Texas Supersedeas Bonds
What is a Texas Supersedeas Bond?
A supersedeas bond in Texas allows a judgment debtor (often the defendant) to temporarily stop the enforcement of a money judgment while they appeal. Also known as an appeal bond, the bond must cover compensatory damages awarded, interest for the estimated appeal duration, and costs.
If the appeal is ultimately unsuccessful, the judgment creditor (often the plaintiff) can file a claim on the bond to collect on the judgment from the surety should the judgment debtor not satisfy the judgment.
Without a supersedeas bond in place or acceptable alternative security, the judgment creditor can generally enforce the final judgment after 30 days while the case is on appeal.
Texas Supersedeas Bond Amount and Court Requirements
Per the Texas Rules of Appellate Procedures, Rule 24.1 Suspension of Enforcement, filing a supersedeas bond with the court is one way to pause the enforcement of a judgment. The bond must be payable to the creditor, signed by the debtor, and backed by a sufficient surety.
According to Rule 24.2, the amount of a Texas supersedeas bond must cover:
- The compensatory damages awarded in the judgment
- The interest for the estimated duration of the appeal
- Costs awarded in the judgment
However, the amount must not exceed the lesser of the following:
- 50% of the judgment debtor’s current net worth, or $25 million
Texas Rules of Appellate Procedure - Rule 24.2
(1) For Recovery of Money. When the judgment is for money, the amount of the bond, deposit, or security must equal the sum of compensatory damages awarded in the judgment, interest for the estimated duration of the appeal, and costs awarded in the judgment. But the amount must not exceed the lesser of:
(A) 50 percent of the judgment debtor’s current net worth; or
(B) 25 million dollars.
(2) For Recovery of Property. When the judgment is for the recovery of an interest in real or personal property, the trial court will determine the type of security that the judgment debtor must post. The amount of that security must be at least:
(A) the value of the property interest’s rent or revenue, if the property interest is real; or
(B) the value of the property interest on the date when the court rendered judgment, if the property interest is personal.
(3) Other Judgment. When the judgment is for something other than money or an interest in property, the trial court must set the amount and type of security that the judgment debtor must post. The security must adequately protect the judgment creditor against loss or damage that the appeal might cause. But the trial court may decline to permit the judgment to be superseded if the judgment creditor posts security ordered by the trial court in an amount and type that will secure the judgment debtor against any loss or damage caused by the relief granted the judgment creditor if an appellate court determines, on final disposition, that that relief was improper.
(4) Conservatorship or Custody. When the judgment involves the conservatorship or custody of a minor or other person under legal disability, enforcement of the judgment will not be suspended, with or without security, unless ordered by the trial court. But upon a proper showing, the appellate court may suspend enforcement of the judgment with or without security.
(5) For a Governmental Entity. When a judgment in favor of a governmental entity in its governmental capacity is one in which the entity has no pecuniary interest, the trial court must determine whether to suspend enforcement, with or without security, taking into account the harm that is likely to result to the judgment debtor if enforcement is not suspended, and the harm that is likely to result to others if enforcement is suspended. The appellate court may review the trial court’s determination and suspend enforcement of the judgment, with or without security, or refuse to suspend the judgment. If security is required, recovery is limited to the governmental entity’s actual damages resulting from suspension of the judgment.
(b) Lesser Amount. The trial court must lower the amount of security required by (a) to an amount that will not cause the judgment debtor substantial economic harm if, after notice to all parties and a hearing, the court finds that posting a bond, deposit, or security in the amount required by (a) is likely to cause the judgment debtor substantial economic harm.
(c) Determination of Net Worth.
(1) Judgment Debtor’s Affidavit Required; Contents; Prima Facie Evidence. A judgment debtor who provides a bond, deposit, or security under (a)(1)(A) in an amount based on the debtor’s net worth must simultaneously file with the trial court clerk an affidavit that states the debtor’s net worth and states complete, detailed information concerning the debtor’s assets and liabilities from which net worth can be ascertained. An affidavit that meets these requirements is prima facie evidence of the debtor’s net worth for the purpose of establishing the amount of the bond, deposit, or security required to suspend enforcement of the judgment. A trial court clerk must receive and file a net-worth affidavit tendered for filing by a judgment debtor.
