California Contractor Disciplinary Bond Requirements

#When a Disciplinary Bond Is Required

A contractor in California must file a disciplinary bond with the Registrar after a license is revoked or suspended. This requirement applies to contractors who violated the Contractors State License Law.

The disciplinary bond is necessary to reinstate, reissue, or reapply for a new license. Without it, a contractor with a past revocation or suspension cannot regain licensed status.

#Disciplinary Bond Amount and Duration

The amount of the disciplinary bond is set by the Registrar within a specific range. It is separate from any other bonds a contractor may need.

A disciplinary bond must be kept on file with the Contractors State License Board (CSLB) for a minimum of two years. This is a mandatory filing period.

#Filing and Maintaining a Bond

All bonds must be written by a surety company that is licensed through the California Department of Insurance. An acceptable bond must be received at the CSLB Headquarters Office within 90 days of its effective date.

Only one bond can be in effect for a license at any given time. If a second bond is filed for the same period, it cancels out the first one. Additionally, bonds are not transferable between different licenses or individuals.

Once the CSLB accepts a bond for an active license, it cannot be returned. The bond remains in effect until the CSLB receives a cancellation notice directly from the surety company.

#What Happens if a Bond Is Canceled?

A surety company can cancel a bond for reasons such as non-payment of the premium or if the company pays out on a claim.

If a bond reinstatement notice or a replacement bond is not received by the CSLB before that 30-day period ends, the license is suspended. A license will also be suspended if a judgment or claim payment reduces the bond amount, or if the surety company loses its authorization to do business in California.

Failure to maintain continuous bond coverage will result in the license being suspended. Any work a contractor performs while their license is suspended is considered unlicensed work, which can lead to further disciplinary action.

#How to Lift a Bond Suspension

A bond suspension can be lifted in a few ways. The CSLB can accept a rescission notice from the surety company that cancels the original bond cancellation.

Alternatively, the suspension can be lifted when a new bond or a cashier's check is received and accepted by the CSLB. A new bond must be received by the CSLB within 90 days of its effective date.

To avoid a break in licensing time, bond coverage must be continuous. When replacing a bond, the new bond's effective date should be the same as the cancellation date of the old bond.

#Who Can File a Claim and How?

Several parties can file a claim against a contractor's bond. These include homeowners, employees who are owed wages by the contractor, and any person who was damaged by a willful and deliberate violation of a construction contract.

Claims must be filed directly with the surety company that issued the bond. The CSLB does not process claims against surety companies.

If a contractor has a cashier's check on file instead of a bond, a consumer must file a civil action to have funds released. The CSLB can only make a payment from a cashier's check under a court order. To confirm if a cash deposit exists, a consumer should first email CashBonds@cslb.ca.gov.

#What If a Bond Is Filed Late?

A bond that is not received by the CSLB within 90 days of its effective date may still be accepted retroactively. This is possible if the failure to have the bond on file was due to circumstances beyond the licensee's control, as outlined in Business and Professions Code 7071.7.

To request retroactive acceptance, the licensee must complete and submit a "Request for 7071.7 Bond Acceptance" form (13B-31). This form requires an explanation of the circumstances that caused the delay.