General Terms and Conditions
Vermont
Section One -Condition to the Effectiveness of Rent Protection
Notwithstanding anything to the contrary elsewhere in these General Terms and Conditions, or in the Bond issued by the Surety, no lease or other agreement will be a Bonded Lease under the Bond, no losses or other damages will be Covered Losses and no Landlord shall be entitled to the payment of any payments or other compensation under the Bond unless and until the Agent has issued a surety bond for such Bonded Lease on behalf of the Surety, and has obtained an executed General Agreement of Indemnity from the Tenant.
Section Two - Bond Term
A. Term
The term of the Bond shall be that stated on the first page of the Bond. For Rent Coverage, a new bond may be issued by the Surety upon expiration of the existing bond. The Deposit Coverage remains in effect for as long as the Tenant resides in the same property managed, owned or operated by the Landlord.
The Surety or Agent shall not be responsible for payment of any part of the Premium which would otherwise constitute a rebate.
B. Penal Sum
The penal sum of the Bond shall be no more than the maximum amount allowable by local and federal legislation and official guidelines.
C. Holdover after Expiration or Termination of Bonded Lease
If a Tenant or Occupant Holds Over in the apartment, then an additional period of time will be added to the Bond Term, not to exceed the earlier to occur of (i) the date on which vacant possession of the apartment is delivered to the Landlord and (ii) the date which is two (2) months after the expiration date or the date of the earlier termination of the Bonded Lease, as applicable.
D. Modification of Bonded Lease
The amendment or modification of a Bonded Lease in any immaterial respect, such as a change in payment schedule (such as entering into a payment plan with the Tenant), lease date, occupant or sublet, does not exclude the Landlord from coverage under the Bond if the Landlord notifies the Surety in writing within ten (10) Business Days of such change.
The subletting of all or any portion of the apartment under the Bonded Lease does not exclude the Landlord from coverage under the Bond, if (i) the original Tenant under the Bonded Lease remains the responsible party, and (ii) the sublet shows similar financial and credit qualification (per the Landlord’s discretion) as the Tenant. The Landlord shall notify the Surety in writing within ten (10) Business Days of such change. A sublease that complies with the requirements set forth above shall not exclude the Landlord from coverage.
The amendment or modification of leaseholder(s) (such as a lease transfer, lease change or lease assignment) or apartment rent is a material change to the Bonded lease. Landlord must notify the Surety in writing within ten (10) Business Days of such change and if the Surety, in its discretion, consents to such change, shall re-underwrite the Bond, amend or modify the Bond and adjust the Premium accordingly.
Section Three - Obligations of Landlord Upon Event of Default
A. Required Actions
If an Event of Default occurs under the Bonded Lease which gives rise to a Rent Protection Event, then no later than 45 days or an otherwise agreed upon amount of time after the date on which such Event of Default occurred, the Landlord shall either:
commence a standard rent collection process, including but not limited to negotiations with the Tenant to enter into a payment plan,
if the Tenant fails to submit rent payment so the Event of Default no longer stands within a short and reasonable timeline, commence negotiations with the Tenant to surrender possession of the apartment and take possession of the apartment when it becomes vacant, or
if the Tenant is not willing to surrender possession of the apartment within a short and reasonable time, commence an Eviction Proceeding or bring a Monetary Claim against the Tenant under such Bonded Lease.
If the Tenant applies for rental assistance through a third party, such as through the Landlord, a government agency, or a non-profit organization, and a Landlord submission or action is required in order to complete the application for consideration, then the Landlord must timely complete and submit the Landlord’s portion of the application and timely take any required action. If any rental assistance programs are available to the Landlord, the Landlord must apply for any such available funding, and if any funding is received, the Landlord must apply it against the Tenant’s balance remaining due and owing.
Upon request, the Landlord will promptly furnish the Surety with copies of:
a complete and accurate description of an Event of Default and a Rent Protection Event giving rise to a Covered Loss that has occurred under the Bonded Lease, per the Surety’s online claim submission process,
an itemized ledger or account statement detailing the charges, payments, and non-payments by the Tenant under the Bonded Lease,
all notices, pleadings, and papers served, filed or otherwise required in connection with such Eviction Proceeding or Monetary Claim, and any other relevant documents,
any judgment of possession or stipulation of settlement obtained, or the statement by the Landlord and associated evidence that the apartment has been abandoned by the Tenant, in respect of such Event of Default,
any money judgment obtained in respect of such Event of Default,
(documentation evidencing the basis for and the manner in which the Security Deposit was applied,
evidence, documentation, or photographs of the state of the apartment when the Tenant vacated or invoices for repairs as support for the repair costs of the apartment, and
any other documents reasonably requested by the Surety with respect to such Event of Default.
