North Carolina Property Warranty Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain a North Carolina Property Warranty bond.
At a Glance:
- Lowest Cost: $1,000 per year or $100 per month
- Bond Amount: $100,000
- Who Needs it: Businesses issuing warranties on real property
- Purpose: To ensure consumers receive compensation for financial harm if the business issuing the warranty fails to honor it
- Who Regulates Property Warranties in North Carolina: The North Carolina Secretary of State
North Carolina Statute 58-1-20 requires all businesses issuing warranties on real property to file a $100,000 surety bond with the Secretary of State. The North Carolina legislature enacted the bonding requirement to ensure that all warranties on real property are honored. “Real property” refers to fixed property such as land and buildings as well as everything permanently affixed to the land.
What is the Purpose of the North Carolina Property Warranty Bond?
North Carolina requires a Property Warranty bond to be purchased before any warranty may be issued. The bond ensures that consumers will receive compensation for financial harm if the business issuing the warranty fails to comply with the regulations outlined in North Carolina Statute 58-1-20. Specifically, the bond protects consumers if the business fails to provide all required maintenance services and/or refunds. In short, the bond is a type of insurance that protects consumers if the business issuing the warranty fails to honor it.
How Can an Insurance Agent Obtain a North Carolina Property Warranty Surety Bond?
BondExchange makes obtaining a North Carolina Property Warranty bond easy. Simply login to your account and use our keyword search to find the “Warranty” bond in our database. Don’t have a login? Gain access now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email or chat from 7:30 AM to 7:00 PM EST to assist you.
At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.
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Is a Credit Check Required for the North Carolina Property Warranty Bond?
Surety companies will run a credit check on the owners of the business issuing the warranty to determine eligibility and pricing for the North Carolina Property Warranty bond. Owners with excellent credit and work experience can expect to receive the best rates. Owners with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit,” meaning that the credit check will not affect the owners’ credit.
How Much Does the North Carolina Property Warranty Bond Cost?
The North Carolina Property Warranty bond can cost anywhere between $1,000 to $12,500 per year or $100 to $125 per month. Insurance companies determine the rate based on several factors including your customer’s credit score and experience. The chart below offers a quick reference for the cost of the $100,000 bond requirement.
$100,000 Property Warranty Bond Cost
|Credit Score||Bond Cost (1 year)||Bond Cost (1 month)|
|680 – 719||$1,500||$150|
|650 – 679||$2,000||$200|
|600 – 649||$4,000||$400|
|550 – 599||$7,500||$750|
|500 – 549||$12,500||$125|
*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to, years of experience and underlying credit factors contained within the business owner’s credit report.
Who is Required to Purchase the Bond?
North Carolina requires all businesses seeking to issue warranties relating to the service or repair of real property to purchase a $100,000 surety bond before doing so. Builders and sellers of real property are exempt from the bonding requirement.
BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.
What are the Licensing Requirements for the Issuance of Warranties on Real Property in North Carolina?
North Carolina does not require businesses seeking to issue warranties on real property to obtain a specific license in relation to the issuance of a warranty. However, businesses issuing warranties may need to obtain a license based on the type of business they operate. Additionally, businesses issuing warranties may need to obtain a local business or tax license and should check with their municipal authority before beginning operations.
How are North Carolina Property Warranty Bonds Filed?
Bondholders should mail their completed bond forms, including the power of attorney, to the following address:
Service of Process Agent, NC Secretary of State
P.O. Box 29622
Raleigh, NC 27622
The surety bond requires signatures from both the surety company that issues the bond and from a representative of the business issuing warranties. The surety company should include the following information on the bond form:
- Legal name, address, and state of incorporation of the entity/individual(s) buying the bond
- Surety company’s name, address, and state of incorporation
- Date the bond is signed
What Can North Carolina Businesses do to Avoid Claims Made Against Property Warranty Bonds?
To avoid claims against their Property Warranty bonds, businesses in North Carolina must ensure that they honor all warranties they have issued.
What Other Insurance Products Can Agents Offer Businesses in North Carolina?
Most reputable businesses will purchase liability insurance. Bonds are our only business at BondExchange, so we do not issue any other types of insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.
How Can Insurance Agents Prospect for North Carolina Property Warranty Bond Customers?
North Carolina unfortunately does not provide a public database of businesses that hold Real Property bonds. We suggest contacting the Secretary of State’s Office to obtain this information. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.