Surety Bond Encyclopedia

Yacht and Ship Broker ($15,000) Bond - Statewide in California

Brief Summary

California will not issue or renew a yacht and ship broker license until a $15,000 bond is on file. A surety bond meets that requirement for an annual premium instead of locking up $15,000 in a certificate of deposit or share account, which the Division of Boating and Waterways also accepts.

Harbors and Navigation Code section 730 requires every yacht and ship broker to file and maintain a $15,000 bond with the Department before a broker license is issued or renewed. The bond is conditioned that the broker will not practice fraud or deceit or make fraudulent or grossly negligent representations that cause a monetary loss. The amount is the same for every broker, and the Division of Boating and Waterways handles the license.

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How to Apply for a Yacht and Ship Broker ($15,000) Bond:

Meet one of the Division's experience qualifications and pass the written exam with a score of 70 percent or better.
Complete the Yacht and Ship Broker License Application with a current original 2 inch by 2 inch photograph.
Complete Live Scan fingerprinting if you are a new or out of state applicant.
Have the surety execute the $15,000 bond on the Division's Yacht and Ship Broker Surety Bond Form.
Submit the application, bond, $200 license fee and $25 exam fee together.
Keep the bond in force through every renewal.

Detailed Information About the California Yacht and Ship Broker ($15,000) Bond:

Who needs the bond

The Yacht and Ship Brokers Act, Harbors and Navigation Code section 700 and following, covers brokers who, for compensation, sell, buy or negotiate the sale of yachts they do not own. Under section 701 a yacht or ship is a vessel 16 feet or more in length and under 300 gross tons, designed to be propelled by machinery or sail.

Who falls outside the Act

Section 710 removes several people from the broker and salesperson definitions. They include an owner acting on a yacht it owns, a corporation acting on its own yacht through regular officers paid nothing extra for it, an attorney working as an attorney, a receiver or bankruptcy trustee or anyone acting under court order, a secured lender (or a licensed repossessor at its written request) liquidating a repossessed yacht, sales, leases or rentals of yachts over 300 gross tons, transactions involving a new yacht or ship, and a wholesale motor vehicle auction regulated by the DMV.

Claims reach through the salesperson to the broker's bond

Section 730 places the bond requirement on the applicant for a broker license. A person who suffers a loss through the fraud, deceit or negligent misrepresentation of the broker, or of sales personnel acting on the broker's behalf, can pursue the broker, the salesperson and the surety on the broker's bond.

Keeping the bond in place

After a recovery on the bond, the Department can require an additional bond, and the broker has 15 days after notice to file it. If a bond is cancelled for any other reason, the broker has 30 days after notice to file a new one. Missing either deadline exposes the license to suspension.

Fees and term

The Division of Boating and Waterways charges $200 for an original license and $25 for the written exam, which takes a score of at least 70 percent to pass. The first license runs one year and can then be renewed for one or two years.

Eligibility and Requirements for a California Yacht and Ship Broker ($15,000) Bond:

Bond amount of exactly $15,000, the same for every broker.
A corporate surety licensed to do business in California.
Bond conditioned against fraud, deceit and fraudulent or grossly negligent representations that cause a monetary loss.
Applicant at least 18 years old with an established California business address.
A certificate of deposit or share account may be posted in place of the surety bond.

California Yacht and Ship Broker ($15,000) Bond FAQs:

I am only selling my own boat. Am I a broker?

No. Section 710 excludes a person acting on a yacht that person owns. The license and bond apply to people who handle yachts they do not own for compensation.

Does the bond amount change with sales volume or the number of salespeople?

No. Section 730 sets a flat $15,000 for every broker license, both when it is issued and at each renewal.

Can a buyer claim against the bond over a salesperson's misrepresentation?

Yes. Section 730 lets a person who suffers a loss through sales personnel acting on the broker's behalf pursue the broker, the salesperson and the surety on the broker's bond.

What happens after a claim is paid?

The Department can require an additional bond. You have 15 days after notification to file it, or the license is subject to suspension.

Is cash collateral accepted instead of a bond?

Yes. The Division of Boating and Waterways accepts a certificate of deposit or share account in lieu of the surety bond. A bond keeps that $15,000 available to the business.