B. Failure To Comply With Requirements
Failure by the Landlord to comply with each of the foregoing requirements with respect of an Event of Default under a Bonded Lease will give the Surety the right, in its sole and absolute discretion, to deny some or all of the claim for payment of any losses arising out of such Event of Default.
Section Four - Payment of Claim
A. Loss Reimbursement Payments
If an Event of Default which gives rise to a Rent Protection Event occurs with respect to the Bonded Lease during the Bond Term, then the Landlord must timely submit claim documentation with a complete and accurate description of an Event of Default and a Rent Protection Event giving rise to a Covered Loss that has occurred under the Bonded Lease. Provided that the Landlord has also otherwise performed all of its material obligations under this Bond, and materially satisfied all of the terms and conditions of the Bond, then the Surety and its Agent shall review the claim within two (2) Business Days and commence the adjustment process. The Surety shall make payment to the Landlord within two (2) Business Days after the claim adjustment by the Surety and its Agent is complete.
B. Subsequent Loss Reimbursement Payments
After a Loss Payment has been made under Section 4A, the Landlord may submit supplemental claim documentation to the Surety for each subsequent Covered Loss. Each such supplemental claim documentation must be submitted within a reasonable time after such Covered Loss occurs and a final claim must be submitted no later than 60 days after the date of the last incurred loss that is eligible for coverage under the Bond. Provided that the Landlord has also otherwise performed all of its material obligations under this Bond, and materially satisfied all of the conditions in this Bond, then the Surety and its Agent will review the claim within two (2) Business Days and commence the adjustment process. The Surety and its Agent shall make payment to the Landlord within two (2) Business Days after the claim adjustment by Surety and its Agent is complete.
Section Five – Determination of Landlord Losses
In all cases, Covered Loss(es) shall not exceed the penal sum of the Bond.
A. Deposit Coverage Covered Loss
Deposit Coverage Covered Loss may include any amounts owed by the Tenant that would be covered by a Security Deposit, compliant with the law and the Bonded Lease, up to the amount of Deposit Coverage specified on the Bond. This includes but is not limited to apartment repair costs, reasonable legal and attorney’s fees, utility costs, reimbursement of Rent Credits or free rent.
The following fees are excluded from Deposit Coverage: any punitive charges and fees in connection with lease termination, lease break, abandonment, or surrender that are not concurrent with a Lease Termination Agreement between Landlord and Tenant.
B. Rent Coverage Covered Loss
The amount of Rent Coverage Covered Loss will be determined by the Surety upon receipt of the claim documentation detailing the applicable Event of Default, in an amount equal to the accrued amount of Fixed Rent due that is unpaid for under such Bonded Lease as of such date.
Additionally, Covered Loss includes the loss suffered by the Landlord as the result of the apartment being vacant through the earlier of the expiration date of the Bonded Lease or the Bond.
Alternatively, the Landlord can opt to receive a Lease Termination Fee or accelerated rent for up to two (2) months of Fixed Rent. The payment of such Lease Termination Fee shall constitute the termination of the Bond, and Surety will be released from additional liability after such payment of the Lease Termination Fee.
Notwithstanding the Landlord’s actual application thereof, subject to Applicable Law, a Security Deposit shall be applied to Landlord’s reasonable costs, fees and expenses suffered or incurred that are compliant with the Bonded Lease and the local law, with the exception of any punitive charges and fees in connection with lease termination, lease break, abandonment, or surrender that are not concurrent with a Lease Termination Agreement between Landlord and Tenant. If there is any remaining Security Deposit after such application, the remaining Security Deposit will be applied to the Covered Loss of Rent Coverage.
In the event the Tenant has declined to take possession of the apartment or has not taken possession of the apartment fifteen (15) days after the commencement of the Bonded Lease, the Landlord will receive a maximum of two (2) months of Fixed Rent.
