Surety Bond Encyclopedia

Contractor License ($10,000) Bond - City of Little Rock, AR in Arkansas

Brief Summary

Check one thing before you buy. Little Rock City Code 8-36(d) says a bond shall not be required of a permittee to perform construction work on residential property owned by the permittee. If you are pulling a permit on your own residential property, you are outside this. Everyone else pulling a construction related permit files one $10,000 bond with the building codes division, and that single bond covers building, electrical, plumbing, mechanical, house moving and demolition work. You do not buy one per trade.

Little Rock City Code section 8-36, adopted by Ordinance No. 18,225 on February 15, 2000, requires every building, electrical, plumbing, mechanical, house mover, demolition or associated contractor needing a construction related permit to have a $10,000 surety bond on file with the building codes division before any permit is issued. The bond is executed by the permittee and a surety company authorized to do business and in good corporate standing in Arkansas, and it assures the permittee's full compliance with Chapter 8. It is continuous, it may not terminate except on thirty days prior written notice, and a permittee performing construction work on residential property the permittee owns is exempt.

We can help with all Arkansas bonds!

How to Apply for a Contractor License ($10,000) Bond:

Check the exemption first. Under 8-36(d) no bond is required of a permittee performing construction work on residential property owned by the permittee.
Confirm you need a permit. Under 8-31 permits are required for work exceeding $5,000 including material and labor, or work requiring an inspection.
Buy one bond, not one per trade. Section 8-36 covers building, electrical, plumbing, mechanical, house mover, demolition and associated contractors, and 8-154 restates the same $10,000 for electrical permits.
Legal business name exactly as it will appear on the city registration and the permit application.
Owner or principal information and authorization for a credit review.
Use a surety company authorized to do business and in good corporate standing in the State of Arkansas.
Complete the bond application, review the quoted premium, and pay it.
Have the bond made out to the City of Little Rock, executed by both you and the surety.
Confirm the surety will give the building codes division thirty days prior written notice before any termination.
File the bond with the building codes division before you apply for the permit. It has to be on file first.
Get the separate City Contractor's License, the city business license also called a privilege license, from the Collector's Office.
Hold the Arkansas contractor license the state requires, and the Master or Class A trade licenses for plumbing, electrical and mechanical work.
Diary the renewal. If the bond lapses without a substitute on file, your permit is suspended automatically with no notice and no hearing.

Detailed Information About the Arkansas Contractor License ($10,000) Bond:

One bond, not one per trade

Worth settling first because contractors get sold several of these.

Section 8-36(a) reaches every building, electrical, plumbing, mechanical, house mover, demolition or associated contractor requiring a construction related permit under Chapter 8. One provision, one list, one bond.

The electrical article has its own line at 8-154, requiring a surety bond in the amount of ten thousand dollars to the city before an electrical permit issues. Same figure. It is the same requirement stated again in the electrical context rather than a second bond stacked on top.

So if somebody is quoting you a building bond and an electrical bond and a plumbing bond, ask them which ordinance sections they are reading.

The exemption most pages leave out

8-36(d) is one sentence and it can remove the cost entirely.

A bond shall not be required of a permittee to perform construction work on residential property owned by the permittee, unless such a bond is otherwise required by article VIII of the chapter. Article VIII is the blasting article.

So an owner pulling a permit to work on residential property they own does not post this. Confirm your situation with the building codes division rather than assuming, particularly if blasting is involved, but do not buy a bond before you have asked.

Let it lapse and your permit stops, with no warning

This is the provision to take seriously, and it is unusually blunt.

8-36(c) says the bond shall be continuous and remain in full force at all times during the permit period, and may not terminate except on thirty days prior written notice to the building codes division. Then it says that if the bond is canceled during the permit period and the permittee fails to provide a substitute bond before the cancellation date, the permit shall be automatically suspended as of the day the bond ceases to be effective, and shall remain suspended until a substitute bond is provided.

The ordinance goes on to say the suspension shall be automatic and shall be effective without notice or hearing.

So a missed renewal premium does not generate a letter. It stops your job. Diary the renewal, keep your surety current on your mailing address, and if you are changing carriers, overlap the dates.

Your customers can sue on it, not just the city

A point that changes how you should think about the exposure.

8-36(b) gives a right of action to the city or any person in a contractual arrangement with the permittee who is aggrieved by failure of the permittee to comply with Chapter 8. That claimant may proceed against the permittee and the surety, to require compliance or to pay the cost of it.

That is a wide door. A customer on a job that failed inspection is inside it. The one limit is that the aggregate liability of the surety for any and all breaches of the conditions of the bond shall not exceed the penal sum, so $10,000 is the ceiling across everything rather than a per claim figure. And a surety that pays comes back to you for the money.

When you need a permit at all

Because no permit means no bond.

Under 8-31(c)(1)a, permits are required for any work exceeding five thousand dollars including material and labor, or that requires an inspection. The section excludes residential fences less than seven feet in height, residential roofs, painting, floor coverings and cosmetic changes, and a one story detached accessory structure used as a tool or storage shed, playhouse or similar use where the floor area does not exceed two hundred square feet.

