Guarantee of obligations to the department.

(1) With the approval of the department’s comptroller, a letter of credit or bond may be accepted by the department to guarantee payment of any obligation due the department or that may become due to the department.

(2) The letter of credit shall be payable solely to the department as beneficiary, and it shall be nonassignable and nontransferable. The letter of credit may be issued by any financially sound bank or savings association existing under the laws of this state or any financially sound bank or savings association organized under the laws of the United States that has its principal place of business in this state or has a branch office which is authorized under the laws of this state or of the United States to receive deposits in this state.

(3) The department’s comptroller must approve the use of the letter of credit or bond, the institution issuing the letter of credit or bond, and the language to be used in the letter of credit or bond. Such approval may be given only when the department’s comptroller determines that acceptance of these items is in the best interest of the state and of the department in the performance of its duties.

(4) The department is authorized to adopt rules relating to the use of prepaid escrow accounts for purchases from the department.