Section Six - Exclusions from Coverage under the Bond
A. Exclusions
Notwithstanding any other provision of this Agreement, Bond or otherwise, the Surety will not be liable under any conditions for any and all losses, damages and expenses (including, but not limited to, attorneys' fees and expenses administrative fees, management fees, fines and penalties) suffered or incurred by the Landlord caused by, or arising from, or in connection directly or indirectly with any of the following:
a constructive eviction of the Tenant from all or any portion of the apartment (per the definition of the Bonded Lease or by Applicable Law),
the Tenant’s inability to occupy the apartment and/or termination of the Bonded Lease as the result of fire, flood or other casualty,
the Landlord’s absence of compliance with Applicable Law, as determined by the local judiciary or government agency, or with any of its obligations under such Bonded Lease,
the Landlord’s breach of any of its material obligations under this Bond,
a claim made against the Landlord by a third-party,
the Landlord has caused or colluded a Tenant’s Event of Default or to create a Loss,
any claim documentation or other request for a Loss Payment submitted by the Landlord is materially false or misleading, and/or fraudulent, and
acts of terrorism or foreign enemies, and/or armed conflict.
The Surety shall not be held liable to, or in any other respect be responsible to, the Landlord by way of indemnity, claims or otherwise, or to any public authority or to any other person, firm or corporation, for or on account of any fines or claims by any public authority or for bodily injuries or property damage to any person or thing, including, but not limited to, injury or damage due to the release or threat of release of hazardous substances of any kind or damage to real estate or to the environment or clean-up costs or other damages of whatever kind or nature arising out of any act of commission or omission by the Principal, the Principal's agents, servants, employees, subcontractors or suppliers or any other person in connection with the performance of the Agreement. This limitation applies regardless of when any such fine is assessed, claim is made, or injury, damage, release or threat of release occurs and without regard to any term or condition of the Agreement.
Notwithstanding any other provision of this Agreement, or otherwise, the Surety is not responsible for and shall not be held liable to the Landlord for any hazardous waste removal and the Surety shall not be held liable to, or in any other respect be responsible to, the Landlord by way of indemnity, claims or otherwise, or to any public authority or to any other person, firm or corporation, for or on account of any fines or claims by any public authority or for bodily injuries or property damage to any person or thing, including, but not limited to, injury or damage due to the release or threat of release of hazardous substances of any kind or damage to real estate or to the environment or clean-up costs or other damages of whatever kind or nature arising out of any act of commission or omission by the Principal, the Principal's agents, servants, employees, subcontractors or suppliers or any other person in connection with the performance of the Agreement. This limitation applies regardless of when any such fine is assessed, claim is made, or injury, damage, release or threat of release occurs and without regard to any term or condition of the Agreement.
Section Seven - Mitigation of Damages
Promptly after an Event of Default on a Bonded Lease, the Landlord shall use commercially reasonable efforts to find a new qualified tenant for the apartment and enter into a new lease thereto, as soon as practicable. If the apartment is rented for less than the full rental amount the Surety will pay the difference, excluding any free rent and/or other inducements. For the avoidance of doubt, such a new lease shall not be a Bonded Lease or be entitled to coverage from the Surety unless a new Bond is specifically issued to the Landlord with the new Tenant as Principal and the new lease as the Bonded Lease.
In the event an apartment has been vacant for more than 30 days, the Surety may present to the Landlord a reasonably qualified tenant to enter into a new lease. Reasonable will be based upon the standard approval guidelines the Landlord adheres to including using a surety bond. If the Landlord unreasonably refuses to enter a new lease with such tenant, the Surety shall have no obligation to pay for any losses that arise 30 days (or more) from the date the tenant was presented to the Landlord.
Section Eight - Rights of Surety Following Loss Payment
A. Rights and Remedies
Following any Loss Payment, and without the necessity of any action by the Landlord or otherwise, the Surety shall be subrogated to the Landlord's rights and remedies to collect and recover all Covered Losses to the extent such Loss Payment was made.
If any claim documentation contains any representation or other statement that is fraudulent, materially inaccurate or materially misleading, then in addition to its rights and remedies hereunder or available under Applicable Law, the Surety will have the right to seek reimbursement from the Landlord for any and all amounts paid in respect of such claim documentation.
