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A Contractor’s Bond must be in place before CSLB can issue an active license, reactivate an inactive license, or renew an active license. 

This type of bond is filed for the benefit of consumers who may be damaged as a result of defective construction or other license law violations, and for the benefit of company employees who have not been paid wages that are due to them.

Requirements for the Contractor’s Bond:

  • The bond must be written by a surety company licensed through the California Department of Insurance.
  • The bond must be in the amount of $25,000.
  • The business name and license number on the bond must correspond exactly with the business name and license number on the CSLB’s records.
  • The bond must have the signature of the attorney-in-fact for the surety company.


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Contractor Bond FAQs


What is a performance bond, and how does it differ from a payment bond?

A performance bond and a payment bond are two types of surety bonds often required in construction contracts. A performance bond ensures that the contractor will fulfill the terms of the contract and complete the project as specified. On the other hand, a payment bond guarantees that the contractor will pay subcontractors, suppliers, and laborers involved in the project.

When is a contractor required to obtain a performance and payment bond?

The requirement for performance and payment bonds varies by project and jurisdiction. Typically, public construction projects funded by government agencies often mandate these bonds to protect taxpayers and ensure project completion. Private owners may also require them in contracts to mitigate risk.

How do I obtain a performance and payment bond, and what factors affect the bond premium?

To obtain these bonds, contractors typically work with surety bond companies or agents. Factors that influence the bond premium include the contractor’s credit history, financial stability, experience, the size of the project, and the specific bond requirements. A strong financial track record and proven experience can help reduce the bond premium.

What happens if a contractor fails to meet their obligations covered by a performance or payment bond?

If a contractor defaults on their obligations, the surety company that issued the bond may step in to complete the project or cover unpaid bills, depending on the type of bond. Afterward, the surety company will seek reimbursement from the contractor. Contractors should be aware that bond claims can have serious financial consequences and may impact their ability to secure bonds for future projects.

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