Understand what is surety bond
Whoever places a property for rent requires assurances that the tenant will honor the payments. Traditionally, the guarantor is the most common way out, but with the current financial scenario it becomes increasingly difficult to find people who agree to undergo such a role.
With this, the surety bond has been growing as an option for those who can not count on a guarantor, although many people do not properly understand how it works. In this article, you will understand what is surety bond and know its key features. Check out:
What is secured bond?
A preferred means of guarantee by the real estate agents, the surety bond is provided by the Law of Tenancy and consists of the hiring of an insurance policy in which the sole beneficiary is the owner of the property.
In most cases, the surety insurance is equivalent to a month and a half of rent, which can be paid in cash or in installments. As it is an additional cost to the rental value, the guarantee is only used by tenants who have already exhausted the other possibilities. There is no possibility of refunding the amount paid at the end of the lease.
How is the surety bond hired?
The approval of the surety bond is not automatic, and the tenant must be submitted to a cadastral evaluation with the insurer. Although it is not a rule, most of the documents required are personal identification (ID / CNH and CPF) and the last three paychecks or other proof of income.
Once the registration is approved, the lease is formalized, informing the insurance as a means of guarantee. The policy is issued after the presentation of the contract and the payment of the premium (or installment, if any).
The term of the policy, although it may be equal to the term of the lease, is usually one year. That is, with each new cycle is necessary to undergo a new assessment and pay again the surety bond.
What are the guarantees of surety insurance?
The essential function of the surety bond is to guarantee the payment related to the default on the payment of the rent by the tenant. It is possible, however, to optionally contract additional coverage for damage caused by the tenant on the property, except for those caused by poor conservation.
How does the owner get in case of default?
The owner of the property can trigger the insurer since the first delay in the rent. Thereafter, the company will make the transfer until the tenant regularises its situation. If this does not happen, an eviction action can begin, culminating in the vacancy of the property.
What are the benefits to the owner of the property?
For the owner, without a doubt, the biggest benefit is the guarantee of a faster payment in the event of default, without the need to go to court. Another positive point is that as the approval of the contract becomes faster, the property is less time idle.
What are the advantages for the tenant?
It may be pointed out as an advantage to the tenant the condition of not depending on a guarantor, which invariably causes certain constraint. Although it does not guarantee the signing of the lease agreement, the surety bond allows a quicker analysis of the landlord’s registration.
Although surety insurance has certain advantages, the truth is that this is an additional cost to the tenant, who will already have to pay the rent. Therefore, the most advisable is to concentrate efforts on the acquisition of your own property.
So, you understand what a surety bond is? So keep learning: check out our article with five tips for buying a property without messing up your finances – and start organizing right now!