6-975

6-975. Bond or other security

A. Each licensed commercial mortgage banker shall deposit with the superintendent,
before doing business as a commercial mortgage banker, a bond executed by the licensee as
principal and a surety company authorized to do business in this state as surety. The
bond shall be conditioned on the licensee's faithful compliance, including the directors,
officers, members, partners, trustees and employees, with this article. Only one bond is
required for any person, firm, association or corporation regardless of the number of
officers, directors, members, partners or trustees who are employed by or are members of
the firm, association or corporation.

B. The bond is payable to any person who is injured by the wrongful act, default,
fraud or misrepresentation of the licensee or the licensee's employees and to this state
for the benefit of the person injured. No suit may be commenced on the bond after the
expiration of one year following the commission of the act on which the suit is based,
except that claims for fraud or mistake are limited to the limitation period prescribed
in section 12-543, paragraph 3. If an injured person commences an action for a judgment
to collect on the bond, the injured person shall notify the superintendent of the action
in writing when the action is commenced and shall provide copies of all documents
relating to the action to the superintendent on request.

C. The bond required by this section is twenty-five thousand dollars for licensees
whose investors are limited solely to institutional investors and one hundred thousand
dollars for licensees whose investors include any other investors.

D. Notwithstanding section 35-155, in lieu of the bond described in this section,
an applicant for a license or a licensee may deposit with the superintendent a deposit in
the form of cash or alternatives to cash in the same amount as the bond required under
subsection C of this section. The superintendent may accept any of the following as an
alternative to cash:

1. Certificates of deposit, investment certificates or share accounts that are
payable or assigned to the state treasurer, issued by banks, savings banks or savings and
loan associations doing business in this state and fully insured by the federal deposit
insurance corporation or any successor institution.

2. Certificates of deposit, investment certificates or share accounts that are
payable or assigned to the state treasurer, issued by a credit union doing business in
this state and fully insured by the national credit union administration or any successor
institution.

E. The superintendent shall deposit the cash or alternatives to cash received under
this section with the state treasurer. The state treasurer shall hold the cash or
alternatives to cash in the name of this state to guarantee the faithful performance of
all legal obligations of the person required to post bond pursuant to this section. The
person is entitled to receive any accrued interest earned from the alternatives to
cash. The state treasurer may impose a fee to reimburse the state treasurer for
administrative expenses. The fee shall be paid by the applicant or licensee. The state
treasurer may prescribe rules relating to the terms and conditions of each type of
security provided by this section.

F. In addition to such other terms and conditions as the superintendent prescribes
by rule or order, the principal amount of the deposit shall be released only on written
authorization of the superintendent or on the order of a court of competent
jurisdiction. The principal amount of the deposit shall not be released before the
expiration of three years after the first to occur of any of the following:

1. The date of substitution of a bond for a cash alternative.

2. The surrender of the license.

3. The revocation of the license.

4. The expiration of the license.