Mechanical Contractors License Group 3 ($30,000) Bond - Statewide in South Carolina

Brief Summary

At Mechanical Group Three the bond is usually the cheaper of two options, and that is a different answer from the one lower groups get. S.C. Code 40-11-262 lets you file a $30,000 surety bond in lieu of the financial statement, and at Group Three the board will not take an owner prepared statement. It wants one compiled by a CPA under GAAP. So the honest comparison is not bond versus free. It is bond premium versus what your accountant charges to compile a statement every renewal.

South Carolina sets a minimum net worth or working capital for each contractor licence group under S.C. Code 40-11-260, and Mechanical Contractor Group Three is $30,000 net worth or $20,000 working capital against a $200,000 bid limit. S.C. Code 40-11-262 lets an applicant file a surety bond in the same amount as the net worth for the licence group instead of the financial statement, which makes the Group Three bond $30,000. The State of South Carolina is the obligee. The bond is continuous, stays in force for as long as the licence is held or until the licensee files a statement meeting the net worth, and cancels only on thirty days notice to the board from both the surety and the applicant.

We can help with all South Carolina bonds!

How to Apply for a Mechanical Contractors License Group 3 ($30,000) Bond:

• Confirm your group and your table. Mechanical Group Three is the $30,000 bond against a $200,000 bid limit. The general contractor table is a different set of figures.
• Cost out the alternative before you buy. At Group Three the statement route means a CPA compiled statement under GAAP, not the owner prepared affidavit that Groups One and Two may use.
• Check the working capital test. Group Three working capital is $20,000 against $30,000 net worth, and the bond is tied to the net worth figure either way.
• Legal entity name exactly as it will appear on the Contractor's Licensing Board application.
• Owner or principal information and authorization for a credit review.
• Business financial information. Applicants using the bond are often those who cannot show the net worth, so the surety looks at the same ground the board would have.
• Use a surety authorized to transact surety business in South Carolina.
• Complete the bond application, review the quoted premium, and pay it.
• Use the board's surety bond form for mechanical contractors rather than the general contractor form or a generic one.
• Confirm the bond names the State of South Carolina as obligee and is written continuous in form.
• File it with the application and the $350 nonrefundable fee, by check or money order. The board does not take cash.
• Diary October 31 in odd numbered years, and review each renewal whether your net worth now clears $30,000 so you can file a statement and drop the bond.

Detailed Information About the South Carolina Mechanical Contractors License Group 3 ($30,000) Bond:

The bond is optional, but at Group Three the alternative is not free

S.C. Code 40-11-260 sets a minimum net worth or working capital for each licence group and requires a financial statement showing it. 40-11-262 then allows a surety bond in lieu of that statement.

So far that sounds like the bond is for firms that cannot show the money. At Mechanical Groups One and Two it largely is, because the board accepts an owner prepared statement with an affidavit at those levels, which costs nothing but your time.

Group Three is where it changes. At Groups Three and Four the board wants a financial statement compiled by a CPA in accordance with GAAP. Group Five wants an audited balance sheet. A compiled statement is a real invoice from a real accountant, and licences renew, so it is a recurring invoice.

That makes the Group Three decision genuinely close. Compare the annual bond premium against what your CPA charges to compile, and pick on the numbers rather than on the assumption that the statement route is the free one.

Make sure $30,000 is your figure

The bond is not a flat South Carolina number. 40-11-262 sets it in the same amount as the net worth for the applicant's licence group, so it moves with the group.

Mechanical contractor groups run: Group One, $35,000 bid limit, $7,000 net worth, $3,500 working capital. Group Two, $100,000 bid limit, $15,000 net worth, $10,000 working capital. Group Three, $200,000 bid limit, $30,000 net worth, $20,000 working capital. Group Four, $400,000 bid limit, $60,000 net worth, $40,000 working capital. Group Five, unlimited, $300,000 net worth, $200,000 working capital.

The bond amounts are $7,000, $15,000, $30,000, $60,000 and $300,000 across those five groups.

One collision worth knowing. Mechanical Group Four is $60,000, and so is General Contractor Group Two. Same figure, two different boards' tables, two different bid limits. If somebody quoted you $60,000, check which table they read.

Working capital does not shrink the bond

A quirk that costs money if you miss it.

40-11-260 lets you qualify on net worth or on working capital, and Group Three working capital is $20,000 against $30,000 net worth. But 40-11-262 ties the bond to the net worth figure. A Group Three applicant who could have satisfied the board on $20,000 of working capital still posts a $30,000 bond if they choose the bond route.

If the working capital test is within reach, the statement is worth costing out properly before you buy anything.

Odd numbered years, not even

This one catches people who hold both licences, and it catches anyone who read a general contractor page and assumed it applied.

All mechanical contractor licences expire October 31 in odd numbered years. General contractor licences expire October 31 in even numbered years. Two different cycles on the same board.

So a firm holding a mechanical licence and a general contractor licence is renewing one or the other almost every year, on alternating Octobers, and the financial documentation has to be current for each.

You can drop the bond later

40-11-262 says the bond must be continuous in form and maintained for as long as the applicant maintains the licence, or until the applicant submits a financial statement showing that he meets the net worth requirements.

So it is a bridge rather than a life sentence. Grow past $30,000 of net worth, decide the CPA fee is now the cheaper of the two, file the statement, and the bond comes off. Worth a look each renewal instead of renewing on autopilot.

This bond pays claims to third parties

Worth understanding before you treat it as a formality.

40-11-262 conditions the bond for the benefit of any person who is damaged by an act or omission of the applicant constituting a breach of construction contract or a contract for the furnishing of labor, materials or professional services for construction undertaken by the applicant, or by any unlawful act or omission of the applicant in performing construction.

The State of South Carolina is named as obligee, but the people who recover are the ones who were damaged, and that includes owners on a bad job and suppliers on a materials contract. A surety that pays a claim comes back to you for reimbursement.

Cancellation is not something a surety can do quietly either. It requires notification to the board from both the surety and the applicant thirty days prior.

What the licence covers and what it costs

Mechanical classifications include Air Conditioning, Boiler Installation, Electrical, Heating, Lightning Protection, Packaged Equipment, Plumbing, Pressure and Process Piping and Refrigeration. Some carry each other, so Air Conditioning includes Packaged Equipment and Refrigeration, and Heating can engage in Boiler Installation work.

A licence is required where the total cost of construction is greater than ten thousand dollars for mechanical contracting, under 40-11-30. The application fee is $350, it is nonrefundable, and the board takes a check or money order only rather than cash.

Eligibility and Requirements for a South Carolina Mechanical Contractors License Group 3 ($30,000) Bond:

• A surety authorized to transact surety business in South Carolina.
• Bond amount in the same amount as the net worth for the licence group, which is $30,000 for Mechanical Contractor Group Three.
• The State of South Carolina named as obligee.
• The board's surety bond form for mechanical contractors.
• Continuous in form, maintained for as long as the licence is held or until a financial statement showing the net worth is filed.
• Cancellation only on notification to the board from both the surety and the applicant thirty days prior to cancellation.
• Conditioned for the benefit of any person damaged by a breach of construction contract, a contract for labor, materials or professional services for construction, or an unlawful act or omission in performing construction.
• Entity name on the bond matching the licence application exactly.
• Owner credit and business financials. The bond stands in for a net worth test, so underwriting covers the same ground.

South Carolina Mechanical Contractors License Group 3 ($30,000) Bond FAQs:

Official and Additional Resources for the South Carolina Mechanical Contractors License Group 3 ($30,000) Bond: