what is a surety bond and how does it work? Is the cost of the bond refundable?

Question

my father passed, co. wants $288 to transfer stock to moms name

Answer 1

A surety is when a guarantor or a sum of money is held as a guarantee for a loan in good faith.

It is similar to a deposit on a loan or contract.

A surety bond is a contract among at least three parties: (i) the principal, (ii) the obligee, and (iii) the surety. Through this agreement, the surety agrees to make the obligee whole (usually by payment of money) if the principal defaults in its performance of its promise to the obligee. The contract is formed so as to induce the obligee to contract with the principal, i.e., to demonstrate the credibility of the principal.

Answer 2

A surety bond is a 3 party agreement involving the Principal (Obligor), Obligee (Owner) and Surety.
There a 3 general types of surety bonds - Contract Bonds, Commercial Bonds, Court Bonds.
For contract bonds, the Principal is frequently a construction contractor and the obligee is usually a government entity or municipality. These are typically used for construction contracts with the government. If the contractor defaults, the government has a recourse so that public funds are not lost/wasted.
For commercial bonds, the Principal is usually a business and the Obligee is usually the government agency/authority respective to the type of bond. Example sales tax and use bond guarantee a business will collect the appropriate taxes and remit them the proper government agency.
For court bonds, the Principal can be either the plantiff or defendant, and the Obligee is usually the court or other respective government authority.
Surety bonds are commonly used for the protection of public funds, as outlined above. Surety bonds are also used for the protection of private funds, such as a bank requiring bonds for a financed construction project.
Surety bonds are a guarantee that the contract (or laws) will be followed and completed. In event of default, the surety may be held liable for the completion of the contract (or payment of fine) on behalf of the principal to the obligee. A surety is frequently a division of a large insurance company. The surety has financial strength to pay potentially large claims, where a private company might not have enough resources to pay a large loss.

The cost of the bond is called a "premium" and is usually a percentage of the bond amount. Commonly the premium is 1% to 3%. Principals that are deemed a higher risk might see premiums 3% - 5% or more.
Contract and court bonds are usually a one time premium while commercial bonds usually renew premium for each year they are active.