Tenn. Comp. R. & Regs. 0765-02-.01 - BONDS
(1) Bonds shall be written on a form approved
by the Insurance Commissioner, available through the Commission, which shows
the name of the principal as it appears on the license application.
(2) Description of Bonds.
(a) Cash Bonds.
Cash bonds may not include personal checks. Cash bonds may include:
1. Currency, which shall be
deposited with the State Treasurer, subject to the order of the Commission, and
which may not earn interest;
2.
Cashier's check, certificate of deposit for a term of at least 2 years or
certified check:
(i) Issued by a financial
institution;
(ii) Showing the name
of the purchaser, and
(iii)
Assigned and payable to the Commission.
3. Savings and loan association certificates,
passbook or share accounts, credit union or share accounts, passbook savings or
other similar accounts assigned and payable to the Commission, which shall be
issued for periods of not less than 1 year and accompanied by delivery of the
certificate passbook, share account, certificate, passbook or other similar
account to the Commission.
(b) Property Bond
1. A property bond shall be the assignment to
the Commission by an owner applicant of an interest of ten thousand dollars
($10,000.00) in real property located in Tennessee; and submission of a title
search showing any encumbrances on the property.
2. The Commission may require the applicant
to submit an appraisal of the property to ascertain that the unencumbered value
of the property is at least ten thousand dollars ($10,000).
(c) Surety Bond.
1. A surety bond shall be in the amount of
ten thousand dollars ($10,000), issued to a contractor by an approved insurance
company authorized to do business in (Rule 0765-2-.01, continued) Tennessee,
for the benefit of a claimant, who has been damaged by the contractor's breach
of a home improvement contract. If the bond ceases to be in effect, the
contractor's license shall become invalid.
2. The commission may refuse to accept a bond
written for a contractor by a surety which has failed to meet its obligations
under this subtitle.
(d)
Letter of Credit.
1. A bond in the form of an
irrevocable letter of credit shall be an agreement, between a financial
institution and a contractor on record at the Commission wherein the financial
institution agrees to extend an irrevocable line of credit amounting to ten
thousand dollars ($10,000), for the purpose of honoring claims filed with the
Commission.
2. The irrevocable
letter of credit shall show the name of the financial institution extending the
credit and the name of the applicant or contractor to whom the letter of credit
was issued as it appears on the applicant's or contractor's license
application.
(3) Release of Bond.
A bond may not be released until whichever occurs last:
(a) One year after the inactivation,
expiration or revocation of contractor's license;
(b) After the pending claims against the
licensee filed during the period described in 3(a) have been heard and
satisfied, or dismissed.
Notes
Authority: T.C.A. ยงยง 62-37-108(j) and 62-37-115(4).
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