Under what condition should collateral be returned to the indemnitor?

The correct answer highlights that collateral should be returned to the indemnitor when the surety has been completely discharged of all liability by the court. This situation typically occurs after the bail bond has fulfilled its purpose, meaning that the defendant has made all required court appearances and has either been acquitted, or the case has been resolved with no further obligations related to the bail bond.

Returning collateral in this context is crucial because it signifies that there are no remaining financial responsibilities tied to the bond, and the indemnitor is no longer at risk for financial loss should the defendant fail to appear in court. Thus, the successful discharge of the surety ensures that the indemnitor can reclaim what they put up as collateral without any remaining obligations.

In contrast, the other conditions mentioned do not meet the criteria for returning collateral. A conviction of the defendant does not absolve the surety of its liability, leaving potential financial exposure. If the defendant leaves the jurisdiction, the bond may be considered at risk, retaining the surety's liability. Finally, a reduction in the bail amount might adjust financial obligations but does not inherently discharge the surety from all liabilities, thus maintaining the indemnitor's exposure until the status is fully resolved.