A contractor disciplinary bond is a surety bond required by the state for contractors who have had their license revoked or suspended. Some people often term it as a punitive bond, but in essence, it is an extra protection to all entities in a contract. It also ensures that contractors do not violate the contractor’s license laws.
You may find competitive rates for bonding by visiting a California contractor bond website that offers pricing from multiple companies.
Therefore, if your contractor’s license is revoked or suspended, you will need to file a disciplinary bond to get your license reinstated or to obtain a new one. Only some suspension will require the filing of the bond.
When appropriate the California Contractors State License Board (CSLB) may attempt to help achieve a resolution without a disciplinary action, but serious violations of contractor’s license laws will certainly lead to disciplinary action. For example;
• Falsifying a certificate of experience or creating an illusion experiences whereas there is none
• Ill-intended application of fund or property
• Failure to obtain permit
• Abandonment of contract without legal reasons
• Poor workmanship
• Abetting an unlicensed person to evade license law
• Failure to pay subcontractor within seven days after receipt, without prior agreement or Simply violating California Labor laws.
These mentioned violations are just but a few types that will get your license revoked or suspended, even when there is no history of complaint on the license. A contractor is always warned before hand on any official investigation, but at that point, it is important to get an expert, if there is a merit to the violation.
Considerations for a Disciplinary Bond
Disciplinary bonds in California are subject to certain requirements,
1. The disciplinary bond will have to be filed in addition to other bonds if any, but this does not imply that the required bond will take the place of disciplinary bond neither can it be combined to maintain an active contractor’s license.
2. The registrar will determine the cost of the bond based on the contracts violation. The minimum amount according to the Business and Professions Code Section 7071.8 is $ 15000. But it’s not going to be ten times than the contractor’s bond.
3. The bond must be current and with the Registrar of Contractors for at least two years. When the bond is on file, the company’s license must be active as there will be scrutiny during the two years duration.
4. California Department of Insurance must license the surety company that writes the bond. Everything on the bond must correspond to the license number on CSLB records. The Bond was written must be signed by an attorney for surety company and must be on a form approved by AG office.
5. Lastly, it must be received at the CSLB offices within 90 days of the effective date of the bond.
It is imperative that the contractor understands that there is no wiggle room when you are under disciplinary bond. Although it is often termed to be punitive, It also gives a contractor an opportunity to improve on the violated areas. By having one, you are telling your Obligee that your company can be trusted and always stand behind business decisions. That id they fail to comply with the term of the contract, the Obligee is protected at all times.