Qualifying Individual ($25,000) Bond - Statewide in California
Table of Contents
Brief Summary
If your California contractor license is qualified by someone who does not own at least 10% of the company, CSLB wants a $25,000 Bond of Qualifying Individual on top of the $25,000 Contractor's Bond. It is a small annual premium, it is issued on the CSLB approved form, and it keeps the license active while your qualifier stays on board.
The Contractors State License Board requires a $25,000 Bond of Qualifying Individual under Business and Professions Code 7071.9 when a license is qualified by a Responsible Managing Employee, or by a responsible managing officer, manager or member who owns less than 10% of the voting stock or equity. It is filed in addition to the Contractor's Bond and must reach CSLB headquarters within 90 days of its effective date.
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How to Apply for a Qualifying Individual ($25,000) Bond:
- Confirm your qualifier type. Every RME needs the bond, and an RMO, responsible managing manager or responsible managing member needs it only if they own less than 10%.
- If the qualifier owns 10% or more, file the exemption certification and Qualifier Statement of Ownership instead.
- Gather the business name, license number and qualifier's name exactly as they appear on CSLB records.
- Complete the bond application and pay the premium.
- Have the surety issue the $25,000 bond on the CSLB approved form, signed by its attorney-in-fact.
- Make sure CSLB headquarters receives the bond within 90 days of its effective date.
Detailed Information About the California Qualifying Individual ($25,000) Bond:
Who needs this bond
The Bond of Qualifying Individual (BQI) follows the person who qualifies the license, not the business itself. CSLB requires it in two situations. The first is any license qualified by a Responsible Managing Employee (RME). The second is a license qualified by a responsible managing officer, responsible managing manager or responsible managing member who owns less than 10% of the voting stock or equity of the corporation or LLC.
If the license has more than one RME or RMO, each qualifier has to meet the bonding requirement separately. A sole owner qualifying their own license does not post a BQI.
The 10% ownership exemption
A qualifier who owns 10% or more of the voting stock or equity is exempt, but the exemption is not automatic. CSLB requires a Bond of Qualifying Individual Exemption Certification, filed with the Qualifier Statement of Ownership, to establish it. A federally recognized tribe or participating tribe is also exempt.
It does not replace the Contractor's Bond
The BQI is required in addition to the $25,000 Contractor's Bond under Business and Professions Code 7071.6. LLC licensees also carry a separate LLC Employee/Worker Bond. The BQI applies to issuing an active license, reactivating a license and keeping an active license renewed.
Form and filing
The bond must be written by a surety licensed through the California Department of Insurance, on a form approved by the Attorney General's Office. Only authorized surety companies can order the approved BQI form from CSLB. The business name, license number and qualifier's name must match CSLB records exactly, the bond needs the attorney-in-fact's signature, and CSLB headquarters must receive it within 90 days of the bond's effective date.
Eligibility and Requirements for a California Qualifying Individual ($25,000) Bond:
- Bond amount of $25,000 for each qualifying individual who needs one.
- Surety company licensed through the California Department of Insurance.
- Form approved by the Attorney General's Office and ordered by the surety from CSLB.
- Business name, license number and qualifier's name matching CSLB records exactly.
- Filed in addition to the $25,000 Contractor's Bond, never in place of it.
California Qualifying Individual ($25,000) Bond FAQs:
Only if the RMO owns less than 10% of the voting stock or equity. At 10% or more, the RMO is exempt but must file the Bond of Qualifying Individual Exemption Certification with CSLB to establish it.
No. CSLB requires the bond for every license qualified by a Responsible Managing Employee.
No. When more than one RME or RMO qualifies a license, each qualifier must meet the bonding requirement on their own.
No. The Bond of Qualifying Individual is separate and is filed in addition to the $25,000 Contractor's Bond.
The surety prices the bond from its underwriting review, which usually looks at the credit of the qualifier and the business. Stronger credit generally means a lower premium.
