Bond Basics: A Brief Discussion
If a license has been revoked—or in some instances, suspended—for a violation of the Contractors State License Law, the contractor must file a disciplinary bond with the Registrar to reinstate, reissue or reapply for a new license.
The amount of a disciplinary bond may not be for less than $15,000 or greater than 10 times the contractor license bond, and it must be on file with CSLB for at least two years.
Filing a Bond Claim
A contractor has an obligation not to commit any violation of contractor license law that is grounds for disciplinary action against the license. If the contractor does not comply with the conditions of the bond, a claim can be filed with the surety company. The consumer will contact the surety directly to engage this process.
Claims against a surety company may be filed by homeowners, any person damaged by a willful and deliberate violation of a construction contract or by employees damaged by the contractor's failure to pay wages.
Consumers must file surety bond claims with the surety company that wrote the bond within specified time frames. Consumers can identify which surety company wrote the bond that was in place at the time of the consumer’s contract with the contractor by clicking the “Contractor’s Bond History” link on the “license detail page” for the contractor on CSLB’s website. The CSLB does not process claims against surety companies. Surety companies will investigate any claim filed against a bond, and the CSLB will investigate any complaint filed against the license.
A license bond is canceled 30 days from the date that CSLB receives a cancellation notice from a bond company. If a bond reinstatement notice is not received by CSLB or a replacement bond is not received by CSLB before the end of the 30-day period, the license is suspended. Cancellation of the bond can occur if the bond premium is not paid, or if the surety pays out some or all of the penal sum of the bond. In some cases, CSLB may be required to investigate whether a surety’s pay out of the bond was made in good faith.
Some contractors do not use a surety to comply with the CSLB license bond requirements, and instead file a cashier’s check with the State of California in the required amount of the bond. If a contractor has a cashier’s check instead of a bond with an admitted surety insurer, the consumer is required to file a civil action for the bond to be released. CSLB can only make payment from a cashier's check under a court order. Any consumer seeking to file a claim against a cashier’s check should first send an email to CashBonds@cslb.ca.gov to confirm the existence of a cash deposit.
Contractors are encouraged to perform a bond "checkup" by verifying on the Automated Phone Response System or on the Internet that your bond is current. Most bond renewals and license renewals are not on the same cycle, so do not assume that when your license renews your bond also renews.
Avoid a license suspension by renewing your bond promptly and making sure the effective date of the new bond is the same as the cancellation date of the old bond. Allow for processing time by arranging for a new bond four weeks before the old one expires.
Ask your bond agent if the surety company will file the bond with CSLB or if you must file it. If you hold the original bond, send it in to CSLB. The CSLB does not return any bond that has been accepted or processed as the bond of record on an active license.
Keep accurate records on your agent, surety company, bond numbers, effective dates, and terms of the bond.