Virginia § 59.1-306 - Bond or letter of credit required; exception
Full text of Virginia Code of Virginia § 59.1-306 — Bond or letter of credit required; exception, with citation guidance and answers to common questions.
§ 59.1-306. Bond or letter of credit required; exception
A. Every health club, before it enters into a health club contract and accepts any moneys in excess of the prorated monthly fee for the month when the contract is initially executed plus one month's fees or accepts any initiation fee in excess of $125, shall file and maintain with the Commissioner, in form and substance satisfactory to him, a bond with corporate surety, from a company authorized to transact business in the Commonwealth or a letter of credit from a bank insured by the Federal Deposit Insurance Corporation in the amounts indicated below:
| a | Number of | Amount of bond |
| b | applicable contracts | or letter of credit |
| c | 0 to 250 | $10,000 |
| d | 251 to 500 | $20,000 |
| e | 501 to 750 | $30,000 |
| f | 751 to 1000 | $40,000 |
| g | 1001 to 1250 | $50,000 |
| h | 1251 to 1500 | $60,000 |
| i | 1501 to 1750 | $70,000 |
| j | 1751 to 2000 | $80,000 |
| k | 2001 or more | $100,000 |
For purposes of calculating the number of applicable unexpired health club contracts when determining the required amount of bond or letter of credit, health club contracts entered into on or after January 1, 2005, with a term that exceeds 13 months shall be counted as multiple health club contracts, such that the number of applicable contracts counted with respect thereto shall equal the total of the number of full years and any partial year in its term. However, this paragraph shall not apply (i) to health club contracts that are payable only on a monthly basis and for which the initiation fee is no more than $250 or (ii) if the number of the health club's contracts in effect with a term that exceeds 13 months is less than 10 percent of the total of its health club contracts.
The number of applicable unexpired contracts shall be separately calculated for each facility.
A health club shall file a separate bond or letter of credit with respect to each separate facility, even though the separate facilities are owned or operated by the same health club.
However, no health club shall be required to file with the Commissioner bonds or letters of credit in excess of $300,000. If the $300,000 limit is applicable, then the bonds or letters of credit filed by the health club shall apply to all facilities owned or operated by the same health club.
B. A health club may sell health club contracts of up to 36 months' duration for a facility for which a health club has not filed a bond or letter of credit so long as the amount of payment actually charged, due or received under the health club contracts each month by the health club or any holder thereunder does not exceed the monthly fee calculated pursuant to the definition thereof in § 59.1-296, with the exception that the payment actually charged may include a maximum initiation fee of $125 for health club contracts of 13 months or more in duration.
1984, c. 738; 1985, c. 585; 1990, cc. 392, 433; 1992, c. 117; 2004, c. 988; 2010, c. 439; 2014, c. 459.
Source: official Virginia text · Last verified 2026-08-27
Frequently Asked Questions About Virginia § 59.1-306
What does Code of Virginia § 59.1-306 cover?
Section 59.1-306 ("Bond or letter of credit required; exception") is part of the Code of Virginia, the codified statutory law of Virginia. It sets out the legal rule or procedure described in the text above. Statutes are amended regularly, so always verify against the official source.
How do I cite Virginia § 59.1-306?
A common citation format is "Code of Virginia § 59.1-306" (Virginia). Legal writing may require the code abbreviation, section number, and year or edition. Match the style required by your court, professor, or publisher.
Is this the official text of Virginia law?
No. This page is for research and education and may not include the most recent amendments. For official current law, check the Virginia official source linked on this page or consult a licensed Virginia attorney.
How does Virginia § 59.1-306 apply to my situation?
Statutes are interpreted in context, and application depends on your specific facts. Only a licensed attorney in Virginia can advise on how this section applies to you. Contact your state or local bar association for a referral.
Sources & Verification
Not legal advice. Verify against the official source and consult a licensed attorney in Virginia.