NAC616B.543. Required security deposit: Requirements for letter of credit.

     1. A letter of credit deposited pursuant to NAC 616B.540 must:

     (a) Include a statement that no document other than the demand for payment under the terms of the letter is necessary for payment.

     (b) Be irrevocable.

     (c) Be valid for at least 1 year and automatically renew for each following year unless written notice is given by the issuer to the Commissioner and the association at least 90 days before the date of renewal.

     (d) Be issued by a bank chartered by this State or a bank that is a member of the United States Federal Reserve System and has been approved by the Commissioner.

     (e) Include a statement that it is not subject to any conditions or qualifications other than the terms stated in the letter. The letter may be the individual obligation of the financial institution issuing it, but must not be contingent upon the institution’s ability to perfect any lien or security interest. The letter must not contain references to any other agreements, documents or persons.

     (f) Include a statement that the obligation of the financial institution under the letter is not contingent upon reimbursement.

     2. The heading of the letter of credit may include a boxed section containing the name of the association and other appropriate notations. If such a section is present, it must be marked clearly to indicate that the information is for internal identification only, and does not affect the terms of the letter or the financial institution’s obligations under the letter.

     (Added to NAC by Comm’r of Insurance, eff. 3-22-96; A by R139-99, 1-27-2000)