General Contractor ($5,000) Bond - City of Auburn, AL in Alabama

Brief Summary

One contract of $20,000 or more is all it takes to move an Auburn general contractor from the $1,000 bond to this $5,000 bond. Post the right tier up front and the city can issue your business license and building permit without a second trip.

The City of Auburn, Alabama requires a $5,000 indemnity bond from any general contractor making a contract of $20,000 or more. Contractors whose contracts all stay under $20,000 post a $1,000 bond instead. The rule is Section 8.1 of the City Code as amended by Ordinance 1842, and the bond must be on file before the business license and building permit are issued.

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How to Apply for a General Contractor ($5,000) Bond:

• Confirm you have, or expect, at least one contract of $20,000 or more.
• Download the City of Auburn General Contractors Indemnity Bond form and mark the $5,000 option.
• Apply for the bond using the business name that will appear on the Auburn license.
• Have the surety execute the form, signed by the principal and the surety's attorney in fact.
• File the bond with the Auburn business license application and pay the $155 general contractor flat fee.
• Bring proof of your State of Alabama licensure board license if your work requires one.

Detailed Information About the Alabama General Contractor ($5,000) Bond:

The $20,000 trigger

Auburn uses a single contract test, not annual revenue. Section 8.1 of the City Code, as amended by Ordinance 1842 in July 1999, requires a general contractor making contracts, any one of which amounts to $20,000 or more, to post a $5,000 indemnity bond with the city. A contractor whose every contract stays below $20,000 posts a $1,000 bond. If there is any chance you will sign a job at or above $20,000 this license year, this is the bond to carry.

What the bond promises

The city's General Contractors Indemnity Bond form names the City of Auburn as obligee. The contractor agrees to perform the work faithfully, follow Auburn's ordinances and rules on construction, pay all licenses, taxes, permit and inspection fees, and hold the city harmless from loss caused by the work or materials. The contractor must also restore any street, alley, sidewalk or property disturbed by the job and keep it in good repair for one year.

Licensing alongside the bond

The Finance Department Revenue Office handles contractor licenses. The city accepts an indemnity bond or a cash deposit. General contractors pay a $155 flat fee plus a quarterly fee of one quarter of 1 percent of gross construction receipts. Contractors licensed by a State of Alabama licensure board must present proof of that license when applying. Working in city limits without a license draws a minimum late penalty of 25 percent plus 1 percent per month.

Cost

The surety sets the premium after reviewing the owner's credit and business history. It is a fraction of the $5,000 face amount.

Eligibility and Requirements for a Alabama General Contractor ($5,000) Bond:

• Bond amount of $5,000 for any general contractor with a single contract of $20,000 or more.
• City of Auburn, Alabama named as obligee on the city's General Contractors Indemnity Bond form.
• A surety company authorized to act as surety under Alabama law.
• Bond posted before the business license and building permit are issued.
• A cash deposit is the only alternative the city lists.

Alabama General Contractor ($5,000) Bond FAQs:

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