TITLE 54

PROFESSIONS, VOCATIONS, AND BUSINESSES

CHAPTER 19

PUBLIC WORKS CONTRACTORS

54-1926A.  Use of government obligations instead of surety bonds. (a) If a person is required under a law of the state of Idaho to give a surety bond, the person may give a government obligation, as defined in subsection (2)(h) of section 54-1901, Idaho Code. The government obligation shall:

(1)  Be given to the official having authority to approve the surety bond, or its authorized custodian;

(2)  Be in an amount equal at fair market value to the penal sum of the required surety bond; and

(3)  Authorize the official receiving the obligation to collect or sell the obligation if the person defaults on a required condition.

(b)  (1) An official receiving a government obligation under subsection (a) of this section may deposit it with:

1.  The state treasurer;

2.  A national or state chartered bank; or

3.  A depository designated by the state treasurer.

(2)  The state treasurer, bank, or depository shall issue a safekeeping receipt that describes the obligation deposited.

(c)  Using a government obligation instead of a surety bond for security is the same as using:

(1)  A corporate surety bond;

(2)  A certified check;

(3)  A bank draft;

(4)  A post office money order; or

(5)  Cash.

(d)  When security is no longer required, a government obligation given instead of a surety bond shall be returned to the person giving the obligation. If a person supplying labor or material to a contractor defaulting under the public contracts bond act, sections 54-1925 through 54-1930, Idaho Code, files with the contracting body the application and affidavit provided under section 54-1927, Idaho Code, the contracting body:

(1)  May return to the contractor the government obligation given as security or proceeds of the government obligation given under the public contracts bond act, sections 54-1925 through 54-1930, Idaho Code, only after the ninety (90) day period for bringing a civil action under section 54-1927, Idaho Code;

(2)  Shall hold the government obligation or the proceeds subject to the order of the court having jurisdiction of the action if a civil action is brought in the ninety (90) day period.

(e)  The provisions of this section do not affect the:

(1)  Priority of a claim of the contracting body against a government obligation given under this section;

(2)  Right or remedy of the contracting body for default on an obligation provided under this section;

(3)  Authority of a court over a government obligation given as security in a civil action; and

(4)  Authority of an official of the state of Idaho authorized by another law to receive a government obligation as security.

(f)  To avoid frequent substitution of government obligations, the state treasurer may promulgate rules limiting the effect of the provisions of this section, to a government obligation maturing more than one (1) year after the date the obligation is given as security.

History:

[54-1926A, added 1986, ch. 67, sec. 3, p. 192; am. 1992, ch. 17, sec. 1, p. 50; am. 2005, ch. 213, sec. 32, p. 665.]