Surety Bond Encyclopedia

Contractor License (Commercial only) Bond - Statewide in Arizona

Brief Summary

Your commercial license bond amount is set by two things: whether you hold a general or specialty commercial class, and the volume of work you expect to do in Arizona. Pick the right tier and the bond is a small annual premium instead of cash tied up with the Registrar of Contractors. Quotes are usually same day and the bond is written on the form the ROC accepts.

Arizona requires a license bond or cash deposit before the Registrar of Contractors will issue an original contractor's license, under ARS 32-1152. For commercial only licenses the amount follows your estimated annual volume of Arizona work, from $5,000 up to $100,000 for general commercial and general engineering contractors, and from $2,500 up to $50,000 for commercial specialty contractors. A commercial only license does not carry the residential recovery fund assessment or the extra $200,000 residential bond.

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How to Apply for a Contractor License (Commercial only) Bond:

Decide whether you are applying for a commercial general, general engineering or commercial specialty class.
Estimate your annual volume of construction work within Arizona and match it to the ROC bond tier.
Have the business name exactly as it will appear on the ROC license, including any DBA.
Provide owner or qualifying party name, home address and Social Security number for the credit review.
Complete the bond application, review the quote and pay the premium.
Submit the executed bond with your ROC license application and fees.

Detailed Information About the Arizona Contractor License (Commercial only) Bond:

Your tier sets the amount

The Registrar of Contractors sets commercial bond amounts by license type and by the volume of work you expect to perform within Arizona. The ROC publishes this schedule.

**Commercial general contractors, including general engineering contractors**

$150,000 or less: $5,000
Over $150,000 up to $500,000: $15,000
Over $500,000 up to $1 million: $25,000
Over $1 million up to $5 million: $50,000
Over $5 million up to $10 million: $75,000
Over $10 million: $100,000

**Commercial specialty contractors**

$150,000 or less: $2,500
Over $150,000 up to $500,000: $7,000
Over $500,000 up to $1 million: $17,500
Over $1 million up to $5 million: $25,000
Over $5 million up to $10 million: $37,500
Over $10 million: $50,000

ARS 32-1152 sets a minimum and maximum for each volume band, and the ROC schedule above is what applicants are asked to post. If you expect your volume to grow, you can raise the bond at any time. You can only lower it at renewal for the next fiscal year.

Commercial only means no residential add on

Residential and dual licensees must also pay into the Registrar's Residential Recovery Fund or post an additional $200,000 bond under ARS 32-1152, subsection C. A commercial only license does not. If you later add a residential class and become dual licensed, the ROC combines the residential and commercial amounts into one bond figure.

Who can claim on it

The commercial bond is for the benefit of, and subject to claims by, another licensee under the contractor chapter, or a lessee, owner or co-owner of nonresidential real property who has a direct contract with you. A suit on the bond has to be filed within two years after the act, delivery of goods or services on which it is based. Every dollar the surety pays on a claim is owed back by the contractor.

Cash instead of a bond

The ROC accepts a surety bond, cash, or a certificate of deposit from a bank operating in Arizona. A cash deposit stays with the state until two years after the license ends, or two years after a surety bond replaces it, provided no claims are open. Most contractors choose the surety bond so the money stays in the business.

Keeping it in force

Under ARS 32-1125 a renewal is accepted only with a valid bond or cash deposit on file with the registrar. A license not renewed is suspended by operation of law on the next business day after its renewal date, and reinstating within a year carries a $50 fee.

How the premium is set

The surety prices the bond from the owner's personal credit, the bond amount for your tier, time in business and claims history. Larger tiers may call for business financial statements. You get an exact annual premium on the quote before you buy.

Eligibility and Requirements for a Arizona Contractor License (Commercial only) Bond:

A surety bond in a form acceptable to the Registrar of Contractors, or a cash deposit or Arizona bank certificate of deposit in the same amount.
Bond amount matching the ROC schedule for your commercial class and estimated Arizona volume.
Principal name on the bond matching the license application, including DBA wording where used.
No residential recovery fund assessment and no $200,000 residential bond for a commercial only license.
Bond kept in force for the life of the license, since renewal requires a valid bond on file.

Arizona Contractor License (Commercial only) Bond FAQs:

How do I know which bond amount I need?

Find your class first. General commercial and general engineering contractors run from $5,000 for $150,000 or less in annual Arizona volume up to $100,000 for more than $10 million. Commercial specialty contractors run from $2,500 up to $50,000 across the same volume bands. Use the volume you realistically expect in Arizona, not your total company volume in other states.

Do commercial only contractors pay into the Residential Recovery Fund?

No. The recovery fund assessment, or the alternative $200,000 bond, applies to residential and dual licensees under ARS 32-1152, subsection C. A commercial only license needs the license bond alone.

Can I lower my bond if my volume drops?

Only at renewal. The ROC lets you increase the bond at any time, but a surety bond or cash deposit cannot be decreased except at renewal for the ensuing fiscal year.

Who can file a claim against a commercial license bond?

Another licensed contractor, or a lessee, owner or co-owner of nonresidential real property, who has a direct contract with you. Claims must be brought within two years of the act or the delivery of goods or services involved.

What does the bond cost?

The premium is a fraction of the bond amount and is set by the surety after reviewing owner credit, the size of the bond, business experience and claims history. You see the exact annual cost on your quote before you commit.