HAR §16-99-53.1. Alternative forms of school bond

(a) Where a surety bond required by sections 16-99-53 and 16-99-65 cannot reasonably be secured and the school owner has received three letters rejecting the owner's application for a surety bond, the commission, after a review of the reasons for rejection, may accept other alternative forms of security including but not limited to: (1) Submission of an executed agreement between the school owner and two other commission-approved registered real estate school owners guaranteeing that they will honor all students' contracts that were §16-99-53.1 99-32 signed or approved by the school owner should the owner be unable to complete the instructing of such courses because of the owner's death, disability, bankruptcy, or extended absence from the State beyond four months; and (2) Submission of one of the following: a certificate of deposit from a federally insured institution, in the amount equal to the required bond; a cashier's check from a federally insured institution, in the amount equal to the required bond; an irrevocable letter of credit on a form approved by the commission drawn upon a bank or savings and loan association, in the amount of the bond required; or any other alternative security approved by the commission for substitution of the bond. (b) Any certificate of deposit, cashier's check, irrevocable letter of credit, or other approved alternative security shall be issued from a federally insured institution located in this State, made payable to the commission or in the case of a letter of credit shall designate the commission as beneficiary for the benefit of any eligible person sustaining damage resulting from the school owner's failure to faithfully, promptly, and truly perform the instruction of any real estate courses contracted to teach. The commission shall retain possession of the security as prescribed by this section for a period of six years dating from the first day of the school's registration and dating subsequently each six years from the first day of the school's biennial registration renewal. In the event any of the alternatives to the surety bond earns interest while in the possession of the commission, the interest shall belong to the school's owner. At the expiration of the six-year holding period as calculated pursuant to this section, the commission shall release all alternative forms of school bonds in amounts remaining as security if no claims have been made against any amounts during the time the commission held the security and if the school owners, heirs, personal representatives, successors, or permitted assigns execute appropriate release forms indemnifying the commission and the State. (c) Cancellation of surety bond. A registered school that has been notified that the school's surety bond required by this subchapter has been canceled, shall not schedule any course offerings until such time that the school submits to the commission proof of a valid surety bond. [Eff and comp 11/3/90; comp 2/25/91; am and comp 5/21/01; am and comp 12/19/16] (Auth: HRS §§26-9(p), 467-4) (Imp: HRS §467-25.5)