Tennessee Appeal Bonds
What Are Tennessee Appeal Bonds?
In Tennessee, an appeal does not automatically stop a judgment creditor from collecting on a money judgment. Under Tennessee Rule of Civil Procedure 62.01, there is an initial automatic stay of 30 days following the entry of a judgment, giving the appellant a window to file post-trial motions or initiate the appeal process. To extend this stay of enforcement throughout the duration of the appeal, the appellant must typically provide a bond to secure the other party. Per Rule 62.04, the stay then becomes effective once the bond is approved by the court.
Tennessee Appeal Bond Amount Requirements
Rule 62.05 of the Tennessee Rules of Civil Procedure and Tennessee Code Annotated § 27-1-124 provide guidelines on setting the amount of an appeal bond. Here are a few highlights for attorneys to be aware of:
- Bond Amount: For most civil judgments, the bond amount necessary to stay execution shall be 125% of the judgment amount, and shall be conditioned to secure the payment of the judgment in full, interest, damages for delay, and costs on appeal.
- Maximum Bond Amount: The bond amount shall not exceed twenty-five million dollars ($25,000,000) regardless of the judgment amount.
- Calculating Bond Amount: Punitive or exemplary damages shall be excluded from the judgment amount when calculating the required bond amount.
- Asset Dissipation Exception: If an appellee proves that an appellant is purposefully dissipating assets outside the ordinary course of business to avoid payment, the court may set the bond amount to include punitive or exemplary damages.
Rules of Civil Procedure - Rule 62.05 Stay of Proceedings to Enforce a Judgment
(1) If an appeal is from a judgment directing the payment of money, the bond shall be conditioned to secure the payment of the judgment in full, interest, damages for delay, and costs on appeal; in cases involving judgments payable in periodic installments, bond shall be fixed in such a manner as the court shall deem sufficient;
(2) If an appeal is from a judgment ordering the assignment, sale, delivery or possession of personal or real property, the bond shall be conditioned to secure obedience of the judgment and payment for the use, occupancy, detention and damage or waste of the property from the time of appeal until delivery of possession of the property and costs on appeal. If the appellant places personal property in the custody of an officer designated by the court, such fact shall be considered by the court in fixing the amount of the bond. A party may proceed as an indigent person without giving any security as provided in Rule 18 of the Tennessee Rules of Appellate Procedure. Upon motion submitted to the trial court and for good cause shown, the bond for stay may be set in an amount less than that called for in the first sentence of this section of this rule. In ruling on such a motion, the trial court may consider all appropriate factors including, but not limited to, the appealing party’s financial condition and the amount of the appealing party’s insurance coverage, if any. If the motion is granted, the party may obtain a stay by giving such security as the court deems proper. If leave to obtain a stay required by this rule is denied, the court shall state in writing the reasons for denial.
(3) If the amount of a judgment is fully bonded as provided in subsection (1), the court upon motion may order the judgment creditor to remove any judgment lien from the register’s office.
*This does not constitute legal advice, please read our disclaimer.
Tennessee Code Title 27. Appeal and Review § 27-1-124
*This does not constitute legal advice, please read our disclaimer.
Who Needs Appeal Bonds in Tennessee State Cases?
Aside from judgments against most public entities, judgment debtors are required to post an appeal bond or other security to prevent judgment execution during the appeal.
Here are some of the cases that may require appeal bonds in Tennessee courts:
- Contract Disputes
- Class Action Lawsuits
- Personal Injury Lawsuits
- Property Disagreements
- Business Litigation
- Employment Law Disputes
- Product Liability Claims
- Intellectual Property Conflicts with Monetary Awards
- Toxic Tort Litigation
- Domestic Relations Cases involving property division, alimony, or child support
Tennessee Appeal Bonds Underwriting Requirements
Appeal bonds are technically an insurance product issued primarily by corporate surety companies. However, these bonds are more like an extension of credit and are therefore underwritten similar to bank loans.
Appeal bonds function more like financial guarantees, where the surety company guarantees to pay the judgment to the appellee up to the bond amount if the appellant doesn’t satisfy the judgment should it be affirmed on appeal.
Unlike insurance products, the appellant has to repay the surety company if the surety ends up satisfying the judgment. Because most civil appeals result in the judgment being affirmed, there is a high probability that the surety company backing the appeal bond will receive a claim. Given the likelihood of a claim, surety companies will often require collateral for the full bond amount.
There are exceptions to the collateral requirement, and those are generally when the appellants are publicly traded companies, banks, insurers, large private firms, municipalities, or high-net-worth individuals who meet particular criteria, such as if the appellant has a significant net worth and liquid assets relative to the bond amount. See our article, “Qualifying for an Appeal Bond Without Collateral,” for additional content.
Common forms of collateral include:
- Cash: This is generally the most streamlined collateral option for clients when dealing with a tight deadline.
- Bank Letters of Credit: A formal guarantee from a bank to a surety, ensuring the availability of funds up to a certain dollar amount upon demand.
