The questions below recur from California private lender-investors on the Reg 2834 fidelity bond framework against a broker trust account. Each answer runs against the Cal Code Regs Title 10 §2834 framework and the broker’s trust-fund discipline under §10145.

Does the broker need a fidelity bond on a single-lender private loan?

The fidelity bond runs against the broker’s unlicensed-signatory framework on the trust account — not against the loan structure. A broker who runs a single-lender private loan against a borrower runs the trust account through the broker’s standard signatory framework. The broker runs the fidelity bond on any unlicensed signatory authorized on the trust account, regardless of whether the broker runs single-lender or multi-lender loan structures.

Can the lender-investor request proof of the broker’s fidelity bond?

The lender-investor runs a request against the broker on proof of fidelity bond coverage as part of the lender-investor diligence on the broker. The broker runs the certificate of insurance against the request and runs the policy declaration page on the bond limit, the policy term, the per-employee sublimit, and the discovery period. A broker who runs the fidelity bond as a standard recordkeeping item runs the proof against the lender-investor diligence on a same-cycle response.

Does the broker-officer carry the fidelity bond personally?

The fidelity bond runs against the broker as the named insured — the broker license entity, not the broker-officer individually. A corporate broker runs the fidelity bond against the corporate broker license. A sole-proprietor broker runs the fidelity bond against the sole-proprietor broker. The broker-officer runs as a sanctioned signatory under Reg 2834 without a personal fidelity bond against the broker.

What runs as a covered employee on a fidelity bond?

A fidelity bond runs the covered employee definition against the policy declaration. The standard definition runs against employees on the broker’s payroll, independent contractors specifically named on the policy, and temporary staff working under the broker’s direct supervision. The broker runs the unlicensed signatory against the covered employee framework on the policy and runs the per-employee sublimit against the signatory’s access ceiling.

Does the fidelity bond cover third-party theft?

A fidelity bond runs the covered event on employee dishonesty — theft, embezzlement, forgery, fraudulent disbursement, and computer fraud by the broker’s employees. The bond does not run third-party theft against the broker’s trust account. The broker runs commercial crime insurance against third-party theft, robbery, and burglary as a separate product or as a rider on a commercial crime policy that runs the fidelity bond as one coverage section.

Does the §10238 framework run a fidelity bond requirement?

The §10238 multi-lender framework runs the broker against the lender-investor disclosure, the trust-account reconciliation, the RE 860 notice, the broker-officer signatory framework, and the trust-fund framework under §10145 and Reg 2831.2. The §10238 framework runs the broker’s trust account against the Reg 2834 signatory framework, and the fidelity bond requirement runs against any unlicensed signatory on the §10238 trust account. The fidelity bond runs at the access ceiling on the unlicensed signatory against the §10238 trust account balance.

How does the broker run the bond against a third-party servicer?

A broker who engages a third-party servicer on the broker’s trust account runs the trust account under the servicer’s framework and runs the servicer’s fidelity bond, E&O, and cyber liability against the servicer’s framework. The broker requests the servicer’s certificate of insurance on the engagement, runs the diligence against the servicer’s SOC 1 Type II or SOC 2 Type II audit report, and runs the broker’s audit-record framework against the servicer’s compliance file. The broker’s own fidelity bond runs against the broker’s direct-staff signatory framework — the engagement of a third-party servicer does not eliminate the broker’s direct bond requirement against unlicensed staff who run trust-account access.

Does a fidelity bond claim trigger a DRE audit?

A fidelity bond claim runs against the carrier on the broker’s covered loss and does not run an automatic DRE audit trigger. The broker runs a self-report against the DRE on the trust-account discrepancy and the corrective-action framework. The self-report runs the DRE audit cycle against the broker’s discipline rather than against an adversarial enforcement framework. The DRE runs the fidelity bond claim payment and the lender-investor restoration into the broker’s corrective-action record.

Related Topics

This article is educational and does not constitute legal advice. The Reg 2834 fidelity bond framework runs under the California Department of Real Estate trust-fund framework — Cal Code Regs Title 10 §§2830–2835 and California Business and Professions Code §10145 — and the overlay frameworks under §10238 multi-lender loans and §10232.4 threshold-broker reporting. Consult qualified legal counsel and a qualified insurance broker on the specific bond coverage and signatory authorization that apply to any California broker portfolio.

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