What Is a Notary Surety Bond?
Notaries are individuals empowered by a state to perform certain legal functions. Primarily, those are limited to administering oaths and affirming signatures. Though these are fairly routine practices, mistakes can be significant and costly. To protect those who use notaries, most states have a bonding requirement as part of the notary public registration process. The notary surety bond, underwritten by a private company, does not transfer liability away from the notary, but ensures that her clients will receive swift compensation for damages.
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Identification
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A surety bond is a legal instrument that reflects an agreement between three parties. In the case of a notary bond, those parties are the state, the surety company who underwrites the bond, and the notary herself. Most states require that notaries public obtain a surety bond to protect their clients from damages caused by the notary.
Size
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The required value of a notary surety bond varies by state. They typically range from $5,000 to $15,000, though the amounts are subject to change. The cost of obtaining the bond is a tiny fraction of the bond amount, as little as $35 to $50 depending on the surety company. The precise requirements for each state are set forth in statutes and codes.
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Function
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The notary bond works like any professional surety bond. Its purpose is to give consumers peace of mind that the professional service provider, in this case a notary, is licensed to perform the services and able to provide reimbursement in the case of faulty work. Errors by a notary could potentially invalidate an important legal document or create other expensive consequences for the consumer. The bond requirement allows consumers of notary services to rely on an individual notary.
Features
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Notaries are licensed through the states. A claim against the notary in her professional capacity is filed against the state. The surety company collects a fee to write the notary bond. If a claim is made, the surety pays out to the state, as obligee, in the amount of a claim, up to the maximum limit of the bond. The payment is used to settle the claim for damages by the notary's client. The principal, which is the notary, is then liable to the surety company, who can collect the full amount of the payment from the notary directly.
Considerations
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The notary surety bond does not protect a notary; it protects her clients. Even with a surety bond, a notary can find herself on the hook for thousands of dollars of damages if she makes mistakes in her work. For this reason, active notaries often take out what's called Errors and Omissions insurance. If a claim against the notary surety bond is paid, and the surety attempts to collect from the notary, the Errors and Omissions policy can cover the personal liability of the notary.
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