Surety Bond Encyclopedia

Contractor License ($5,000) Bond - Township of Clinton, MI in Michigan

Brief Summary

Check what you are actually being asked for. The $5,000 Clinton Township bond in the ordinances is the water and sanitary sewer service line contractor bond under section 1040.03, not a general contractor licence bond. It applies to contractors installing water or sanitary sewer service lines connecting to the Township's public systems, and it is annual and payable to the Township. If your work does not touch those connections, ask the Building Department which ordinance they are citing before you buy anything.

Clinton Township Codified Ordinances section 1040.03, in Chapter 1040 Water and Sewers Generally, requires contractors who expect to install water and or sanitary sewer service lines connecting to the public water and sewer systems of the Township to be licensed by the Township and to furnish a $5,000 surety bond payable to the Township. The bond is conditioned on the contractor's failure to satisfactorily complete any building services sewer connections, failure to restore the construction site, or failure to abide by any other conditions. Licensure also requires state licensure as a master plumber, drain layer contractor Class A or B, or residential building or maintenance contractor, plus specified insurance.

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

Confirm which ordinance applies to you. Section 1040.03 covers contractors installing water and or sanitary sewer service lines connecting to the Township's public systems.
Hold the state credential first. The section requires state licensure as a master plumber, a drain layer contractor Class A or B, or a residential building or maintenance contractor.
Legal business name exactly as it will appear on the Township licence application.
Owner or principal information and authorization for a credit review.
Complete the bond application, review the quoted premium, and pay it.
Have the bond written for $5,000 and made payable to the Township.
Confirm the bond wording covers the three statutory conditions, failure to satisfactorily complete building services sewer connections, failure to restore the construction site, and failure to abide by any other conditions.
Arrange the insurance in parallel. Comprehensive general liability of $1,000,000 per occurrence for bodily injury, and motor vehicle liability of $250,000 each person and $500,000 per occurrence.
Pay the initial filing fee for the licence. The amount comes from the Township's General Fee Schedule rather than from the ordinance text, so confirm the current figure with the Township.
Diary the renewal. The licence is valid for one year and the bond is an annual requirement.
If you also build or alter residential structures, hold the separate state residential builder or maintenance and alteration contractor licence from LARA's Bureau of Construction Codes.

Detailed Information About the Michigan Contractor License ($5,000) Bond:

This is the water and sewer connection bond

Worth settling first, because the name on most listings for it is wrong.

The $5,000 Clinton Township bond sits in section 1040.03, which is part of Chapter 1040, Water and Sewers Generally. The licence it attaches to is described in the ordinance itself: contractors who expect to install water and or sanitary sewer service lines connecting to public water and sewer systems of the Township shall be licensed by the Township.

That is a specific trade permission for tapping the Township's water and sewer mains. It is not a general permission to contract in Clinton Township, and buying it will not answer a request for something else.

If somebody at a counter has told you that you need a Clinton Township contractor bond, ask which ordinance section they are working from before you pay a premium. If the answer is 1040.03, this page is yours.

$5,000, annual, payable to the Township

The amount does not tier. The ordinance requires the contractor to furnish the Township with a five thousand dollar surety bond, and the bond is payable to the Township.

It is an annual requirement. The contractor pays an initial filing fee for a licence which is valid for one year, with renewal fees set out in the General Fee Schedule that forms part of the Code of Ordinances. That means the fee is not printed in the ordinance text and can be changed without amending it, so confirm the current figure with the Township rather than budgeting off a number you found online.

What the bond actually secures

Three things, and they are broader than most people expect from a small municipal bond.

It is conditioned on the contractor's failure to satisfactorily complete any building services sewer connections. On failure to restore his or her construction site. And on failure to abide by any other conditions.

That third limb is the one to notice. It is not limited to the physical work. Site restoration is called out separately, which matters on a job where you have opened a street or a lawn to make the connection.

The state licence is a prerequisite, not an alternative

The same section conditions Township licensure on holding state credentials. Those eligible must hold state licensure as a master plumber, a drain layer contractor Class A or B, or a residential building or maintenance contractor.

So the Township is layering its licence on top of a state one rather than replacing it. Holding the state credential does not exempt you from the Township licence or the bond, and holding the Township licence does not substitute for the state credential.

