(a) If the principal does not pay the amount of the liability on the deposit within the time prescribed in Section 995.750, the deposit shall be collected, sold, or otherwise applied to the liability upon order of the court that entered the judgment of liability, made upon five days' notice to the parties.
§ 995.760.Failure to Timely Pay Amount of Liability
Title 14. Of Miscellaneous Provisions · Chapter 2. Bonds and Undertakings · Article 7. Deposit in Lieu of Bond · Last amended 2015 · Last verified July 28, 2026
In one sentenceSection 995.760 lets the court that entered the judgment of liability order the deposit collected, sold, or otherwise applied to that liability on five days' notice if the principal misses the § 995.750 deadline, requires public auction for bonds or notes without a market price, and sets distribution as collection costs, then the judgment, then any remainder to the principal.
Full Text of § 995.760
(b) Bonds or notes, including bearer bonds and bearer notes, without a prevailing market price shall be sold at public auction. Notice of sale shall be served on the principal. Bonds or notes having a prevailing market price may be sold at private sale at a price not lower than the prevailing market price.
(c) The deposit shall be distributed in the following order:
(1) First, to pay the cost of collection, sale, or other application of the deposit.
(2) Second, to pay the judgment of liability of the principal on the deposit.
(3) Third, the remainder, if any, shall be returned to the principal.
Plain-English Summary
This is the enforcement mechanism behind the deposit-in-lieu-of-bond option. If the principal doesn't pay within the time § 995.750 sets, the deposit doesn't just sit there -- the court that entered the judgment of liability can order it collected, sold, or otherwise applied to that liability, on five days' notice to the parties.
How the deposit gets converted to cash depends on what it is. Bonds or notes without a prevailing market price have to be sold at public auction, with notice served on the principal; bonds or notes that do have a prevailing market price can instead be sold privately, but never below that market price.
Whatever the deposit yields gets distributed in a fixed order: first, the costs of collecting, selling, or otherwise applying the deposit; second, the judgment of liability itself; and third, whatever remains goes back to the principal. That is the same sequence § 995.750 anticipates for every deposit enforced under this article.
Frequently Asked Questions
What happens if the principal doesn't pay liability on a deposit by the § 995.750 deadline?
The court that entered the judgment of liability may order the deposit collected, sold, or otherwise applied, on five days' notice to the parties.
How are deposited bonds or notes without a market price sold?
At public auction, with notice served on the principal.
Can bonds or notes with a prevailing market price be sold privately?
Yes, but not below that prevailing market price.
In what order is the proceeds of a sold deposit distributed?
First to the costs of collection or sale, second to the judgment of liability, and third -- any remainder -- back to the principal.
Amendment History
Amended by Stats 2014 ch 305 (AB 1856),s 4, eff. 1/1/2015.
Source & verification. Section text is reproduced verbatim from
the Deering's California Codes Annotated / vLex. Enacted by the California Legislature.
Last verified July 28, 2026.
· Official source
Also known as: collecting on a deposit bond californiaselling deposited bonds to satisfy judgment california