- Real Estate: Acceptable collateral may include residential properties (single-family or multi-family) and commercial properties (office, industrial, or retail). However, due to the homestead laws in Tennessee, the property cannot be the client’s primary residence.
- Marketable Securities: Non-retirement brokerage accounts holding stocks and bonds can be pledged as collateral, offering a creative option for securing an appeal bond without having to liquidate assets.
FAQs
How Much are the Premium Rates for Tennessee Appeal Bonds?
The cost of a Tennessee appeal bond is determined by the premium rate, which typically ranges from 0.30% to 4% of the total bond amount. The exact premium rate will depend on several factors, such as:
- The size of the bond requirement
- The type of collateral provided, if required
- The financial strength of the appellant relative to the bond amount, if the bond is being considered without collateral
For example, if the appeal bond is required for $8,000,000 and the premium rate is set at 0.75%, the bond premium would be $60,000. It’s important to know that surety companies charge premiums for appeal bonds annually until their liability under the bond has been released. The premium for the first year is considered fully earned once the bond is issued, and any renewal premiums for subsequent years are prorated if the bond is exonerated midterm.
Best Practices for Posting an Appeal Bond Through a Surety Bond Provider
Securing an appeal bond in Tennessee can be a complex process. Following best practices and having an experienced appellate bond specialist working with your client can help simplify this process and ensure a smooth and efficient experience:
- Contact a surety bond agent early. This advantage helps the client explore all options and ensure they can file the appeal bond without delay.
- Ensure attorney involvement. Attorneys are critical in confirming the bond amount based on the jurisdiction’s requirements and parts of the judgment being bonded, updating the surety company on the deadline to file the bond, and reviewing the bond form to ensure it conforms with State or local rules.
- Choose the right surety bond agent. You and your client can choose the right surety bond agent by interviewing multiple professionals and choosing one with a strong track record of experience and who specializes in Tennessee appeal bonds.
Read our guide, “The Biggest Mistakes Made with Appeal Bonds,” to learn more.
Why Choose CSBA for Your Client's Tennessee Appeal Bonds?
If your client needs to stay enforcement of a Tennessee judgment, they need a professional surety agent who can use a wide variety of collateral options and who has access to the right surety companies.
A Legacy of Expertise & Trust
Since 1984, CSBA has provided first-class service through our expertise in the appellate process, underwriting requirements, and the time frames required to secure a bond before the filing deadline. With our combined experience of 110 years, our surety bond professionals anticipate potential setbacks and take proactive steps to tailor options unique to your client’s financial situation.
Exclusive Surety Insurer Access & Creative Solutions
At CSBA, we leverage our extensive network of over 30 surety insurers for clients seeking to secure a Tennessee appeal bond. Our long-standing relationships with top-tier surety companies allow us to handle bond amounts of all sizes, whether it’s a $1 million appeal bond for a private individual or a $1 billion appeal bond for a publicly traded corporation.
With access to exclusive and semi-exclusive sureties, we offer:
- Creative collateral solutions tailored to each client’s financial profile.
- Expedited underwriting to ensure a streamlined bonding process.
- Comprehensive support and guidance to attorneys and their clients throughout the appeal bond process.
Our specialized expertise and direct surety relationships set us apart, making CSBA the trusted choice to attorneys and their clients for appeal bonds in Tennessee cases.
How Long Does It Take to Secure an Appeal Bond in Tennessee?
If collateral isn’t required to secure an appeal bond, a Tennessee appeal bond can be approved and issued in as little as 24 hours in the most straightforward cases.
If collateral is required, the process can vary significantly and mainly depends on the type of collateral being used. For example, cash collateral can be posted within a few days, while real estate can take 30-60 days, depending on the type and number of properties being posted.
Steps to Apply for a Supersedeas Bond
- Contact an Appeal Bond Specialist – Consult with a surety expert to review your client’s bond amount, financial qualifications, and go over available collateral options. We recommend that the client contact CSBA early to prevent setbacks and ensure that all necessary steps are completed on time.
- Explore All Available Options – The surety agent will discuss customized solutions based on your client’s financial situation. If your client may qualify for an appeal bond without full collateral, we will go over the underwriting requirements and answer any questions.
- Submit the following documents – To begin the underwriting process, the following documents are required:
- Appeal bond application
- Court complaint
- Judgment
- Notice of appeal
- CPA-audited year-end financial statement (if the client is a candidate for an appeal bond without full collateral)
- Secure Approval & Finalize the Bond – Once the underwriting documents have been received, your surety agent will review them internally and:
- Work to obtain competitive terms from a surety insurer.
- Outline the appeal bond approval for your client.
- Guide the client in the posting of the collateral, if required.
Get a Free Quote for Your Client's Tennessee Appeal Bond Today
Filing an appeal bond comes with strict deadlines, and securing a Tennessee appeal bond requires a knowledgeable and responsive surety agent who understands the complexities of the court requirements. At CSBA, we specialize exclusively in appeal and civil litigation bonds, ensuring a fast approval process so you can focus on your case.