A Notary Bond, or Notary Public Bond, is a legally binding contract ensuring that a notary will perform their duties ethically and lawfully. If a notary commits malfeasance or fraud, the bond provides compensation to those harmed by their actions. Required in most states, it’s a means of protecting the public from potential misconduct.
While notary public appointments and regulations are determined at the state level in the U.S., most states mandate that notaries secure a bond before they can practice. The bond amount and specific requirements can vary considerably from one state to another.
The foremost function of the notary bond is to protect individuals who use the services of a notary public. If a notary fails to perform their duties in accordance with state laws, and someone incurs financial harm due to this failure, the bond can be used to compensate the aggrieved party.
A notary bond assures ethical conduct. By necessitating a bond, the state ensures that the notary is less likely to engage in misconduct. The bond acts as a deterrent against unethical actions, as the notary would be held financially responsible for claims made against the bond.
As with all types of bonds, there are three stakeholders, the Principal, the Obligee and the Surety.
The principal is the notary public, who is obliged to perform their duties in line with state regulations and is responsible for any breaches that may result in claims against the bond.
The obligee is generally the state, or the appointing body that require the bond to be in place. The obligee are the entity ensuring that notaries abide by the stipulated guidelines. The general public, however, can make a claim against the bond if they are harmed by the notary’s actions.
The insurance or bonding company issuing the notary bond is the surety. They guarantee, on behalf of the notary, that compensation will be provided to the public in the event of proven malfeasance. If a claim is validated and the surety pays out, the notary (principal) is obligated to reimburse the surety for the amount paid.
It’s very important to differentiate between a notary bond and professional liability insurance, also referred to as errors and omissions insurance). While both are financial tools, they serve different purposes.
A notary bond protects the public from a notary’s mistakes or intentional wrongdoing. On the other hand, errors and omissions insurance protects the notary public from potential financial losses resulting from claims or lawsuits arising out of errors, omissions, or negligence while performing notarial acts.
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