An Act To Permit the Use of Surety Bonds in Lieu of Security Deposits
Maine Legislature, Session 123, LD 1651
Committee: Legal and Veterans Affairs
Sponsors: HASKELL, MARRACHE, HOLMAN, PATRICK, SA VIELLO, WAGNER, WEDDELL, PLOWMAN
Amends: 14 MRSA §6039

Legislative Document 
No. 1651 
H.P.1160 
House of Representatives, March 22, 2007 
An Act To Permit the Use of Surety Bonds in Lieu of Security 
Deposits 
Reference to the Committee on Legal and Veterans Affairs suggested and ordered printed. 
Presented by Representative HASKELL of Portland. 
Cosponsored by Senator MARRACHE of Kennebec and 
If/~ 
frl.7Il~ 
MILLICENT M. MacFARLAND 
Clerk 
Representati ves: BRYANT of Windham, HOLMAN of Fayette, PATRICK of Rumford, 
SA VIELLO of Wilton, WAGNER of Lewiston, WEDDELL of Frankfort, Senator: 
PLOWMAN of Penobscot. 
Printed on rtcydt"u paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 14 MRS A §6031, sub-§3 is enacted to read: 
3. Surety bond. "Surety bond" means a bond purchased by a tenant in lieu of 
making a security deposit when the function of the bond is to secure the performance of a 
rental agreement for residential premises or any part of residential premises. 
Sec.2. 14 MRSA §6039 is enacted to read: 
§6039. Surety bonds 
The following terms apply to the purchase of surety bonds by tenants of residential 
dwellings. 
1. 
Landlord option. 
A residential landlord may offer a tenant the option of 
purchasing a surety bond in lieu of providing some or all of a security deposit, but a 
landlord may not require nor otherwise be required to consent to the purchase of a surety 
bond by a tenant. 
2. Refund by surety. A surety shall refund to a tenant any premium or other charge 
paid by the tenant in connection with a surety bond if, after the tenant purchases a surety 
bond, the landlord refuses to accept the surety bond or the tenant does not enter into a 
rental agreement with the landlord. 
3. Surety limitation; right of action. The amount of a surety bond purchased may 
not exceed 2 months' rent for the tenant's dwelling unit. If a tenant purchases a surety 
bond and provides a security deposit, the aggregate amount of both the surety bond and 
the security deposit may not exceed 2 months' rent for the dwelling unit. In the event a 
landlord consents to a surety bond but requires that the surety bond amount alone or in 
the aggregate with a security deposit exceed 2 months' rent, the tenant has a right of 
action against the landlord for wrongful assessment of surety bond subject to the 
following conditions. 
A. The tenant shall give notice to the landlord of the tenant's intention to bring a 
legal action for wrongful assessment of surety bond no less than 7 days prior to 
commencing the action. If the landlord fails to return the excess assessment within 
the 7-day period, it is presumed that the landlord wrongfully assessed the surety bond 
requirement. 
B. In a successful action against the landlord, the tenant may recover up to 3 times 
the excess amount demanded of the surety bond by the landlord, plus reasonable 
attorney's fees and court costs. 
C. 
In any action brought under this subsection, the landlord has the burden of 
proving that the landlord's requirement of security was not wrongful. 
4. Notice of rights. The surety or landlord shall deliver to a tenant a copy of any 
agreements or documents signed by the tenant at the time of the tenant's purchase of the 
surety bond. The surety or landlord shall advise the tenant in writing of all of the tenant's 
rights under this section prior to the purchase of a surety bond. This notice must conform 
to the requirements of Title 24-A, section 2441, subsection 1. 
5. Notice of rights and responsibilities by surety. In addition to the requirements 
of subsection 4, before a tenant purchases a surety bond a surety shall conspicuously 
disclose to the tenant in writing the following rights and responsibilities of tenants: 
A. The surety bond premium is nonrefundable except as provided in subsection 2; 
B. The surety bond is not insurance for the tenant; 
C. The surety bond is being purchased to protect the landlord against loss due to, but 
not limited to, the following: nonpayment of rent, nonpayment of utility charges that 
the tenant was required to pay directly to the landlord, breach of the rental agreement, 
storing and disposing of unclaimed property or damages caused by the tenant other 
than normal wear and tear; 
D. The tenant may be required to reimburse the surety for amounts the surety paid to 
the landlord; 
E. Even after a tenant purchases a surety bond, the tenant remains responsible for 
payment of: 
(1) All unpaid rent; 
(2) Damage due to breach of the rental agreement; 
(3) Damage by the tenant or members of the tenant's household or their invitees 
or guests in excess of normal wear and tear to the leased premises, common 
areas, major appliances or furnishings owned by the landlord; 
(4) Utility charges that the tenant was required to pay directly to the landlord; 
and 
(5) The cost of storing and disposing of unclaimed property; 
F. The tenant has the right to pay the damages directly to the landlord or require the 
landlord to use the tenant's security deposit, if any, before the landlord makes a claim 
against the surety bond; and 
G. 
