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Injunction bonds are a type of court bond required in certain civil matters. Someone who claims to be harmed or potentially harmed by the actions of another can request the court to issue an injunction ordering such actions to cease.�
For example, in a case regarding contested property in the possession of the defendant in a civil lawsuit, the plaintiff can request an injunction preventing the sale of that property until the case has been decided in court.�?Or, in a case alleging that the defendant’s business operation encroaches on land owned by the plaintiff, the plaintiff could request an injunction requiring the defendant to cease doing business at that location pending resolution of the lawsuit.
When requesting either a temporary restraining order or a preliminary injunction, the plaintiff must purchase a California injunction bond. The bond ensures that there will be funds available to compensate the defendant if the defendant prevails in court and can demonstrate a financial loss resulting from the unwarranted injunction.
The court will inform you of any bonding requirements you will need to meet when filing a request for a temporary restraining order or injunction. Note that a temporary restraining order provides immediate relief until a plaintiff�s request for a preliminary injunction has been granted through an evidentiary hearing.
The court will determine the required amount of the bond based on the financial impact on the defendant of ceasing enjoined activities until the case is decided.
In issuing a California injunction bond, a surety bond company is establishing a line of credit for the bonded individual (known as the �principal� in the surety bond agreement). In most cases, this line of credit must be fully collateralized by the principal. If and when the court rules that the injunction was unwarranted, and the defendant can prove a financial loss caused by the injunction, the defendant has a valid claim against the plaintiff�s California injunction bond.
The surety will attempt to negotiate an amicable settlement, but that doesn�t always work. When it�s clear that no settlement is possible, the surety will pay a valid claim upfront on behalf of the principal, using the line of credit established when the bond was purchased. The surety bond agreement legally obligates the principal to repay the surety company.�
The collateral the principal put up to purchase the bond will not be released until the surety has been fully reimbursed. A principal who fails to repay the surety will forfeit that collateral.
The annual premium for a California injunction bond is a small percentage of the required bond amount established by the court. When an injunction bond is fully collateralized, there is no significant risk to the surety company, so the premium rate is typically only 1%.
Request a convenient online quote today, or discuss your California injunction bond needs with one of our experienced surety bond specialists.
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