Brief Summary
Group 1 is the entry point for a South Carolina mechanical license, and the $7,000 bond is how a new or thinly capitalized shop meets the money test without a balance sheet. It stands in for the $7,000 net worth showing, so the license can issue while the business builds equity.
South Carolina Code 40-11-260(B) caps a Group 1 mechanical contractor at $35,000 per job and requires $7,000 net worth or $3,500 working capital. Under 40-11-262, an applicant may instead file a $7,000 surety bond naming the State of South Carolina as obligee, on the Contractor's Licensing Board's Mechanical Contractors Surety Bond form.
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Detailed Information About the South Carolina Mechanical Contractors License Group 1 ($7,000) Bond:
The bond replaces the financial statement
Every South Carolina mechanical license group has a financial test. For Group 1 it is $7,000 in net worth or $3,500 in working capital, normally shown on an owner-prepared financial statement on the Board's form with an affidavit of accuracy. Section 40-11-262 gives a second route. The applicant may file a surety bond in the same amount as the net worth for its license group, which for Group 1 is $7,000. A shop that just formed, or one whose books do not yet show $7,000 in net worth, can license on the bond.
Watch the $35,000 job limit
Group 1 is the smallest classification. Section 40-11-260(B) limits a Group 1 mechanical contractor to bids and jobs of $35,000. Once your jobs run larger, the next step is Group 2, which allows up to $100,000 per job and carries a $15,000 net worth figure and bond. Groups 3, 4 and 5 rise to $30,000, $60,000 and $300,000. Size the bond to the group you actually need, not the one you started in.
What the bond covers
The obligee is the State of South Carolina. The bond is for the benefit of any person damaged by an act or omission of the licensee that is a breach of a construction contract or a contract for labor, materials or professional services, or an unlawful act or omission in construction work. The LLR bond form names the Contractor's Licensing Board as a claimant as well. The surety must notify the Board of any claim payment within 30 days. The bond is in addition to, and not in place of, any other surety bond the job or the law requires.
Keeping it in force
The bond must be continuous and maintained for as long as the license relies on it, or until the licensee files a compliant financial statement instead. Cancellation takes 30 days written notice to the Board. If the bond is cancelled, the licensee has 10 days to prove the required net worth or the license is suspended. All mechanical contractor licenses expire October 31 in odd-numbered years.
Licensing basics
Mechanical classifications include air conditioning, electrical, heating, lightning protection, packaged equipment, plumbing, process piping and refrigeration. Each license needs a qualifying party who has passed the trade exam and the South Carolina Business Management and Law for Commercial Contractors exam, with at least 2 years of work experience within the past 5 years.
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