On the state side, Michigan licenses residential builders and maintenance and alteration contractors through the Department of Licensing and Regulatory Affairs, Bureau of Construction Codes, Licensing Section, under Article 24 of Public Act 299 of 1980. That licence covers construction of a residential structure or a combination residential and commercial structure, and repair, alteration, addition, subtraction or improvement of a residential structure for compensation. It is a separate filing from anything Clinton Township asks for.

The insurance is the bigger number

More contractors get held up by this than by the bond, because the limits are substantial relative to a $5,000 bond.

The ordinance requires comprehensive general liability insurance at $1,000,000 per occurrence for bodily injury, and motor vehicle liability insurance at $250,000 for each person and $500,000 per occurrence.

Line the certificate up at the same time as the bond. A $5,000 bond is a small file. A million dollar liability policy is not something to arrange on the day you want the licence.

What is current

The section has been kept up to date. The most recent amendment noted on it is Ordinance 482, passed 10-24-22, so anything written about Clinton Township water and sewer contractor licensing before late 2022 should be checked against the current text rather than relied on.

Eligibility and Requirements for a Michigan Contractor License ($5,000) Bond:

A $5,000 surety bond furnished to the Township under Clinton Township Codified Ordinances section 1040.03.
The bond payable to the Township.
Conditioned on failure to satisfactorily complete any building services sewer connections.
Conditioned on failure to restore the construction site.
Conditioned on failure to abide by any other conditions.
State licensure as a master plumber, drain layer contractor Class A or B, or residential building or maintenance contractor.
Comprehensive general liability insurance of $1,000,000 per occurrence for bodily injury.
Motor vehicle liability insurance of $250,000 for each person and $500,000 per occurrence.
A licence valid for one year, with an initial filing fee and renewal fees set by the Township General Fee Schedule.
Business name on the bond matching the Township licence application exactly.

Michigan Contractor License ($5,000) Bond FAQs:

Is this a general contractor licence bond?

No. The $5,000 bond sits in section 1040.03, which is part of Chapter 1040, Water and Sewers Generally. The ordinance applies it to contractors who expect to install water and or sanitary sewer service lines connecting to public water and sewer systems of the Township. If your work does not involve those connections, ask the Building Department which ordinance section they are citing before you buy.

Does the amount change with the size of the job?

No. The ordinance names a five thousand dollar surety bond flatly. It does not scale with contract value, number of connections or revenue. What is annual is the licence, and the bond goes with it.

Who is the obligee?

The Township. The ordinance says the bond will be payable to the Township. It is not a state bond and it is not payable to a customer.

What is the bond conditioned on?

Three things. Failure to satisfactorily complete any building services sewer connections, failure to restore his or her construction site, and failure to abide by any other conditions. The site restoration limb matters on any job where you have opened a street or a lawn to reach the main.

Do I need a state licence as well?

Yes, and it is a prerequisite rather than an alternative. The section limits eligibility to contractors holding state licensure as a master plumber, a drain layer contractor Class A or B, or a residential building or maintenance contractor. The Township licence sits on top of that credential.

What is the Michigan state builder licence?

Michigan licenses residential builders and maintenance and alteration contractors through the Department of Licensing and Regulatory Affairs, Bureau of Construction Codes, Licensing Section, under Article 24 of Public Act 299 of 1980. It covers construction of a residential structure or a combination residential and commercial structure, and repair, alteration, addition, subtraction or improvement of a residential structure for compensation. That is a separate filing from anything Clinton Township requires.

What insurance do I need?

Comprehensive general liability insurance of $1,000,000 per occurrence for bodily injury, and motor vehicle liability insurance of $250,000 for each person and $500,000 per occurrence. Those limits are the item most likely to hold up your licence, so arrange the certificate at the same time as the bond rather than after.

What does the licence itself cost?

The ordinance does not print a figure. It says the contractor pays an initial filing fee for a licence valid for one year, with renewal fees per the General Fee Schedule that forms part of the Code of Ordinances. Because the fee lives in that schedule rather than in the ordinance, it can change without the ordinance being amended. Confirm the current amount with the Township.

What does the bond cost?

You pay an annual premium rather than the $5,000. At this size the rate is driven mainly by the owner's personal credit, and a municipal bond of $5,000 is a small exposure written routinely. Rates vary enough between applicants that publishing a percentage would mislead rather than help. Get your actual number, it takes a couple of minutes.

Is the ordinance current?

Yes. The most recent amendment noted on section 1040.03 is Ordinance 482, passed 10-24-22. Anything written about Clinton Township water and sewer contractor licensing before late 2022 should be checked against the current text.