Investing in the real estate market has always been considered a safe, profitable and differentiated business opportunity. This is because it is possible to obtain great income from the value of rents.
Whether residential, commercial, subdivisions or land, the option of investing in real estate remains one of the most traditional. However, at the time of renting a property, the landlord must take a number of precautions such as, for example, the risk of default.
It is common that when renting a property, the tenant does not have a guarantor. But what is the alternative in these cases? It is possible to make a surety bond in the rental agreement.
But surety bond: how does it work? So that you can get to know him better, we prepared this post with the main doubts on the subject. Stay tuned and keep reading!
What is bail insurance?
The surety bond is a guarantee that replaces the figure of the guarantor guaranteeing the owner of the property (lessor) the receipt of the value of the rent and charges due and not paid by the tenant.
As a rule, the surety bond is contracted by the tenant and has the owner as insured of the property. Thus, the whole process of contractual approval of the property is streamlined.
It is worth noting that the surety bond has specific rules, being regulated mainly by the Tenancy Law, which defines and limits the lease guarantees.
Surety bond: how does it work?
The surety bond is an alternative that facilitates all the procedures of lease, however, in the case of default of the tenant, the same continues being responsible for the debt, and can be acted judicially by the insurer.
The insurer that paid the rent and the charges to the lessee (insured) must be reimbursed.
The surety bond can be used to lease commercial and residential real estate located exclusively in urban regions.
This form of guarantee has been increasingly practiced in the market due to its security, a reduction in value compared to what has been practiced previously and an easy way of payment (up to 11 times).
In practice it works like this: the tenant is responsible for contracting and paying the insurance with the insurer. In contrast, the lessor will be the insured and beneficiary of the insurance, that is, who is reimbursed in case of non-payment of the rent.
What are the advantages of surety insurance?
A surety bond can offer advantages to both the homeowner and the tenant, making this relationship more stable and beneficial to both. See some of these advantages.
Agility in the cadastre analysis
The careful analysis of large insurers is agile for analyzing only the lessee. This ensures agility in the analysis of registration and approval of the lease, reducing the time the property is vacated, generating unnecessary expenses with taxes and fees.
Possibility of installment of the surety bond
The surety bond is the less bureaucratic alternative and that punctuates the obligations of the renters, providing more tranquility and confidence to the owner of the property.
The lessee may resort to the payment of the surety bond, and may even opt for the payment of the insurance costs. This modality can be parceled in up to 11 times charged along with the rental ticket, which allows the lessor is already assured since the payment of the 1st installment.
Emergency repair services
Who chooses the coverage of the surety insurance plan is always the owner of the property, who usually chooses the form of surety to be made. Some repairs that may be included in the contract include damage to the property, exterior painting, fine for contractual termination, interior painting, light, water, among others.
In the case of emergency repair services on the property, the tenant may trigger the assistance of the insurer. Another great advantage is to have other very useful services available such as: water box cleaning, ceiling fan installation, electrician, plumber and others.
As with other types of insurance, in the case of surety insurance there is the possibility of progressive discounts at the time of renewal, and the owner of the property can benefit from granting of bonuses.
For example, the insurer was not triggered in the event of default, the owner may receive discounts on the insurance payment at the time of renewal.
Another possibility is the installment of the total amount, however, each insurer offers differentiated benefits that are in accordance with the needs of the renter and the tenant, and it is important to consult a specialized insurance broker to accurately tell you the best alternative.
In addition to the advantages mentioned above, the following stand out:
- product made in the right measure to facilitate the whole process of negotiation, replacing with advantage the guarantor;
- contracting for the term of the contract, with annual renewals;
- guarantees to the lessor the compensation for the damages that he will suffer as a result of the non-length of the lease of the lease agreement.
Advantages for real estate:
- possibility of new business for real estate;
- solution for clients with difficulty to obtain a guarantor;
- analysis of the cadastre by the insurer itself, which reduces costs and time;
- opportunity to offer a differentiated service to the clients, since it guarantees the receipt of the rents.
Advantages for lessor:
- lease guarantee until termination of the contract (successive renewals);
- guarantee of receipt of rent and charges in case of default;
- the costs of the judicial process are borne by the insurer, providing more economy and tranquility at the time of rental;
- professional accompaniment throughout the negotiation process.
What are the guarantees offered by the surety insurance?
The main function of the surety bond is to protect the owner of the property in case of default. In addition, the surety bond also offers the tenant some benefits that soften the amount invested during the rent as:
- possibility of renting a property without a guarantor;
- avoid disbursement of the security.
In basic coverage, the renter is compensated for the rent and fines, in the event that the tenant delays or does not pay. In addition, there are additional coverage, including:
- damage to property;
- piped gas;
- external painting and internal painting;
- condominium, among others.
Whoever chooses the type of coverage is always the owner of the property. It is important to stress that the choice of the type of insurance coverage must be rational, since it can increase the cost of insurance and make it difficult to rent the property.
When renting your property, have specialized help
The surety bond is an excellent option as the cost of the chosen coverage is within the budget and, even better, when there is the possibility of installment payment. But it all depends on the renter’s profile and the tenant’s needs.
It is also worth remembering that even with a surety bond, the process of renting a property can count on some risks and so having a good real estate consultant or a real estate agent of trust is fundamental in this process, bringing more security and tranquility to you.
Our material helped you better understand the surety bond: how does it work? Contact us and know our services!
For 40 years in the market, LAR Imóveis offers innovative solutions for buying, selling and renting real estate, always focusing on the best customer service and a relationship of credibility and mutual trust.