Counter Replevin Bond

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Counter Replevin Bonds

If you are involved in a dispute over who owns a vehicle, inventory, or other property, you may learn about the process of “replevin” and how to file a replevin action. Although the specifics vary from place to place, the general nature of replevin actions is the same in most of the United States.

This legal proceeding begins when one person (the plaintiff) files a lawsuit to determine the rightful owner of a property (called a “complaint in replevin”). By filing a “replevin bond” with the court, the plaintiff obtains the right to take possession of the disputed property while the case proceeds.

For Example

A wholesaler sells a restaurant 20 tables, with partial payments to be made over six months. After completing all but one of the payments, the restaurant stops paying. The wholesaler files a complaint for replevin and obtains a bond allowing it to take back the tables.

The restaurant counterclaims that they should have some ownership interest based on their partial payment. While the case is pending, the restaurant would prefer to keep the tables to continue to do business.

Get Your Counter Replevin Bond:

Quick Takeaways

  • A defendant in a replevin action can ask the court to allow them to retain possession of the disputed property during the litigation to determine its rightful owner.
  • If the court agrees, it will order the defendant to obtain a counter replevin bond.
  • The defendant keeps the property during litigation, but the bond protects the plaintiff’s potential interest.

What is a counter replevin bond?

Counter Replevin Bond Definition: A bond obtained by a defendant in a replevin action that protects the value of the disputed property

A counter replevin bond allows the defendant in a replevin case to retain possession of the property in dispute. It guarantees that the property will still be valuable if the plaintiff ultimately wins.

In the above example, if the court allows, the restaurant could obtain a counter replevin bond. It could then continue using the tables while the court decides the replevin action.

A counter replevin bond helps ensure that the defendant will not destroy, sell, or otherwise reduce the disputed property’s value while the lawsuit is underway. It also protects a plaintiff if the property’s value depreciates naturally (like a car, for example) while the replevin action progresses.

Who needs a counter replevin bond?

Counter replevin bonds are helpful in replevin actions where the disputed property is useful to the defendant, as in the previous example. A defendant who wishes to retain possession, control, and use of the disputed property during a replevin action must ask the court to allow them to do so. If a court permits this, it will order the defendant to obtain a counter replevin bond and direct the required bond amount.

If someone files a complaint for replevin against you and you wish to retain (or regain) possession of the property while the lawsuit proceeds, you will need a counter replevin bond.

How do counter replevin bonds work?

If the court allows and orders a counter replevin bond, the defendant keeps the disputed property, obtains the appropriate bond, and files the bond with the court. The parties exchange evidence and eventually conduct a trial before a judge. The court determines the rightful ownership of the property and issues a judgment for replevin. If the court finds in favor of the defendant, the defendant keeps the property per the terms of the order.

However, if the court finds in favor of the plaintiff, the plaintiff will reclaim the property along with any court-ordered damages, fees, and costs. If the defendant refuses to return the property, or if it has lost value while it was in the defendant’s possession, the plaintiff will make a claim on the bond with its issuer (the surety company) for compensation. The surety will then recover the amount it paid the plaintiff, plus fees, interest, and other costs, from the bondholder (the defendant).

Another Example

In the previous example, imagine the court finds in favor of the wholesaler and orders the return of the tables. The restaurant agrees to do so but refuses to pay any costs associated with returning the property as ordered by the court.

When it recovers the tables, the wholesaler determines that they have been damaged during the nine months the case was ongoing. They’re now only worth half of their original value. After appealing to the defendant for compensation, the wholesaler files a claim on the counter replevin bond.

Generally, counter replevin bonds are issued for 1.5 times the value of the property in dispute. This is to ensure the bonds protect the total value of the property at the time of the bond and provide for other fees, costs, or losses associated with the plaintiff being deprived of and ultimately regaining possession of the property.

Because of the risk involved, surety companies often require that a defendant put up collateral for the full amount of a counter replevin bond. Bonds that are fully collateralized usually have premium costs of 1-2% of the bond’s total value. For bonds with less than full collateral or no collateral, premiums can be closer to 5%. The rate will vary depending on the creditworthiness of the person obtaining the bond (the principal).

Most counter replevin bonds are written for one year, although they can be renewed if the litigation is not resolved. Premiums are usually paid annually.

Along with the standard bond application, counter replevin bond applicants must provide a copy of the complaint in replevin and the court order requiring the counter replevin bond. Applicants will undergo a credit check and may be required to provide additional financial information. Counter replevin bonds often require collateral.

How to Get a Counter Replevin Bond in Your State

If you have been served with a replevin action, ZipBonds can help you find the right court or probate bond for your situation. ZipBonds offers the fastest and most secure option for getting bonded. Our all-digital platform is intuitive and straightforward. Apply online or call us at 888-435-4191 to speak with an agent directly.



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