Call Us 24/7: 800-314-7003

Call Us 24/7

Non Resident Cost Bonds

Aug 05, 2014

By Micah Bleecher

There is more interstate commerce and finance than ever, and just like in-state businesses, people sue people in other states and get sued by people in other states, and get sued by people out of the country altogether. Foreclosures make up the largest segment of these interstate/international lawsuits, particularly in places that have been hardest hit by the real estate crisis. Interstate lawsuits pose some problems for courts, though, one of which is collecting court costs which might be awarded to the defendant if the plaintiff loses. If you're in-state there are fewer problems but for out of state (including international) litigants, it's more difficult. For this reason, some jurisdictions require what is called a non-resident cost surety bond to cover the court costs incurred by out of state litigants, since there may be no immediate way to collect such fees otherwise.


Florida’s History of Non-Resident Cost Bonds

Not all states require these bonds, but Florida is one of them, and its law has an interesting history. Curiously, the “Out of State Bond Law”, Florida Statutes 57.011.  has been on the books since the Civil War era, when the concern was big bully Yankee (i.e. foreign) corporations harassing defenseless Floridians with onerous lawsuits they know they would not win. Then the “Yankee Corporation” would drop the lawsuit and leave the Floridian having to pay for his own court costs, often destroying him financially. 

After the “Yankee Threat” was over, the bond requirement laid dormant for decades until the current real estate crisis, when attorneys discovered a neat loophole to spring their clients: you could use this neglected bond requirement against foreign banks. With finance crossing not only state borders, but international borders, many people facing foreclosure have debts held by the likes of Deutsche Bank, the Bank of Tokyo etc. Foreclosures are big business for attorneys in Florida, and there's a lot at stake for these 21st century “Yankees.” Competition is fierce to get results for the client.

The bond does not have to be filed with the lis pendens (in Florida, written notice there is a pending lawsuit concerning real estate has been filed), but it must be filed within 30 days of that.  If an out of state plaintiff neglects to post the bond by that time, the defendant must raise the issue, and this gives the plaintiff 20 more days to acquire one.

Here's the Catch

Unlike bonds that are required as a condition of something (like getting a business license), the state of Florida does not enforce the bond requirement. That means it is up to you (the plaintiff) to make sure it's taken acquired.  The bond is a modest $100 (a lot of money at the time of the Civil War), but foreclosure attorneys representing the foreclosed  love to pounce on plaintiffs who forget to file one, because it gives them grounds to request that the lawsuit be dismissed or at least delayed. And dismissed they are--more than you'd think.  Courts have a certain amount of discretion over dismissal, some are granted more time to get a bond, and some are not. For those ruled against, it's a crushing blow for the plaintiff's lawyer over a lousy $100 bond.  Unfortunately for plaintiffs, this will apply to otherwise meritorious lawsuits. 

The lesson should be clear: don't screw up you case by forgetting your Non-Resident Court Cost Bond in Florida or other states where applicable.

non resident cost bonds.jpg

Please add a comment

You must be logged in to leave a reply. Login »