This bond may also be referred to as a Residential Builder/Certificate of Authorization Bond, Licensed Residential Specialty Contractor Bond, or Registered Residential Specialty Contractor Bond
What is a surety bond, and why do I need one for my Residential Builders License Bond?
A surety bond is a three-way agreement between a Principal (the Licensed Home Builder), an Obligee (South Carolina Residential Builders Commission), and a surety company (the company backing the bond). A surety bond does not function like an insurance policy for the Principal; instead, it protects the Obligee and clients from financial obligations due to misconduct or negligence on behalf of the builder. The bond is a guarantee that the bonded Builder will comply with Title 40 Chapter 59 of the SC Code of Laws and the International Residential Code.
There are three classifications for this bond with three different amounts (the amount is not the same as the cost for the Principal) – be sure to include yours in your application. The average cost of a bond is between 1-3% of the amount, but can be as high as 9% depending on your credit score. The bond amounts are as follows:
- Residential Builder/Contractor with Certificate of Authorization – $15,000
- Licensed Residential Specialty Contractor (HVAC, Plumber, or Electrician) – $10,000
- Registered Residential Specialty Contractor – $5,000
In the event that the bonded Contractor violates the terms of their bond, there will be a claim filed against it. The surety will make payments to the damaged party, at which point the Principal is legally obligated to fully repay the surety for all damages. In addition to repayment, the bond may be revoked, and the Contractor License will be invalid until a new bond is filed. Be sure that you, your employees, agents, and representatives fully understand the regulations they must follow to avoid any claims against your bond. A history of claims will cause issues with any future bond applications, as each claim acts as a mark against your “credit” in the bond market.
Residential Builder/Contractor with Certificate of Authorization - $15,000
Licensed Residential Specialty Contractor (HVAC, Plumber, or Electrician) - $10,000
Registered Residential Specialty Contractor - $5,000
IMPORTANT NOTES ON YOUR APPLICATION:
- Personal information for all owners who hold 10% or more of the corporation is required on your application
- The name on the bond must be the personal name of the contractor, even if the bond is for a corporation
Failure to follow the above steps will result in delays to your quote and application.