B. Assignment of Rights to Payment and Collection
The Landlord hereby presently, absolutely and irrevocably assigns to the Surety all of the Landlord's rights and remedies to collect and recover all Covered Losses in respect of which such Loss Payment was made by the Surety to the Landlord.
Section Nine - Defense of Claims
In the event of any claims brought or actions commenced against the Landlord, whether by a Tenant or other Occupant or a third-party, the Surety shall have no obligations or liabilities with respect thereto and shall not be required to defend, participate in or contribute to the cost of any such claims or actions (or any judgments or settlements with respect thereto).
Section Ten - Covenant Against Discrimination
No person shall be precluded from applying for or obtaining a surety bond or denied the potential benefits of a surety bond or otherwise be subjected to discrimination by the Landlord or the Surety in connection herewith for any reason prohibited by Applicable Law.
Section Eleven - Suits, Actions and Proceedings
Any legal suit, action or proceeding arising out of or relating to the Bond shall be instituted in any Federal or State court sitting in the State of New York and the Parties hereto waive any objections which they may now or hereafter have based on venue and/or forum non conveniens of any such suit, action or proceeding, and the Parties hereby irrevocably submit to the jurisdiction of any such court in any suit, action or proceeding.
In the event of a dispute between the insurer and the claimant, the Parties may retain and use a third-party appraisal service, at the expense of the claimant.
Any suit under the Bond must be instituted before the expiration of one (1) year from the date on which the Principal ceased to occupy the rental property or such time period as otherwise permitted by relevant statute. If the provisions of this paragraph are void or prohibited by law, the minimum period of limitation available to sureties as a defense in the jurisdiction of the suit shall be applicable.
No right of action shall accrue on the Bond to or for the use of any person or corporation other than the Landlord named herein or the heirs, executors, administrators or successors of the Landlord.
Section Twelve – ADDITIONAL TERMS
A. Construction and Descriptive Headings
Descriptive headings are for convenience only and shall not control or affect the meaning or construction of the provisions of the Bond or these General Terms and Conditions. The singular of any term, including any defined term, shall include the plural and the plural of any term shall include the singular.
B. Assignment
The Landlord may assign all or any portion of its rights under or with respect to the Bond with the prior written consent of the Surety.
C. Successors and Assigns; No Third-Party Beneficiaries
All of the terms and provisions of the Bond shall be binding upon and inure to the benefit of the Parties thereto and, their respective successors and assignees. The Bond is for the sole benefit of the Parties thereto and not for the benefit of any third party.
D. Severability
It is the desire and intent of the Parties hereto that the provisions of the Bond shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of the Bond shall be adjudicated to be invalid or unenforceable, such provision shall be deemed amended to delete therefrom the portion thus adjudicated to be invalid or unenforceable, such deletion to apply only with respect to the operation of such provision in the particular jurisdiction in which such adjudication is made.
E. Governing Law
The Bond, and the rights and obligations of the Parties thereto, shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to principles of conflicts of laws.
F. Waiver of Jury Trial
The Landlord, the Tenant and the Surety hereby waive trial by jury in any action, proceeding or counterclaim involving any matter whatsoever arising out of or in any way connected with the Bond.
G. Waivers; Rights and Remedies Cumulative
The failure of any party to pursue any remedy for breach, or to insist upon the strict performance, of any covenant or condition contained in the Bond shall not constitute a waiver thereof or of any other right with respect to any subsequent breach. Except as otherwise expressly set forth herein, rights and remedies under the Bond are cumulative, and the pursuit of any one right or remedy by any party shall not preclude, or constitute a waiver of, the right to pursue any or all other remedies. All rights and remedies provided under the Bond are in addition to any other rights the Parties may have by law, in equity or otherwise.
H. Amendments
The Bond cannot be amended without written consent of the Surety.
I. Execution and Delivery by electronic signature or Email
The execution and delivery of the Bond or any amendment hereto by electronic mail or electronic signature shall be deemed a valid and effective execution and delivery of such instrument and shall have the same effectiveness as the execution and delivery of an original instrument.
J. Notification of Modification to this Agreement
This Agreement and the Program Agreement apply to all Bonds issued by the Surety. The Surety will notify the Landlord if there is any material change within 30 Business Days of such change.
