Are Bail Companies Following the Law?

Have you ever wondered if the contract you are signing is legal? Maybe not, as many people assume the contracts they sign comply with the necessary laws, regulations, and rules. Although bail companies don’t have the most honorable reputation, this post will show that they are complying with the applicable laws. In California, bail bond companies are regulated by the California Code of Regulations. 10 CCR § 2081 delineates the collection and charges permitted; § 2082 outlines the prohibited service charges; and § 2083 looks at the specific written statements of bail transactions, including the contents and delivery. This post will first examine these regulations and then show how the contract terms I discussed in my last post comply with them.

Are there any limits to what a bail bondsman can charge a defendant beyond the initial 10% of bail? The short answer? Not really. The regulations place limits on bail bonds companies in that they can only charge defendants additional expenses that are “actual, necessary, and reasonable.” But only a few examples of those expenses are written into the regulation. With such broad terms in the regulations, my assumption is that bail bonds companies charge defendants a number of expenses that they claim are actual, necessary, and reasonable. I was unable to find any caselaw in California where defendants who had entered into contracts with the bail bonds companies have challenged the regulations, or more specifically challenged an expense to not be “actual, necessary, and reasonable”. The only additional limitation is found in CCR § 2083, which I will discuss below.

Permitted Collection and Charges:

CCR § 2081 focuses on the expenses that are associated with the bail transaction. It states, “No bail licensee shall, in any bail transaction or in connection therewith, directly or indirectly, charge or collect money or other valuable consideration from any person except for the following purposes.” Those purposes are summarized below.

Section (a) states:

To pay the premium at the rates established by the insurer and set forth on the undertaking of bail or to pay the charges for the bail bond filed in connection with such transaction at the rates filed in accordance with section 2094.

This section encompasses the right of the bail company to collect money for the initial bail transaction.

Section (b) states, “To provide collateral.” The regulation does not expand on this section, but some of the costs associated with collateral are noted in subsection (c).

Section (c) states:

To reimburse himself for actual, necessary and reasonable expenses incurred in connection with the individual bail transaction, including but not limited to:

                  (1) Guard fees after the first 12 hours following release of an arrestee on bail, and

                 (2) Notary fees, recording fees, necessary long distance telephone expenses; telegram                             charges, travel expenses; and a reasonable posting fee charged by a licensee operating in                    a county other than that where the bail was arranged;

For example, if the defendant chooses to put his house up as collateral for the amount he owes the bail agent, the bail agent can charge the defendant expenses associated with that collateral. For instance, suppose you were arrested in Santa Clara County, but the house you want to use as collateral is located in Riverside County. If the bail agent decides to travel to Riverside County to view the home or gather information about the house from the county’s assessor’s office, those travel expenses can be charged to the defendant. The only limitation on those travel charges is that they cannot exceed the amount allowed to be taken as a travel expense for income tax purposes under the federal Internal Revenue Code and Regulations, or the amount allowed by California to be claimed for mileage by its employees.

Bail bond agencies are allowed to reimburse themselves for these “reasonable and necessary expenses” as per section (d). This subsection does not give any examples of expenses that could be charged. Thus, it is completely left up to the bail company to use this broad discretion and determine what expenses to charge the arrestee after a breach of the agreement. The only limitation on bail licensee in this subsection is that the reimbursement may not exceed the penal amount of such undertaking or bond.

Finally, section (e) looks at the repercussions of a forfeiture of bail. If there is a forfeiture of bail, not only is the defendant on the hook for the forfeiture amount, but also is responsible for any of the actual, necessary, and reasonable expenses I discussed above. This could include the costs the bail agent may have incurred in tracking down the defendant, possibly even the cost of a bounty hunter the bail agent hired to find the defendant. This is explicitly stated in the regulation and again the balance is clearly in favor of bail companies administering these contracts.

Without any caselaw to further explain the parameters of this regulation, my assumption is that bail companies take advantage of their position and charge defendants expenses they consider to be legal.

Let’s look at some common terms found in these contracts:

To pay ‘stated amount’ per annum for this Bail Bond. The fact that Defendant may have been improperly arrested, his bail reduced, or his case dismissed, shall not obligate the return of any portion of said premium. This bond is renewable each year. First Party agrees to pay to Second Party a renewal premium in the amount stated above, twelve months after the date on which this Bond was executed. If said renewal premium is not paid upon written demand, second party has the right to surrender Principal, as provided in the CA Penal Code §1300.

