Each auctioneer bond issued is a legal contract binding three parties together.
- The principal is the auctioneer who purchases the bond.
- The obligee is the state government agency who requires the bond
- The surety is the insurance company who issues the bond.
If an auctioneer conducts fraudulent activities (i.e., misuse, withhold or stealing of funds), the obligee can seek reimbursement by filing a claim against the auctioneer's bond. If a claim is prove to be valid, the surety will pay for the claim up to the bond amount. Then, the surety will require reimbursement from the auctioneer