What Is an Appeal Bond?
An appeal bond is an amount of money placed in holding while an appeal is being decided. An appeal bond is supplied by the appellant who is appealing the lower court's judgment and is usually in the amount of the original judgment (though it could be more).
An appeal bond is also referred to as a supersedeas bond.
- An appeal bond, or supersedeas bond, is a payment that a court requires from an appellant who is awaiting the appeal of a judgment.
- The amount of money required for the bond is often the actual judgment plus interest—and is held while the appeal is being debated.
- The appeal bond is required as a sign of good faith that the judgment will be paid if the appellant loses, and to protect the winning party should the losing party go bankrupt during the appeals process.
- The appeal bond is also used to limit frivolous attempts at an appeal, as the appellant still has to pay the judgment upfront in the form of a bond, and may end up paying more ultimately, due to interest, fees, lawyers, etc.
Understanding an Appeal Bond
After a civil court ruling, the losing party can appeal by bringing the court case to the higher court. The higher court will only review issues objected to in the lower court during the initial trial, not new evidence. If the lower court ordered the defendant to pay a judgment, s/he usually wouldn't have to come up with the money until the appeals process has been exhausted. An appeal, however, could take a long period of time to be ruled upon; in some cases, an appeal could take years. During this time, the losing defendant will have to spend out-of-pocket costs to cover his or her legal fees and any other costs related to the case. Since there is a possibility that the defendant may go bankrupt by the time the case is ruled on, s/he is required to post a surety bond before the commencement of the appeals process.
An appeal bond is a type of surety bond, meaning a bond that guarantees the debts of one party by another party.
How an Appeal Bond Works
The surety bond, known as an appeal bond, is required by the Federal Rule of Appellate Procedure 7. It must be paid to the court or a third party to demonstrate good faith and intent to commit to the final ruling if the appellant loses. The appeal bond also serves as a safety net bond, which helps protect the court from frivolous appeals or delaying tactics to avoid payment as these dishonest activities cost the court time and money. For instance, a defendant could file an appeal to stall payment of a court-ordered sum if an appeal bond was not required. Also, by posting an appeal bond, the defendant guarantees that the original judgment against him will be paid if s/he loses the appeal.
A losing defendant needs an appeal bond, which is required by both federal and state courts, to secure his right to appeal an adverse judgment and stay the plaintiff's execution of that judgment. The process of appealing involves posting a full judgment in addition to posting interest. An appeal bond should be discussed early in a case since the cost of this bond can be high, and defendants are required to post this bond a few weeks after the judgment. The bond amount could be significantly larger than the value of the ruling since it is to be used to cover interest or other costs that may arise during the appeal process. The amount of the bond is governed by state regulations, which vary from state to state. For example, in the state of California, the appeal bond amount must be 150% of the judgment amount. Some states cap the maximum amount of an appeal bond. In Florida, for example, the amount of an appeal bond is limited to no more than $50 million per appellant.
In addition to an appeal bond premium, applicants must put up collateral worth 100% of the bond amount to qualify for an appeal bond. This collateral is put up with a surety company and is required due to the low likelihood of winning an appellate case. If the defendant doesn't post an appeal bond within two weeks after the lower court enters a judgment, the winning plaintiff can seize his property.
If the appeal is unsuccessful, the bond is in effect until the judgment, and all accrued interest and any awarded fees and costs are paid, which may take many years to finalize. After all, payments have been settled, the court discharges the bond, and the appellant is no longer responsible for the judgment.