6-975 - Arizona Statutes

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.