Assignment of Savings Accounts & Certificate of Deposit
An assignment is an irrevocable agreement between a principal and the Forest Service that assigns all rights, title, and interest in the principal's savings account or certificate of deposit to the Forest Service. The principal's financial institution is an indirect party to the agreement, and allows the Forest Service to exercise any rights to the principal's savings account or certificate of deposit. Assignment relationships differ legally from that of letters of credit or sureties. The assignment agreement gives the Forest Service authority to present the assignment to the financial institution for payment in satisfaction for any damages, demands, or deficiencies arising from the principal's default. An assignment of a savings account is similar to cash deposit in that the Forest Service may draw funds from the savings account up to the amount stated in the agreement. A certificate of deposit is a formal instrument issued by a financial institution acknowledging a deposit of cash subject to withdrawal by the depositor or by some other person at the depositor’s order under the specific terms of the instrument. Certificates of deposit may be payable on demand or at a fixed or determinable future date. Certificates of deposit are not uniform in their names or terms.
1) Eligible Financial Institutions. Only assignments from a principal whose savings account or certificate of deposit is federally insured by FDIC, FSLI, or NCUA will be accepted.
2) Assignment Agreement Contents. An assignment agreement must include:
a) An agreement number.
b) The name and address of the principal's (assignor) financial institution.
c) The assigned savings account or certificate of deposit number.
d) The amount assigned, which must equal or exceed the penal sum of the bond.
e) The special use authorization number covered by the assignment.
f) A statement that the assignment can be terminated and the account or certificate of deposit released only if the Forest Service terminates it.
g) A statement that the principal authorizes and directs the financial institution to make payment as directed by the Forest Service.
h) A statement that the financial institution is entitled and directed to rely only on the instructions of the Forest Service without any requirement that the financial institution determine whether the principal has received notice of the payment demand.
i) A reference to the specific purpose of the assignment and acceptance by the financial institution stating that requests to offset debts or liens of the principal against the assigned account would not be recognized.
j) The address of the financial institution where the passbook or certificate of deposit is held, if in hardcopy, and where the Forest Service may present sight drafts.
k) The following statement “The deposits of (Name of financial institution) are insured by the FDIC or FSLI or NCUA.”
l) A statement that the financial institution and the principal agree that if the financial institution closes or is placed in receivership, Federal insurance proceeds received for the benefit of the principal on any account maintained with the financial institution must be applied to the Forest Service assignment first.
m) The agreement is signed by the principal, financial institution representative, and Forest Service bond-approving officer and fiscal officer.
3) Release. After the principal's obligations are completed and the assignment is no longer needed, the bond-approving officer completes the release.