Surety Bonds in Real Estate: What Buyers, Sellers, and Agents Need to Know

Surety bonds appear throughout real estate transactions and professional licensing in ways that most buyers, sellers, and agents don’t fully understand. From the bonds that protect homeowners hiring contractors to the bonds real estate brokers must carry as a condition of licensing, understanding surety bonds can save you significant time, money, and legal headaches.

This guide covers the key intersections of surety bonds and real estate including which professionals need bonds, what they cost, and how bonds protect property owners in practice.

What Is a Surety Bond and How Does It Work in Real Estate?

A surety bond is a three-party agreement. In real estate contexts, the parties are typically: the professional or business being bonded (the principal), the licensing authority or client requiring the bond (the obligee), and the surety company backing the guarantee. If the principal causes financial harm through misconduct or failure to perform, the obligee or damaged party can file a claim against the bond.

Unlike insurance, bonds protect the public not the bonded professional. The professional is personally responsible for repaying any claims paid by the surety.

Real Estate Professionals Who Need Surety Bonds

Mortgage Brokers and Lenders

Most states require mortgage brokers to carry surety bonds ranging from $10,000 to $150,000 as a condition of NMLS licensing. The bond protects borrowers from fraudulent loan origination practices. For borrowers, working with a bonded mortgage broker provides an additional financial protection layer beyond standard regulations.

Home Improvement and General Contractors

Before a contractor can pull a permit or obtain a state license, most states require a contractor license bond. These bonds protect homeowners if the contractor fails to complete work, violates licensing laws, or causes undisclosed damage. Bond amounts typically range from $5,000-$25,000 depending on the state.

Property Managers

Property management companies in several states must carry surety bonds to protect tenant security deposits and rental income. A bonded property manager provides additional security for property owners that their funds are protected from embezzlement or mismanagement.

Real Estate Appraisers

Some states require real estate appraisers to carry bonds as part of state licensing. The bond protects clients from financial harm resulting from fraudulent or negligent appraisals.

Title Companies

Title insurance companies and title agents are subject to bonding requirements in many states. While title insurance is separate from surety bonds, title agents must often maintain fidelity bonds to protect against employee theft and fraud.

Lost Title Bonds: A Common Real Estate Need

One of the most frequent bond requests in real estate involves lost or missing title situations. When a property or vehicle title is lost, damaged, or never received, a lost title bond allows the owner to register the property or vehicle with their state DMV or title agency.

When Lost Title Bonds Are Needed

• Buying a vehicle at auction without a clean title
• Inheriting property with title issues
• Mobile home or manufactured housing with missing title documentation
• Classic or collector vehicles with undocumented ownership history

Lost title bond costs are typically modest — often $100-$400 — and the bond amount is set at 1.5x to 2x the property value. Processing is usually same-day.

Contractor Bonds: The Most Common Real Estate-Adjacent Bond

For homeowners hiring contractors for renovations, additions, or major repairs, contractor license bonds are the primary protection mechanism. Here’s what homeowners should know:

Bond Type	Typical Amount	What It Protects Against
Contractor license bond	$5,000-$25,000	Contractor misconduct, licensing violations
Performance bond	Contract value-based	Failure to complete the project
Payment bond	Contract value-based	Failure to pay subcontractors/suppliers
Completion bond	Project-specific	Developer failure on new construction

Before hiring any contractor for significant work, verify that they are bonded and confirm their bond is current. A simple call to the surety company or a check through your state licensing board confirms active coverage.

How to Verify a Contractor or Professional Is Bonded

1. Ask for the bond certificate — bonded professionals can provide one immediately
2. Call the surety company directly to confirm the bond is active
3. Check your state licensing board’s online verification system
4. For federal contractors, verify Treasury-listed surety at sam.gov

What Real Estate Investors Should Know About Bonds

Real estate investors who hire contractors for fix-and-flip projects, rentals, or new construction face unique risks. Requiring bonds from all contractors protects your investment:

• Always require a current bond certificate before work begins
• For projects over $100,000, consider requiring both a performance and payment bond
• Understand your rights to file a bond claim before signing any contract
• Verify the surety company is Treasury-listed for any federally-regulated work

Whether you’re a homeowner hiring a contractor or an investor managing multiple projects, understanding the bond landscape protects your interests. BondsExpress has helped contractors, property managers, and real estate professionals get properly bonded since 1965 — visit

BondsExpress.com to learn more.

For additional guidance on surety bonds and where to obtain them, USFinanceMarket.com has a detailed resource: Where to Get a Surety Bond.

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