It also says proper documentation such as a copy of the contract or a letter of affidavit must be presented when obtaining a permit, and that if documentation is not presented the latest building valuation data chart published by the International Code Council will be used to determine permit fees.

The bond is not the only piece

Little Rock's own permit handout lists what has to be in hand before a permit issues, and the bond is one of four items.

You need an Arkansas contractor license from the state. You need a City Contractor's License, which the city describes as the city business license, also called a privilege license, obtained from the Collector's Office. You need the $10,000 surety bond made out to the City of Little Rock. And for plumbing and electrical work you provide Master licenses, with a Class A license for mechanical work.

One caution on the state license. Little Rock's own handouts quote different dollar thresholds for when the state license is triggered, so do not take the threshold off a city document. Confirm it with the Arkansas Contractors Licensing Board directly.

Separately, 8-31(a) requires an application for a building permit for a new dwelling of one to four units, other than one to be the builder's primary residence, to include a copy of the applicant's certificate of registration issued by the secretary of state under A.C.A. 17-47-101 et seq., along with a statement that the certificate is in full force and effect. That registration is its own requirement and the bond does not stand in for it.

Eligibility and Requirements for a Arkansas Contractor License ($10,000) Bond:

A surety bond of $10,000 on file with the Little Rock building codes division before any construction related permit is issued.
A surety company authorized to do business and in good corporate standing in the State of Arkansas.
The City of Little Rock as the party the bond is made out to.
Executed by the permittee as well as the surety.
Conditioned to assure the permittee's full compliance with Chapter 8 of the city code.
Continuous, remaining in full force at all times during the permit period.
No termination except on thirty days prior written notice to the building codes division.
Aggregate liability of the surety for any and all breaches capped at the penal sum of the bond.
A separate City Contractor's License, also called the city business or privilege license.
Business name on the bond matching the permit application exactly.

Arkansas Contractor License ($10,000) Bond FAQs:

Am I exempt?

You are if you are a permittee performing construction work on residential property that you own. Section 8-36(d) says a bond shall not be required in that situation, unless a bond is otherwise required by article VIII of the chapter, which is the blasting article. Confirm your case with the building codes division before you buy anything.

Do I need a separate bond for each trade?

No. Section 8-36(a) covers every building, electrical, plumbing, mechanical, house mover, demolition or associated contractor requiring a construction related permit, all under one $10,000 bond. Section 8-154 restates the same $10,000 in the electrical article before an electrical permit issues. It is the same requirement described again, not a second bond.

Does the amount change with the size of my jobs?

No. Section 8-36(b) names ten thousand dollars flatly. It does not scale with contract value, revenue, trade or number of permits. What does change with job size is whether you need a permit at all, since 8-31 sets that at work exceeding $5,000 including material and labor, or work requiring an inspection.

What happens if my bond is cancelled?

Your permit stops. Section 8-36(c) says that if the bond is cancelled during the permit period and you fail to provide a substitute before the cancellation date, the permit is automatically suspended as of the day the bond ceases to be effective and stays suspended until a substitute is provided. The ordinance says the suspension is automatic and effective without notice or hearing. Your surety has to give the building codes division thirty days prior written notice, and that notice period is the whole of your warning.

Who can make a claim against it?

The city, and also your customers. Section 8-36(b) gives a right of action to the city or any person in a contractual arrangement with the permittee who is aggrieved by the permittee's failure to comply with Chapter 8, against both the permittee and the surety, to require compliance or pay the cost of it. The surety's aggregate liability for any and all breaches cannot exceed the penal sum, so $10,000 is a ceiling across everything rather than a per claim limit.

Is the bond the same as the city contractor's license?

No, they are two different things and you need both. Little Rock's permit handout lists a City Contractor's License, which it describes as the city business license also known as a privilege license, obtained from the Collector's Office, and separately a surety bond made out to the City of Little Rock in the amount of $10,000. Neither one substitutes for the other.

Do I need a state license too?

Yes, and it is separate from everything the city requires. The Arkansas Contractors Licensing Board handles it. Be careful with dollar thresholds you find on city handouts, because Little Rock's own documents quote different figures for when the state license is triggered. Confirm the current threshold with the Board rather than with a city page.

I am building a new house. Anything else?

Yes. Section 8-31(a) says an application for a building permit for a new dwelling of one to four units intended principally for residential purposes, excluding a unit that will be the builder's primary residence, must include a copy of the applicant's certificate of registration issued by the secretary of state under A.C.A. 17-47-101 et seq., plus a statement that the certificate is in full force and effect. That registration is its own requirement and the bond does not replace it.

What does the bond cost?

You pay a premium rather than the $10,000. At this size the rate is driven mainly by the owner's personal credit, and a municipal permit bond of $10,000 is a small exposure that is written routinely. Rates vary enough between applicants that publishing a percentage would be misleading. The useful part is that one bond covers all your trades in Little Rock, so you are pricing a single instrument rather than several.

When do I file it?

Before you apply. Section 8-36(b) says that prior to the issuance of any construction related permit, the permittee shall have on file with the building codes division a surety bond in the amount of ten thousand dollars. Having it on file is the precondition, so leaving it until permit day will hold up the job.