House Journal: Page 1342: Monday, April 23, 2001
27 the extent expressly agreed to in writing by the
28 surety, the surety's liability extends to each such
29 agreement subject to this chapter executed prior to
30 the time the bond was in force and until performance
31 or recision of the agreement. A purchaser aggrieved
32 by a breach of a condition of the bond covering the
33 purchaser's agreement may maintain an action against
34 the bond. If, at the time of the breach, the
35 purchaser is aware of the purchaser's rights under the
36 bond and how to file a claim against the bond, the
37 surety shall not be liable for any breach of condition
38 unless the surety receives notice of a claim within
39 sixty days following discovery of the acts, omissions,
40 or conditions constituting the breach of condition,
41 except as otherwise provided in this section. A
42 surety bond shall not be canceled by a surety except
43 upon a written notice of cancellation given by the
44 surety to the commissioner by restricted certified
45 mail, and not prior to the expiration of sixty days
46 after receipt of the notice by the commissioner. The
47 surety's liability shall extend to each purchase
48 agreement subject to this chapter executed prior to
49 cancellation of the surety bond until the seller has
50 complied with section 3.
Page 22
1 2. If a seller becomes insolvent or otherwise
2 ceases to engage in business prior to or within sixty
3 days after cancellation of a bond, the seller shall be
4 deemed to have breached the bond conditions for
5 outstanding agreements under this chapter as of the
6 day prior to cancellation of the bond. The
7 commissioner shall mail written notice by restricted
8 certified mail to the purchaser under each outstanding
9 purchase agreement of the seller that a claim against
10 the bond must be filed with the surety company within
11 sixty days after the mailing date of the notice. The
12 surety shall cease to be liable for all purchase
13 agreements except those for which claims are filed
14 with the surety company within sixty days after the
15 date the commissioner mails the notices.
16 3. If a surety bond is canceled by a surety under
17 any conditions other than those specified in
18 subsection 2, the seller shall comply with all of the
19 following:
20 a. The seller shall comply with the trust
21 requirements of section 523A.201 for all purchase
22 agreements subject to this chapter executed on or
23 after the effective date of cancellation of the surety
24 bond. In the alternative, the seller may submit a
25 substitute surety bond meeting the requirements of
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League of Women Voters of Iowa
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