Section Thirteen - Definitions
As used in these Terms and Conditions, the terms below have the following meanings:
“Abandonment” means that
the Tenant and each other Occupant has not lived in the apartment for 30 consecutive calendar days, unless the Tenant gives the Landlord written notice that such vacancy is temporary and the Tenant (or subtenant or permitted roommate) intends to return to the apartment and resume occupancy thereof within a reasonable period of time,
all or substantially all of the property and possessions of the Tenant and each other Occupant have been removed from the apartment,
the Tenant expressed to the Landlord or the Landlord's agent Tenant’s intent to cease its occupancy of and residency in the apartment, whether orally or in writing, including by returning the keys to the apartment to the Landlord or the Landlord's agent,
(any other action by the Tenant which, in the Surety's sole judgment, indicates that the Tenant no longer claims or retains any interest in the apartment, or
any other condition that constitutes an “abandonment” as defined in or otherwise under the terms of the Bonded Lease.
“Agent” means the entity authorized to issue the Bond on behalf of the Surety.
“Applicable Law” means any applicable law, statute, code, regulation, ordinance, or rule of any governmental authority.
“Bond” means the insurance policy(s) issued by the Surety.
“Bonded Lease” means that lease or other agreement in writing between the Landlord and the Tenant for the use and occupancy of the apartment indicated in the Bond with respect to such lease or other agreement that
outlines equal monthly payments of Fixed Rent, and,
the form of lease for the apartment to be rented by the prospective tenant is on the same form of lease that the Landlord uses for tenants for whom the Landlord does not require a surety bond.
“Bond Term” means the time period of Bond is in effect.
“Business Day” shall mean any other day than a Saturday, Sunday, or a day which is a New York State, United States Federal or statutory holiday for which financial institutions shall be closed.
“Claim” means a written request by the Landlord for a Loss Payment from the Surety under the Bond.
“Covered Loss” means a loss entitled to reimbursement under this Bond arising from a Rent Protection Event with respect to the Bonded Lease.
“Deposit Coverage” means the right of the Landlord after an Event of Default to claim reimbursement from the Surety for losses actually incurred by the Landlord for costs including, but not limited to, apartment repair costs, reasonable and attorney’s fees, utility costs, reimbursement of Rent Credits or free rent.
“Event of Default” means a “default” or “event of default” by the Tenant under the Bonded Lease (as defined in such Bonded Lease).
For the purposes of this Bond, the date of an Event of Default is the earlier of:
if the act or failure to act giving rise to such Event of Default occurs on a specific identifiable date, then such date, or
if the act or failure to act giving rise to such Event of Default does not occur on a specific identifiable date, then the later to occur of (i) the effective date of any notice of termination of the Bonded Lease or notice to quit or vacate the apartment, and (ii) the last day of any cure period as defined in the Bonded Lease to which the Tenant is entitled under the Bonded Lease.
For the avoidance of doubt, the date of an Event of Default due to the non-payment of rent shall be the first day after the expiration of any cure period as defined in the Bonded Lease for unpaid rent, whether or not the Tenant was notified of the missed payment.
“Eviction Proceeding” means a process under law commenced following an Event of Default under a Bonded Lease in exercise of the Landlord’s rights thereunder to terminate such Bonded Lease as well as the Tenant’s occupancy of the apartment thereunder that seeks the removal of the Tenant from the apartment and a Monetary Claim against the Tenant.
“Fixed Rent” means the fixed or base rent due each month under the Bonded Lease. Fixed Rent shall not mean any amount defined as “additional rent” or that is not otherwise required to be paid in equal monthly installments during the term of the Bonded Lease. Examples of amounts that are not Fixed Rent include, but are not limited to, legal fees and expenses, security deposits or other deposits, pass-through items, penalties, and service charges.
“Holds Over” means the tenant remains in occupancy or otherwise fails to deliver vacant possession of the apartment to the Landlord at the conclusion of the Bond Term.
“Landlord” means the landlord or lessor under a Bonded Lease, and any successor or assignee of the landlord or lessor.
