What is a California Contractor’s Disciplinary Bond and Why Do I Need One?
If you are a California contractor, you may have heard about the contractor’s disciplinary bond and wondered what it was. All contractors who have had their license revoked or suspended by the Contractors State License Board (CSLB) are required to get this bond to have their license reinstated. Read on to learn what a contractor disciplinary bond is, why you need one, and how to get this type of bond.
**Effective January 1st, 2023, the CA Contractor License Bond, Bond of Qualifying Individual, and Contractors Disciplinary Bond will increase to a $25,000 bond amount as a result of Senate Bill 607. This post has been updated to reflect that.**
What is a California Contractor’s Disciplinary Bond?
A California Contractor’s Disciplinary Bond is a surety bond required by the CSLB for any contractor that wants to reinstate their revoked or suspended license. According to California law, a contractor is any person or business performing work that alters or constructs buildings, roads, parking facilities, or other structures. And while all contractors must be licensed and bonded to operate legally within the state, the contractor’s disciplinary bond differs from the contractor’s license bond, which we will discuss in more depth later.
The disciplinary bond is required, in most cases, when a contractor violates California contractor license law and their license gets revoked or suspended by the CSLB. To get their license reinstated or reissued, the contractor must file a disciplinary bond with the California Registrar of Contractors. Furthermore, the Registrar will determine the bond amount needed based on the reason for the revocation or suspension and the severity of that violation, with the minimum amount set at $25,000.
Once a contractor has obtained a disciplinary bond, it must remain current and on file with the Registrar for at least two years. In some cases, this filing period may be longer. Furthermore, all other contractor licenses and bonds must remain active and current while the disciplinary bond is on file. The disciplinary bond is an additional requirement, separate from any other bonds needed, for the contractor or business to regain their license.
What is the purpose of a contractor disciplinary bond in California?
As we have mentioned, if your contractor license has been revoked or suspended, you will need to get a disciplinary bond in California to have your license reinstated. The purpose of this bond is to further protect the public from injury caused by a licensed contractor (who has a history of delinquency on their license) that fails to comply with Section 7000 of the California Business and Professions Code.
According to Section 7071.8 of the California Business and Professions Code, the following people need to get a CSLB disciplinary bond:
- A person whose license has been suspended or revoked due to disciplinary action.
- An officer, director, manager, partner, or member of the personnel of record of a licensee who knew of or participated in an act that resulted in the disciplinary action against the licensee.
- A business entity, firm, or association of which an existing or new officer, director, manager, partner, qualifying person, or member of the personnel of record has had a license suspended or revoked due to disciplinary action.
- A business entity, firm, or association of which a member of the personnel of record was, likewise, a manager, officer, director, or partner of a licensee during which the event that resulted in disciplinary action and then resulted in suspension or revocation of the license occurred, and who had knowledge of or participated in the act or omission which was the cause for the disciplinary action.
In such cases, the individual seeking to have their license reinstated must obtain and file a disciplinary bond with the California Registrar of Contractors. The Contractors State License Board will not consider reinstating a contractor’s license without a disciplinary bond.
Does this bond replace the $25,000 Contractor License Bond?
No, all contractors must have a $25,000 contractor license bond to qualify for a contractor license. The disciplinary bond is a separate requirement for contractors who had their license revoked by violating California’s contractor licensing laws. To have a license reinstated, the contractor must acquire the disciplinary bond and satisfy all other licensing requirements established by the CSLB.
The minimum California contractor license requirements are as follows; you must:
- Be 18 years of age or older
- Have either a Social Security number or individual taxpayer identification number
- Have the experience and skills necessary to manage the daily activities of a construction business, including field supervision, or be represented by someone (a “qualifying individual”) with the necessary experience and skills
- Submit an official CSLB contractor license application and pay any related fees
- Pass the required exams
- Obtain the required surety bond(s)
- $25,000 Contractor License Bond (for all contractors except pool/roofers)
- $25,000 Swimming Pool/Roofing Contractor License Bond
- $100,000 LLC Employee/Worker Bond (if operating as a Limited Liability Corporation)
For more detailed information regarding the licensing process, check out our post on How To Become a Licensed Contractor in California.
How much does a California CSLB disciplinary bond cost?
The cost of a surety bond can depend on several factors, including (but not limited to) the type of bond, the bond amount, business and personal financials, and the industry experience and credit of the applicant. In this case, the bond amount of a California Contractor’s Disciplinary Bond will vary depending on the severity of the violation that resulted in the revocation of the contractor’s license. The California Registrar of Contractors will determine the bond amount, though in no situation will the bond amount be less than $25,000.
Because the bond amount can vary so drastically and the surety analyzes several factors when quoting disciplinary bonds, we cannot accurately estimate how much this bond may cost for you. Surety bond premiums are calculated as a percentage of the bond amount, called the premium rate. Premiums for CA contractor disciplinary bonds can range from a few percent to over 10% for less qualified contractors. At South Coast Surety, we offer free quotes for all bonds so you can apply risk-free.
Apply for your California Contractor’s Disciplinary Bond today
South Coast Surety offers a quick, straightforward process for getting your California Contractors Disciplinary Bond. After the Registrar informs you of your required bond amount, fill out our online application for your free quote. If you have questions at any point along the way, please call our surety experts at 949-361-1692 or email us at firstname.lastname@example.org.
- If a contractor violates a California contractor license law, their license may be revoked or suspended by the CSLB. To get their license reinstated or reissued, the contractor must file a disciplinary bond with the Registrar of Contractors.
- The California Disciplinary Bond is an additional requirement, separate from any other bonds needed, for a contractor or business to regain their license.
- In California, the bond amount of a disciplinary bond is determined by the California Registrar of Contractors. The amount depends on the severity of the violation that resulted in the revocation of the contractor’s license but will be no less than $25,000.
- The surety company will typically quote the premium (what you pay) for your bond as a percentage of the bond amount (called the premium rate).
- The premium rate for a contractor disciplinary bond in California can range from a few percent to over 10% for less qualified contractors.