576.040 - Bonds and other security; penalty for selling or encumbering security for bond.
576.040 Bonds and other security; penalty for selling or encumbering security for bond.
1. Each applicant to whom a license to act as a dealer, broker or commission merchant is issued shall:
(a) File one of the following:
(1) A bond of a surety company authorized to do business in this state.
(2) A bond with individual sureties owning unencumbered real property within this state subject to execution and worth, above all exemptions, double the amount of the bond.
(3) A personal bond secured by a first deed of trust on real property within this state which is subject to execution and worth, above all exemptions, double the amount of the bond. If the applicant files the bond with the Department, the applicant shall also file a policy of title insurance on the real property from a title insurance company licensed in this state which states that the property is free and clear of all encumbrances and liens other than the first deed of trust. The applicant shall certify under oath that the property is worth at least twice the amount of the bond and that it is unencumbered. The certificate must be approved by the Department.
Ê The bond must be in the form prescribed by, and to the satisfaction of, the Department, conditioned for the payment of a judgment against the applicant and arising out of the failure of the applicant or the applicant’s agent to conduct the applicant’s business in accordance with the provisions of this chapter, or for nonpayment of obligations in connection with the purchase and sale of livestock or farm products. The bond must provide that the surety company, if any, will notify the Department before the end of the second business day after any claim or judgment has been made against the bond. The aggregate liability of any surety to all claimants is limited to the amount of the bond for each licensing period.
(b) File a copy of the bond required by the United States pursuant to the provisions of the Packers and Stockyards Act, 7 U.S.C. § 204.
(c) Furnish other security in the amount required by this section which is acceptable to the Department.
2. In lieu of complying with one of the alternatives provided in subsection 1, the dealer, broker or commission merchant may deliver to the Department the receipt of a bank, credit union or trust company in this state showing the deposit with that bank, credit union or trust company of cash or of securities endorsed in blank by the owner thereof and of a market value equal at least to the required principal amount of the bond. The cash or securities must be deposited in escrow under an agreement conditioned as in the case of a bond. Any receipt must be accompanied by evidence that there are no unsatisfied judgments against the dealer, broker or commission merchant of record in the county in which he or she is doing business or resides. An action for recovery against any such deposit may be brought in the same manner as in the case of an action for recovery on a bond filed under the provisions of NRS 576.042.
3. The amount of the bond, other security or deposit must be:
(a) Based on the applicant’s annual volume of purchases, according to a schedule adopted by the Department; and
(b) Not less than $5,000 or more than $100,000.
4. All bonds must be renewed or continued in accordance with regulations adopted by the Department.
5. Any licensed dealer, broker or commission merchant who knowingly sells or otherwise encumbers real property which is the security for a bond under subsection 1, after a policy of title insurance on that property has been issued and while the bond is in force, is guilty of a gross misdemeanor.
(Added to NRS by 1959, 557; A 1960, 416; 1961, 558; 1963, 389; 1965, 390; 1967, 1197; 1971, 334; 1973, 414; 1981, 599; 1985, 486; 1993, 1766; 1999, 1515, 3705; 2001, 91)