A Yellowstone injunction bond allows a tenant to remain in their apartment pending an eviction procedure by the landlord. These bonds guarantee the landlord a court determined penalty usually equal to the bond amount. If the proceedings later determine the landlord had proper cause to evict the tenant, the landlord collects the bond penalty. Thus, Yellowstone injunctions are a type of forfeiture bond, which means in the event of a claim the surety and principal award the full bond penalty to the landlord.

For a tenant to obtain a Yellowstone injunction, he or she must prove the following:

  1. The tenant holds a commercial lease
  2. The landlord has requested the tenant to leave
  3. The tenant has gone to court to ask for a stay of the eviction
  4. The tenant can and wants to remedy the situation as an alternative to eviction

From the surety’s perspective, these bonds raise many red flags. First, an eviction proceeding against a tenant usually indicates a deteriorating relationship between the landlord and tenant. Second, tenants renting property usually do not own homes nor have significant investments to collateralize the bond.  Sureties may want full or partial collateral for these bonds because the stark outcome depends on unpredictable litigation. As with most court bonds, underwriters cannot evaluate a principal on the merits of his or her case. They must plan for the worst case scenario and so underwriters always look at the principal’s financials first and foremost.

Both businesses and individuals may need a Yellowstone injunction bond if they find their landlord wants to evict them from their space. Businesses may have an easier time obtaining these bonds than individuals because they tend to have more revenue and sources of indemnity. For example, an underwriter may approve a bond for a business if the business itself and the owners or shareholders agree to indemnify the surety for any loss sustained due to the bond.

In cases involving Yellowstone Injunctions in New York Supreme Court, the tenant usually is the Plaintiff. After the judge grants the Yellowstone injunction, a Plaintiff tenant should understand they may need to pay any rents due, interest accrued, or other expenses as a result of the injunction. The judge usually takes this into account when he or she sets the bond penalty in the court proceeding.

Yellowstone injunction bonds are a type of injunction bond. You can read more about other injunction bonds by clicking here.

Fun Fact: “Yellowstone Injunction” gets its name from the Court of Appeals case, First National Stores v. Yellowstone Shopping Center, 21 NY2d 630, 290 NYS2d 721 (1968). (Source: http://sarjilaw.com)