(2) Contest; Discovery. A judgment creditor may file a contest to the debtor’s claimed net worth. The contest need not be sworn. The creditor may conduct reasonable discovery concerning the judgment debtor’s net worth.
(3) Hearing; Burden of Proof; Findings; Additional Security. The trial court must hear a judgment creditor’s contest of the judgment debtor’s claimed net worth promptly after any discovery has been completed. The judgment debtor has the burden of proving net worth. The trial court must issue an order that states the debtor’s net worth and states with particularity the factual basis for that determination. If the trial court orders additional or other security to supersede the judgment, the enforcement of the judgment will be suspended for twenty days after the trial court’s order. If the judgment debtor does not comply with the order within that period, the judgment may be enforced against the judgment debtor.
(d) Injunction. The trial court may enjoin the judgment debtor from dissipating or transferring assets to avoid satisfaction of the judgment, but the trial court may not make any order that interferes with the judgment debtor’s use, transfer, conveyance, or dissipation of assets in the normal course of business.
Who Needs a Supersedeas Bond in Texas State Cases?
Supersedeas bonds are typically a requirement in Texas courts to supersede a judgment while the appellant seeks to overturn a verdict on appeal.
Here are the common types of cases that require supersedeas bonds in Texas.
- 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 (click here to read our article on Appeal Bonds in Family Law Cases)
Texas Supersedeas Bonds: Surety Underwriting Requirements
Supersedeas 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.
Supersedeas 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 supersedeas bond will receive a claim. Given the likelihood of a claim, surety companies will often require collateral for the full bond amount.
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 Texas, 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 a supersedeas bond without having to liquidate assets.
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.
FAQs
How Much Does a Supersedeas Bond Cost in Texas?
The cost of a Texas supersedeas bond is determined by the premium rate set by surety companies, which are commonly in the 0.30% to 4% range based on the total bond amount and are dependent on the following factors:
- Bond amount requirement
- Type of collateral provided (if required)
- Financial stability of the appellant relative to the bond amount (if the bond is being considered without collateral)
Thus, if a surety is charging a 1% premium rate on a $2 million bond, the annual premium would equal $20,000.
Surety companies charge premiums for supersedeas bonds yearly until their liability under the bond is released. The first year’s premium is considered fully earned upon bond issuance, and the bond automatically renews on an annual basis. After the first year, if the appeal is concluded midterm, and the surety is then exonerated from liability, they will prorate the renewal premium and issue a refund back to the client.
Best Practices for Posting a Supersedeas Bond Through a Surety Bond Provider
Securing a supersedeas bond in Texas 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 supersedeas 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 Texas supersedeas bonds.
Read our guide, “The Biggest Mistakes Made with Appeal Bonds,” to learn more.
Why Choose CSBA for Your Client's Supersedeas Bonds in Texas?
When the stakes are high, your clients need a professional surety agent they can count on to stay enforcers of judgment. At CSBA, we have decades of experience in supersedeas bonds, and we can guide your clients through the complex process.
A Legacy of Expertise & Trust
CSBA has helped appellants secure supersedeas bonds from various industries involving almost every type of case since 1984. So whether your client is an individual needing a $1 million bond or a publicly traded company with a billion dollar judgment, we have the experience and resources to help.
Exclusive Surety Insurer Access & Creative Solutions
At CSBA, we have access to over 30 top-rated surety insurers. Several of these are exclusive or semi-exclusive insurers that most agents don’t have. This unique access and programs allow us to find creative solutions tailored to each client’s circumstances.
How Long Does It Take to Secure a Supersedeas Bond in Texas?
If collateral isn’t required to secure a supersedeas bond, a Texas supersedeas 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
1. Contact a Supersedeas 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 so that we can prevent setbacks, and ensure that all necessary steps are completed on time.
2. Explore All Available Options
The surety agent will discuss customized solutions based on your client’s financial situation. If your client may qualify for a supersedeas bond without full collateral, we will go over the underwriting requirements and answer any questions.
3. Submit Required Documentation
To begin the underwriting process, the following documents are required:
- Supersedeas 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)
4. 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 supersedeas bond approval for your client.
- Guide the client in the posting of the collateral, if required.
Get a Free Quote for Your Client's Texas Supersedeas Bond Today
Filing a supersedeas bond comes with strict deadlines, and securing a Texas supersedeas 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.