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An appeal bond is an amount of money held while a legal appeal is decided by a higher court. An appeal bond is supplied by an individual or other entity who loses a court case and has grounds for appeal. These bonds are issued through surety agents or companies. The value of the appeal bond is at least the value of the judgment but may be more to cover additional costs and fees.
After a civil court ruling, the losing party can appeal by bringing the court case to the higher court. The higher court will only review issues objected to in the lower court during the initial trial, not new evidence. If the lower court ordered the defendant to pay a judgment, they usually wouldn't have to come up with the money until the appeals process is exhausted.
But, an appeal could take a long time—anywhere from several months to a few years. During this time, the losing defendant will have to spend out-of-pocket costs to cover their legal fees and any other costs related to the case. Since the defendant may go bankrupt by the time the ruling, they must post a surety bond before the commencement of the appeals process.
The surety bond, known as an appeal bond, is required by the Federal Rule of Appellate Procedure 7. It must be paid to the court or a third party to demonstrate good faith and intent to commit to the final ruling if the appellant loses.
The appeal bond also serves as a safety net bond, which helps protect the court from frivolous appeals or delaying tactics to avoid payment as these dishonest activities cost the court time and money. For instance, a defendant could file an appeal to stall payment of a court-ordered sum if an appeal bond was not required. By posting an appeal bond, the defendant guarantees that the original judgment against them will be paid if they lose the appeal.
An appeal bond is also referred to as a supersedeas bond, though there are subtle differences.
A losing defendant needs an appeal bond, which is required by both federal and state courts, to secure their right to appeal an adverse judgment and stay the plaintiff's execution of that judgment. The process of appealing involves posting a full judgment in addition to posting interest.
An appeal bond should be discussed early since defendants are required to post this bond a few weeks after the judgment. These bonds are expensive; the amount may be larger than the value of the ruling since it often covers interest or other costs. State regulations govern the bond amount, so they vary from state to state. For example, the value of an appeal bond in California must be 150% of the judgment amount.
The costs associated with an appeal bond tend to vary. It depends on several factors, including the total amount of the judgment and the appellant's financial situation. But certain costs can't be avoided when an appeal bond is needed—notably, the premium. Bond premiums are paid by the appellant. This can range between 0.3% to 4% and is typically a percentage of the bond.
Some bonds require collateral. Surety agents and companies only accept certain types of collateral when they're needed, including cash, real estate, securities (that aren't part of a retirement account), and letters of credit from a financial institution.
If the appeal is unsuccessful, the bond is in effect until the judgment and all accrued interest and any awarded fees and costs are paid, which may take many years to finalize. After all, payments have been settled, the court discharges the bond, and the appellant is no longer responsible for the judgment.
Appeal bonds can come uncollateralized. These bonds may be harder to qualify for and typically rely on an appellant's ability to pay the judgment amount on their own.
Appeal bonds are usually required in civil cases involving monetary judgments. These typically include contract disputes, personal injury lawsuits, property disagreements, and business litigation. Other common cases requiring appeal bonds include employment law disputes, product liability claims, and intellectual property conflicts with monetary awards.
Some jurisdictions have specific requirements for appeal bonds in certain case types. For instance, real estate cases like eviction proceedings or foreclosure disputes may require bonds in some states. Domestic relations cases, particularly those involving property division or alimony, and probate cases concerning will contests or estate distribution, might also require appeal bonds.
Cases less likely to require appeal bonds include criminal proceedings, civil matters resulting in non-monetary judgments, and some administrative appeals. Constitutional challenges and public interest cases may sometimes see bond requirements waived or reduced. Last, government entities acting as appellants are often exempt from posting appeal bonds.
The terms appeal bond and supersedeas bond are often used interchangeably in legal contexts. While they serve similar purposes, there are subtle differences.
In the broadest sense, an appeal bond may encompass a wider range of purposes. While it often includes the function of a supersedeas bond, it can also serve additional purposes depending on the jurisdiction. For example, some courts may require an appeal bond even when there is no specific judgment to stay, such as in cases where the appeal is against a non-monetary decision or order.
A supersedeas bond is specifically designed to stay the execution of a judgment during the appeal process. Its primary function is to prevent the prevailing party from enforcing the judgment while the case is being reviewed by a higher court. By posting a supersedeas bond, the appellant can effectively freeze the status quo, ensuring that no action is taken to collect on the judgment until the appeal is resolved.
The key is that both types of bonds serve to protect the interests of the prevailing party during the appeal process, though an appeal bond is a bit more vague.
When a party loses a case and wishes to appeal, they may be required to post an appeal bond. This bond typically covers the full amount of the judgment plus interest and costs. If the appeal is successful, the bond is discharged. If the appeal fails, the bond ensures that the winning party can collect the judgment amount.
Appeal bonds are typically required in civil cases where a monetary judgment has been entered against the appellant. They are often mandatory when a defendant wishes to stay the execution of a judgment during the appeal process.
The appellant, or the party filing the appeal, is responsible for paying for the appeal bond.
In some circumstances, an appeal bond can be waived or reduced. This usually requires a motion to the court demonstrating that the appellant lacks the financial resources to post the full bond amount.
Appeal bonds are financial guarantees required by courts to protect the winning party's interests during the appeals process, typically covering the full judgment amount plus anticipated interest and costs. They allow the losing party to delay payment of a judgment while appealing, but ensure funds will be available if the appeal fails, and are most commonly used in civil cases involving monetary judgments.