If the surety fails to comply with the requirements of this section, the surety 
forfeits the right to make any claim against the tenant under the surety bond. 
The notice required by this subsection must conform to the requirements of Title 24-A, 
I 
section 2441, subsection 1. 
The word "nonrefundable" must be conspicuously placed on the document and must be in 
a minimum of 16-point, bold-faced type. This word must appear on the first page of the 
disclosure and must be repeated immediately above the signature line for the tenant. 
6. Use of surety bond. A surety bond does not represent liquidated damages and 
may not be used as payment to a landlord for breach of the rental agreement, except in the 
amount that the landlord is actually damaged by the breach consistent with the provisions 
of this section. Except as provided in this section, a surety may not, directly or indirectly, 
make any other payment to a landlord. A surety bond may be used to pay claims by a 
landlord for: 
A. Unpaid rent; 
B. Damage due to breach of the rental agreement; 
C. Damage by the tenant or members of the tenant's household or their invitees or 
guests in excess of normal wear and tear to the leased premises, common areas, major 
appliances or furnishings o'Wned by the landlord; 
D. Nonpayment of utility charges that the tenant was required to pay directly to the 
landlord; and 
E. The cost of storing and disposing of unclaimed property. 
7. Written list of damaees. At least 10 days before a landlord makes a claim 
against a surety bond subject to this section, the landlord shall send to the tenant by first-
class mail directed to the last known address of the tenant a written notice ind icating the 
landlord's intent to make such claim and the tenant's right to dispute the claim and 
containing a list of the damages to be claimed and a statement of the costs actually 
incurred by the landlord related to the premises and as otherwise permitted by this 
section. This notice must further indicate the name and address of the surety and process 
for disputing a claim. In the case of a written rental agreement, the landlord shall mail 
such a written notice within the time specified in the agreement, not to exceed 30 days. 
In the case of a tenancy at will, the landlord shall mail the written notice 21 days after the 
termination of the tenancy or the surrender and acceptance of the premises, whichever 
occurs later. If a landlord fails to provide a written notice within the time required by this 
subsection, the landlord forfeits any right to make a claim against a surety bond or the 
tenant related to the premises. 
8. Payment of damaees by tenant. A tenant may pay any damages directly to the 
landlord or require the landlord to use the tenant's security deposit, if any, before the 
landlord makes a claim against the surety bond. If a tenant pays any damages directly to 
the landlord or requires the landlord to use the tenant's security deposit under this 
subsection and the payment or the security deposit fully satisfies the claim, the landlord 
forfeits the right to make a claim under the surety bond for any damages covered by the 
tenant's payment or the amount deducted from the tenant's security deposit in accordance 
with this subsection. 
9. Dispute of claim. The tenant may dispute the landlord's claim to the surety by 
sending a written response by first-class mail to the surety within 10 days after receiving 
the notice described in subsection 7 of the landlord's claim on the surety. If the tenant 
disputes the claim, the surety may not report the claim to a credit reporting agency prior 
to obtaining a judgment for the claim against the tenant. 
10. Action by surety aeainst tenant. In any proceeding brought by the surety 
against the tenant on a surety bond under this section, the tenant retains all rights and 
defenses otherwise available in a proceeding between a tenant and a landlord. Damages 
may be awarded to the surety only to the extent that the tenant would have been liable to 
the landlord under this section. If a surety, in an action against the tenant, asserts a claim 
under the surety bond without having a reasonable basis to assert the claim, the court may 
gmnt the tenant damages of up to 3 times the amount claimed pIllS reasonable attorney'.~ 
fees and court costs. 
11. Loss of claim by surety. If a surety fails to comply with the requirements of this 
section, the surety forfeits the right to make any claim against the tenant under the surety 
bond. 
12. Transfer of premises. If a landlord's interest in the rented premises is sold or 
transferred, the new landlord shall accept the tenant's surety bond and may not require an 
additional security deposit or surety bond from the tenant during the rental term that the 
premises is sold or transferred. At any renewal of the rental agreement, the new landlord 
may not require a surety bond or a security deposit from the tenant that, in addition to any 
existing surety bond or security deposit, is in an aggregate amount in excess of 2 months' 
rent for the tenant's dwelling unit. If the aggregate amount described above is in excess 
of 2 months' rent, the tenant may bring an action for wrongful assessment of surety bond 
under subsection 3. 
13. Licensed surety. A surety bond issued under this section may only be issued by 
an admitted carrier licensed by the Department of Professional and Financial Regulation, 
Bureau of Insurance. 
SUMMARY 
This bill allows tenants, at their sole option, to purchase surety bonds in lieu of some 
or all of a required security deposit for the purpose of assisting tenants who have 
insufficient resources to provide a security deposit for a residential dwelling unit. The 
bill also sets forth a series of restrictions on the issuance of surety bonds, including 
required disclosures to tenants, limitations on when and how a landlord can draw upon a 
surety bond and establishment of a tenant's right of action in the event of wrongful 
assessment of surety bond.