Surety Bond Requirements for Kentucky’s Real Estate Appraisal Management Companies

Kentucky’s House Bill 288 is new legislation that requires real estate appraisal management companies to register through the Kentucky Real Estate Appraisers Board. The registration process involves completing an application, paying a filing fee, submitting to a criminal history check and obtaining an Appraisal Management Company Surety Bond. While the required surety bond amount would vary, it would be determined by regulations and could not exceed $500,000, according to the initial proposed legislation. However, the Surety and Fidelity Association of America (SFAA) explained to the Kentucky lawmakers that requiring such a large surety bond amount regardless of the size of the real estate appraisal management company would be extremely problematic. Therefore, due to the SFAA comments, the proposed bond amount has been lowered to $25,000. Additionally, the surety’s aggregate liability must not exceed the principal sum of the surety bond. Any claim against a real estate appraisal management company may be made directly against the surety bond. The purpose of the bond is to guarantee that the real estate appraisal management company will perform faithfully and meet its obligations.

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