Why Is a Spouse's Signature Needed on a Surety Bond Application?
Completing a surety bond application is a daunting task given the amount of business and personal information you must provide. Some applications also require your spouse's signature -- even though your spouse might not have anything to do with operating your business. In general, a surety company sets its own policy for what is required to apply for a bond. A spouse’s signature is not a legal requirement. However, a surety company typically requires a spouse’s signature to give it maximum protection in the event it pays out a loss on the bond.
Surety bonds guarantee that you will comply with certain legal or contractual requirements. For example, a license bond guarantees a state agency that you will comply with the state's applicable licensing law. As a condition of issuing the bond, your surety company will require that you provide a personal indemnity that obligates you to repay the surety company for any losses it pays out on the bond. Such an indemnity applies to both your business and personal assets. Because the personal assets of a married business owner are typically owned jointly with a spouse, a surety company often requires the spouse’s signature on the application to make sure all personal assets are available for the indemnity. This also helps prevent a situation where a business owner transfers assets to a spouse to avoid paying on an indemnity.
If your business is located in a community property law state, such as Arizona or California, a surety company presumes that some portion, if not all, of your business and personal assets are subject to your spouse's community property rights. A basic principle of community property law is that all property acquired by you and your spouse during your marriage is community property. Even if you started your business prior to marriage, all income from the business and any expansion or increase in its value is community property. A surety company requires a spouse's signature in this situation to ensure that the spouse's community property rights do not interfere with its indemnity rights.
Although surety companies have sound business reasons for requiring a spouse's signature on a bond application, the surety company can forego this requirement. If you are unable or unwilling to provide your spouse's signature on the application, you should contact other surety companies and compare their bonding requirements. Not all surety companies make a spouse's signature on the application an absolute requirement.
To satisfy a bonding requirement, you are not necessarily limited to using a surety bond. In some situations, you can post a cash bond or pledge equity in real estate. For example, the Arizona Registrar of Contractors accepts cash bonds in lieu of a surety bond to satisfy the bonding requirement for issuing a contractor's license. In Jefferson County, Texas, a pledge of real estate to the county board is acceptable in lieu of a surety bond to obtain a bail bondsman license.