This term is in direct compliance with §2081(a), as it describes the basic agreement of the amount to be paid between the bail bond company and the defendant.

To reimburse Second Party and Surety for actual expenses incurred by Second Party or Surety in connection with the arranging and/or execution of Bail Bond or renewal or substitution thereof whether or not said Principal refuses to be released after arrangements have been initiated by Second Party.

This term follows the provisions of § 2081(c), and specifically falls under the umbrella phrasing of “actual, necessary, and reasonable expenses” incurred in connection with the individual bail transaction.

To pay second party or surety as collateral upon demand, the penal amount of Bail Bond whenever Second Party or Surety, as a result of information concealed or misrepresented by the First Party or Principal or other reasonable cause, any one of which was material to hazard assumed, deems payment necessary to protect the Second Party.

Regulation of this term also falls under the umbrella in subsection (c). This nondisclosure/misrepresentation term is legal under this regulation because it is invoked when the bail bondsman believes he is at risk because of something the defendant withheld. It most likely will be considered an “actual, necessary, and reasonable” expense in connection with the individual bail transaction.

Prohibited Service Charges:

10 CCR § 2082 states:

Except to the extent permitted by Section 2081 (c), (d), and (e), no bail licensee shall make any charge for his services in a bail transaction in addition to the premium on an undertaking of bail or the charge for a bail bond at the rates filed in accordance with Section 2094.

This regulation seems to be referring us back to § 2081 for guidance, but without further explanation of these regulations, there is not much to go on.

Written Statements of Bail Transactions:

Lastly, 10 CCR § 2083 outlines specifically what the bail bondsman is required to give to the defendant, shortly after entering into the transaction. This regulation states,

Every bail licensee shall, at the time of obtaining the release of an arrestee on bail or immediately thereafter, deliver to such arrestee or, if the negotiations concerning the bail were not with the arrestee, to the principal person with whom such negotiations were had, a numbered document containing the following information:

  • If an undertaking of bail, the name of the surety insurer.
  • The name and address of the bail licensee
  • The name of the arrestee
  • The date of release of the arrestee
  • The date, time, and place of the arrestee’s required appearance.
  • The amount of bail
  • The offenses with which the arrestee is charged
  • The premium if an undertaking of bail, or the charge if a bail bond
  • An itemization of all actual expenses described in Section 2081 (c) and (d), supported by vouchers and receipts, or true copies thereof.
  • The total amount of all charges
  • The amount received on account
  • The unpaid balance, if any
  • A description of and receipt for any collateral received and a statement of any conditions relating thereto including a copy of any written agreement executed in connection therewith.

The bail bondsman is required to provide a document with each item listed above to either the arrestee, or the individual who secured bail for the arrestee. Most of the items are written right on the contract, but a key term is “the total amount of all charges.” When I first read § 2081, I saw the broad, umbrella-like terms that a bail agent could fit almost any type of expense under and then charge the defendant. It seemed that there were no checks on a bail agent. This subsection provides a slight check on the bail agent by requiring him or her to provide an itemization of the expenses mentioned above, and it must be supported with vouchers and receipts. While this doesn’t prevent a bail agent from classifying certain expenses as “actual, necessary, and reasonable,” it does require them to show proof, which ultimately is better than nothing.

10 CCR § 2083 is the only additional limit that is placed on bail bonds companies and what they can charge as an expense to defendants. Beyond this limitation, if the bail bonds company can show that an expense is “actual, necessary, and reasonable,” then they are in compliance with the regulations.

After analyzing these regulations, I have concluded that the bail companies are complying with the regulations set forth, at least in terms of what is put in the contracts. I was unable to find anything to show how these regulations are used in practice, so I analyzed them based on the exact language of the regulations. The regulations are phrased in a way to give bail agents extremely broad discretion in the expenses they can charge the defendant, who is bound to comply with the contract or risk being returned to custody. It seems quite unfair, but the bail companies will tell you that it is legal. My next post will look at any consumer protection laws that are in place in California to protect defendants from these unreasonable, yet legal charges, and also what, if any, states have taken certain measures to protect these individuals.

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