(i) notification of termination. The guarantee loan and trust fund contract can only be terminated after 30 days of written notification to the FMCSA, on the prescribed BMC 36 form, by the principal or guarantee of the guarantee loan and on form BMC 85 prescribed by the agent/broker or agent for the fiduciary agreement. The notice period begins after the notification is effectively received at the FMCSA office in Washington, DC. In addition, many trust companies advertise that freight brokers can finance their trust with cash, an irrevocable accreditor (ILOC) or the fiduciary company to obtain an ILOC on their behalf. But it is important to note that anyone considering buying a trust fund should verify that the trust company is not underfunded. BMC-85 trust funds are another way to fulfill the $75,000 commitment to THE FMCSA. Larger, more established freight brokers with more capital sometimes choose a BMC 85 trust fund. This option requires a larger and riskier prior investment: freight brokers often handle extremely valuable cargoes, whether raw materials, electronics, automobiles or anything else. Therefore, obtaining a freight brokerage license in the United States means that you must use certain methods to protect your business and your customers. BMC-84 obligations and trust funds BMC-85 are the two accepted ways of doing so. Many still mistakenly believe that group confidence or group obligations are valid ways to meet FMCSA`s commitment requirements. However, these options have been removed by POP 21 and no longer meet the requirement.
The group action of the Owner-Operator Independent Drivers Association (OOIDA), filed against pacific Financial Association for the legitimacy of its BMC-85 trusts, was given to move forward. (3) Deposit and copies. Brokerage guarantee obligations and trust fund agreements must be submitted to the FMCSA in two copies. As a general rule, claims against trust fund agreements are settled quickly by the Fund`s cash. This is a payment first, issue later situation with little or no preliminary inquiry. If a claim turns out to be false, the payment can be refunded, but it often takes extra time and aggravation. A BMC-85 is a trust fund that generally requires brokers to pay $75,000 $US to the fund and are no longer able to access it thereafter. If you opt for a BMC-85, please note that Surety Bonds Direct does not offer BMC-85 trust services and often must complete BMC 85 documents yourself. (2) Brokerage guarantee obligations and trust fund contracts take effect on an ongoing basis. Guarantee obligations and trust fund agreements provide that the coverage of these funds remains in effect at all times until these funds are terminated. Unfortunately, some agencies are still trying to sell these trusts or bonds. These illegal tactics often go under the radar until they are caught by an fmcsa audit.
If it`s done, it got the brokers out of the business. (ii) Replacement termination. Brokerage guarantee obligations or trust fund contracts accepted by the FMCSA under these rules may be replaced by other collateral loans or trust fund contracts, and the outgoing agent`s liability under these guarantee or trust fund agreements is deemed terminated on the effective date of the replacement loan or trust fund contract. However, such termination does not affect the liability of the state of insurance or the agent resulting from the payment of damages resulting from contracts, agreements or agreements concluded by the broker for the provision of transport before the effective date of such termination.