Why Every Real Estate Company Needs a Fidelity Bond


sherwoodrealestate / Flickr / CC BY



Real estate professionals are lucky: unlike brokers and contractors in many industries, they don’t face a lot of complicated licensing and bonding requirements. And yet, with people’s homes on the line, your job carries a lot of responsibility, and, in turn, certain risks.


When there are large sums of money involved, there’s often fraud involved. This is why real estate brokering companies are advised to have a fidelity bond, which is a type of protection for your business and your clients. Let’s take a more detailed look at what fidelity bonds are, why you need one and how to get it.

Bonds and Insurance: What’s the Difference?

People are often confused about the difference between bonds and insurance, and fidelity bonds might be partly to blame. Surety bonds are usually mandatory requirements for certain businesses – insurance brokers, contractors and auto dealers among them – before they can obtain a license or work on public projects. Unlike insurance, they do not protect the policyholder, but rather the government (municipal, state or federal) and the policyholder’s clients.


But fidelity bonds are different from surety bonds. Read this fidelity bond guide to learn more about these bonds and the different types available. Fidelity bonds work more like insurance and are designed to protect businesses from dishonest practices by their employees: forgery, fraud or theft.

Employee Dishonesty Bonds Protect You and Your Business

As a real estate broker, the type of fidelity bond that will be of most interest to you is the employee dishonesty bond. If you have one of these, you’re protected in the unpleasant event of a broker or bookkeeper embezzling client funds. The fidelity bond will kick in to reimburse not only you, but also your client – making sure that your company is protected.


Many real estate brokers choose to obtain an employee dishonesty bond for marketing purposes as well: it gives clients peace of mind that their money is in safe hands.

Obtaining Your Employee Dishonesty Bond

If you’re protecting your real estate business with an employee dishonesty bond, you need to contact a surety bond agency, as bonding companies don’t work directly with the public.


The agency will provide you with a quote based on different factors, including what kind of protection you need, the number of employees being covered and potentially, background checks on these employees. Keep in mind, if an employee has committed a felony, the bonding company will refuse to bond them.


Once you accept the terms of the quote and pay the premium, the bond will be forwarded to you and the process complete.


In a high-stakes business like real estate where huge sums of money are changing hand regularly, an employee dishonesty bond can save you a lot of trouble and even help you attract customers. In this competitive marketplace, it can be a valuable investment to make.


Have you had to deal with employee dishonesty in your real estate business? Tell us what steps you took by leaving us a comment below the article.

Eric Halsey is a historian by training and disposition who’s been interested in US small businesses since working at the House Committee on Small Business in 2006. Coming from a family with a history of working on industry policy, he has a particular interest in the Surety Bonding and Real Estate, and Professional Certification; he loves sharing his knowledge of the industry for JW Surety Bonds.

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  1. AvatarAutomate Bookkeeping

    Hi there, thanks for the great tips by the way. However, I do have a question that
    I think you could answer for me. I was wondering what major
    accounting, finance, and/or bookkeeping challenges do small businesses face?
    If you could give me some insight I would greatly appreciate

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