In the state of Maryland, if you want to stay the execution of a judgment pending appeal, you need to file what is called a supersedeas bond. In the various Maryland State District Courts, these bonds are regularly filed under Rule 8-422. The bond is to guarantee satisfaction in full of the judgment from which the appeal was taken, together with the cost, interest, and damages for the delay. If, for any reason, the appeal is dismissed, the judgment is affirmed, or any modified judgment and costs, interests, and damages entered or reported on appeal.
In simpler terms, this means that the bond must guarantee the payment of judgment and all interest costs, and damages that have been awarded for the underlying judgment and pending appeal. It also includes costs and interest. Make sure that you are including that in your bond amount calculations. The bond amount is going to be greater than the judgment in most cases. The bond amount can be set by stipulating with the judgment creditor or motioning the court.
The statute concerning the bond amount is as follows: (1) Money Judgment Not Otherwise Secured. Subject to Code, Courts Article, § 12-301.1, when the judgment is for the recovery of money not otherwise secured, the amount of the bond shall be the sum that will cover the whole amount of the judgment remaining unsatisfied plus interest and costs, except that the court, after taking into consideration all relevant factors, may reduce the amount of the bond after making specific findings justifying the amount.
Supersedeas bonds are regularly issued by my office. The first item the client generally needs to decide is whether or not they want to deposit collateral with the surety or provide financial statements. If they are going to deposit collateral, there are certain acceptable forms of collateral. Generally, those include cash, a letter of credit, or a pledge of non-retirement account securities. Not all brokerage accounts can be secured that have securities. In some select cases, real estate can be used as collateral. The real estate generally needs to have little to no mortgage and a value that is a multiple of the bond amount. The real estate owner must have a clean credit history and no record of litigation or bankruptcies.
If the client wants to put up property, and they have a long history of bankruptcy filings and is very litigious, that’s probably not going to work. When securing real estate, the surety will charge a higher than normal bond premium, which are sometimes upwards of 4% to 5% if the surety is taking a first position. If they are going to be a second-position property, sometimes they charge well more than that amount if they can use the property as collateral.
The long and short of this article is to give you an idea of what is required to get an appeal on a supersedeas bond. More importantly, it is to get you to start thinking about what you need to do to get one well in advance of the entry of the judgment.
Give me a call today to discuss the current judgment and how to obtain a bond, even if you don’t think you qualify. I’m happy to talk with you and see if there’s anything I can do to help you get bonded.
Neil Pedersen
PEDERSEN & SONS SURETY BOND AGENCY, INC.
15 Maiden Lane Suite #800
New York, NY, 10038
212-227-7277
neil@courtbondnow.com
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