California Contractor Bonds

A contractor bond is a type of surety bond that guarantees a contractor will comply with local licensing regulations and operate ethically. It protects the public by ensuring that clients are compensated for damages if the contractor fails to meet their obligations.

Bond pricing is determined based on a soft pull of your credit score.

No, our agency will file your bond with the state and notify you once they have received and posted it to your license.

Yes, the CSLB requires that you carry both bonds in order to keep your license in active standing.

The LLC Employee/Worker Bond is a surety bond designed to protect employees or workers who are harmed by the LLC's failure to pay wages, interest on wages, fringe benefits, or other contributions. This bond ensures that workers have a financial recourse if the LLC defaults on its obligations.

Typically, the Bond of Qualifying Individual is required when: A corporation or limited liability company (LLC) applies for a contractor's license OR The RMO or RME associated with the license does not own at least 10% of the company's equity or voting stock.

A disciplinary bond is typically required when:

• License Revocation or Suspension: If a contractor's license has been revoked or, in some cases, suspended due to violations of the Contractors State License Law, the contractor must file a disciplinary bond to reinstate or reissue the license.
• New License Applications Post-Discipline: Contractors who have previously faced disciplinary actions and are applying for a new license may also be required to submit a disciplinary bond.
• License Reinstatement or Reissuance: If a contractor's license has been suspended and the suspension has been stayed (delayed), the contractor must file a disciplinary bond to remain in business during this period.

• Amount: The amount of the disciplinary bond is determined by the CSLB Registrar and is based on the seriousness of the violation(s). The bond amount must be at least $25,000 but can be up to ten times the amount of the contractor license bond.
• Duration: The bond must remain current and on file with the CSLB for at least two years. In some cases, the CSLB may require a longer filing period.
• Additional Bonds: The disciplinary bond must be filed in addition to, and cannot replace or be combined with, any other bonds required to maintain an active contractor's license.

They protect project owners from financial losses due to a contractor's failure to perform, bankruptcy, or default. They also ensure that only qualified contractors, who are financially stable and have a proven track record, are awarded contracts. In the event of contractor default, the surety can step in to find another contractor or provide funding to complete the project.

The cost of a performance bond is usually calculated as a percentage of the total contract value, which typically ranges from 0.5% to 3%, depending on: The size and complexity of the project, the contractor's creditworthiness and experience, and the bond amount and terms.

Performance bonds are often required in:

• Public sector projects: U.S. federal law (Miller Act) requires performance and payment bonds for federal construction contracts over $150,000.
  Large private sector projects, where the investor or owner wants assurance of performance.
  International contracts, where trust and legal enforceability are even more crucial.

A performance bond ensures project completion while a payment bond guarantees that subcontractors, laborers, and material suppliers are paid. They are often issued together.

• Bid Bond Amount: Usually a percentage of the total bid amount, commonly 10%.
• Surety Company: The bond must be issued by a surety company licensed to do business in California.
• Submission Timing: The bid bond must be submitted with the bid proposal before the specified deadline.

• Ensuring Serious Bidders: They prevent frivolous or speculative bids.
• Protecting Project Owners: They provide financial recourse if a contractor defaults.
• Demonstrating Financial Stability: They show that the contractor has the backing of a reputable surety company.