Surety Bond Encyclopedia

Home Improvement Contractor ($10,000) Bond - Statewide in Tennessee

Brief Summary

The $10,000 bond is the financial responsibility piece of a Tennessee home improvement license, the license for remodeling jobs too big to skip and too small for a full contractor license. A surety bond satisfies it for a premium, so you are not posting $10,000 in cash or tying up a bank line in a letter of credit.

Tennessee requires a home improvement license for residential remodeling jobs valued from $3,000 to $24,999 in Bradley, Davidson, Hamilton, Haywood, Knox, Marion, Robertson, Rutherford and Shelby counties. Under T.C.A. 62-6-506, applicants file a $10,000 surety bond or irrevocable letter of credit with the Board for Licensing Contractors for the benefit of people damaged by breach of contract. The initial application fee is $250 and the license runs 24 months.

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

Confirm the job is in one of the nine listed counties and valued from $3,000 to $24,999.
Check T.C.A. 62-6-505 to make sure no exemption applies to you.
Gather evidence of general liability and workers' compensation coverage.
Complete the bond application and review the quote.
Pay the premium and receive the executed $10,000 bond.
Submit the Initial Home Improvement Contractor Application online with the $250 fee and the bond.

Detailed Information About the Tennessee Home Improvement Contractor ($10,000) Bond:

Check your county and contract size first

This license is not statewide. The Board for Licensing Contractors applies it in nine counties: Bradley, Davidson, Hamilton, Haywood, Knox, Marion, Robertson, Rutherford and Shelby. Inside those counties it covers residential remodeling work valued from $3,000 to $24,999. T.C.A. 62-6-501 defines home improvement as repair, replacement, remodeling, alteration, conversion, modernization, improvement or addition to residential property of one to four dwelling units, and leaves out new home construction and contracts of $3,000 or less.

Who does not need it

T.C.A. 62-6-505 lists who needs no home improvement license, and so posts no bond for one. That includes employees working for wages, licensed tradespeople such as plumbers and electricians acting only within the craft they are licensed for, clerks and salespeople of a licensed home improvement contractor, and any residential or commercial contractor already holding a valid license under the same chapter. A homeowner can also get a permit for work on their own property without a state license.

The bond itself

T.C.A. 62-6-506 calls for a surety bond or irrevocable letter of credit of $10,000, filed with the board for the benefit of persons damaged by breach of contract. The board's page also allows other financial responsibility in the form of a cash or property bond. Evidence of workers' compensation coverage and general liability insurance, including the amount of coverage, is required before licensure and at renewal.

Term, renewal and local permits

A home improvement license expires the last day of the 24th month from issuance. Renewal requires the fee and an updated application statement, so the bond needs to stay in force for as long as you hold the license. Counties and cities may not require their own separate home improvement license, but under T.C.A. 62-6-503 they may not issue a permit for home improvement work unless the permit lists each contractor's home improvement license number.

Eligibility and Requirements for a Tennessee Home Improvement Contractor ($10,000) Bond:

A $10,000 surety bond, or an irrevocable letter of credit, or a cash or property bond.
Filed with the Tennessee Board for Licensing Contractors.
Protects persons damaged by the contractor's breach of contract.
Evidence of general liability and workers' compensation coverage.
License renewal every 24 months.

Tennessee Home Improvement Contractor ($10,000) Bond FAQs:

I already hold a Tennessee contractor license. Do I need this bond?

No. T.C.A. 62-6-505 exempts any residential or commercial contractor holding a valid license under the same chapter from the home improvement license, and the bond goes with that license.

Can I use a letter of credit instead?

Yes. The statute accepts a surety bond or an irrevocable letter of credit of $10,000, and the board's page also allows a cash or property bond.

What is the risk of working without the license?

T.C.A. 62-6-503 says a person subject to this part who does home improvement work without a license is subject to treble damages in any tort action arising out of that work.

How long is the license good for?

It expires the last day of the 24th month from issuance. Renewal takes the fee and an updated application statement.

Does my city require its own home improvement license too?

No. Under T.C.A. 62-6-503 a county or city may not require an additional home improvement license. It will want your state license number on the permit.