“Lease Break” means:
illegal activity in or about an apartment,
the use of the apartment for a purpose that is not a permitted use under the Bonded Lease (such as using the apartment under Airbnb or other “apartment sharing” program),
an assignment or sublease of the apartment without the consent of the Landlord for profit or for an amount in excess of the amount permitted by Applicable Law,
any representation or other statement by the Tenant to the Landlord in a lease, rental application for the apartment or otherwise that is fraudulent, materially inaccurate or materially misleading.
“Lease Termination Agreement” means an agreement between Landlord and Tenant to dissolve the Bonded Lease.
“Lease Termination Fee” means a one-time fee paid to the Landlord as a condition in the Lease Termination Agreement."
“Loss Payment” means a payment made by the Surety to the Landlord for Covered Losses.
“Monetary Claim” means a legal proceeding that is limited solely to the recovery of money damages.
“Occupant” means a subtenant who has been approved by the Landlord in writing or a “roommate” permitted by Applicable Law without the Landlord’s consent.
“Premium” means the sum remitted by a Tenant to the Surety in exchange for the issuance of the Bond for such Tenant’s Bonded Lease per the terms of the General Agreement of Indemnity and the Bond with respect to such Bonded Lease.
“Principal” means the Tenant under the Bonded Lease.
“Rent Coverage” means the right of the Landlord following an Event of Default to claim reimbursement from the Surety for the rent loss and vacancy loss.
“Rent Credits” means each of the following:
an abatement of, credit against, or other deduction in the amount of the Fixed Rent due under a Bonded Lease, including “free rent” or other promotions or allowances, for any reason (including, but not limited to, an administrative or judicial order or an agreement in writing executed and delivered by the Landlord), and
any other amount set forth in Section 5 hereof.
“Rent Protection Event” means any of the following events:
the recovery by the Landlord of physical possession of the apartment under a Bonded Lease after an Event of Default by the Tenant thereunder, provided that possession of such apartment is the result of:
the issuance and entry by a court of competent jurisdiction of a final and unappealable judgment in an Eviction Proceeding awarding vacant possession of the apartment to the Landlord,
the entry with and approval of a court of competent jurisdiction of an unconditional stipulation of settlement under which the Tenant delivers vacant possession of the apartment to the Landlord, executed and delivered by the Tenant and the Landlord in connection with an Eviction Proceeding,
the execution and delivery of a Surrender Agreement prior to the commencement of an Eviction Proceeding,
Abandonment by the Tenants of the apartment, or
the issuance and entry by a court of competent jurisdiction of a final and unappealable judgment for money damages against the Tenant within twelve (12) months after the expiration date of the Bonded Lease arising from an Event of Default by the Tenant thereunder;
the renewal of a Bonded Lease where the Rent Coverage is not renewed or extended and the renewed Term of the Bonded Lease is not covered by the Surety Bond, and
the expiration of the Hold Over period, regardless of whether the Tenant has delivered vacant possession of the apartment to the Landlord.
“General Agreement of Indemnity” means an agreement between Tenant and Surety purchased from the Surety (through the Agent) by a Tenant for the benefit of a Landlord with respect to a Bonded Lease, executed and delivered by the Tenant setting forth the terms and conditions of the relationship between the Tenant and the Surety with respect to such Bond.
“Security Deposit” means collateral provided by (or on behalf of) the Tenant to secure its obligations under the Bonded Lease, including cash Security Deposit, promissory note, insurance or bond (other than the subject Bond).
“Surety” means the Insurance Company identified on the Bond and/or any direct or indirect subsidiaries, parent companies, and affiliates, whether in existence now or formed or acquired hereafter, co sureties, fronting companies, companies which any of them may procure, through Agent, to issue or deliver any Bonds for, on behalf of or at the request of any of the Indemnitors, and reinsurers, and the successors and assigns of each of them and any person or company joining with any of the aforesaid in executing or procuring any Bonds. Surety shall have the right to act by and through its Agent for any and all of its rights and obligations under the Bond.
“Surrender Agreement” means an agreement to deliver vacant possession of the apartment to the Landlord and/or liquidate any damages suffered by the Landlord arising from an Event of Default under such Bonded Lease. The Bonded Lease may or may not be terminated as a result of the surrender.
“Tenant” means the tenant(s) or lessee(s) of an apartment under a Bonded Lease.
Insurance Fraud Notice
Any person who knowingly presents a false statement in an application for insurance may be guilty of a criminal offense and subject to penalties under state law.