Surety Bond Encyclopedia

General Contractors License ($50,000) Bond - Statewide in Utah

Brief Summary

If DOPL has made a license bond a condition of your Utah general contractor license, $50,000 is the minimum, not a fixed price tag. The rule sets the bond at the greater of $50,000 or 30% of the outstanding liabilities in your file, and posting it lets the license move forward while DOPL keeps the bond on record until it gives written permission to release it.

Utah Code 58-55-306 has contractor applicants and renewing licensees show financial responsibility, either by a signed DOPL questionnaire or by a bond. Under Utah Admin. Code R156-55a-602, when the cumulative outstanding debts, judgments, child support, liens and obligations of the owners, qualifiers or entity reach $1,000 or more, a general contractor in any classification other than R100 posts the greater of 30% of those liabilities or $50,000. The surety must be listed in Treasury Circular 570.

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How to Apply for a General Contractors License ($50,000) Bond:

Read DOPL's notice for the exact bond amount it calculated and the classification it applies to.
Gather the figures behind it: judgments, liens, collections and any bankruptcy Forms 106.
Complete the surety application in the licensee's exact legal name.
Have the bond issued by a surety listed in Treasury Circular 570 as of the bond date.
Submit the executed bond to DOPL with the application or renewal.
Keep the bond active until DOPL approves a release in writing.

Detailed Information About the Utah General Contractors License ($50,000) Bond:

Why the bond is tied to your file

Utah does not attach one flat bond to every general contractor license. Utah Code 58-55-306(1) asks applicants and licensees seeking renewal or reinstatement to show financial responsibility by completing and signing a questionnaire developed by the Division of Professional Licensing, or by submitting a bond in an amount and form determined by the Construction Services Commission with the concurrence of the director. When the financial review turns up unpaid obligations or a recent bankruptcy, DOPL requires the bond under Utah Admin. Code R156-55a-602.

How the amount is figured

The rule takes the greater of two calculations.

Bankruptcy: if a bankruptcy petition was filed, is pending or was discharged within the last three years from the date of application or renewal, for the owners, qualifiers, the licensee entity or any prior entities of the owners or qualifiers, the bond is 30% of the total liabilities listed on all Forms 106 filed with the bankruptcy court.

Outstanding obligations: if the cumulative outstanding debts, judgments, child support obligations, liens and obligations of those same people and entities total $1,000 or more, the bond is the greater of 30% of that total or a minimum. The minimum is $50,000 for any general contractor classification except R100, $25,000 for R100 and $15,000 for other classifications.

So a B100 general contractor with $400,000 of open judgments is looking at a $120,000 bond, not $50,000.

Unincorporated entities

A separate provision in 58-55-306(5) and R156-55a-602 applies to unincorporated entities whose owners do not show financial responsibility. That bond is 20% of the annual gross distributions from the entity to its owners.

What the bond covers

Coverage must include losses from the contractor's failure to maintain financial responsibility, failure to pay its obligations, and failure of the owners of a licensed unincorporated entity to pay income or self-employment taxes on distributions.

Getting released

The bond stays in place during licensure until DOPL gives written permission to discontinue it. DOPL's Bond Release Request Application asks whether three years have passed since a bankruptcy filing, whether all judgments, tax liens and child support liens are paid or satisfied, or whether payment arrangements are in place with each creditor. DOPL warns that cancelling the bond without its permission may result in discipline up to revocation of the license.

Eligibility and Requirements for a Utah General Contractors License ($50,000) Bond:

Surety listed in the U.S. Department of Treasury, Fiscal Service, Circular 570.
Amount equal to the greater of 30% of outstanding liabilities or $50,000 for general contractor classifications other than R100.
Coverage for failure to maintain financial responsibility and failure to pay obligations.
Continuous coverage during licensure until DOPL grants written permission to discontinue.
Supporting documents for any later release request, such as satisfaction orders, creditor receipts or bankruptcy closing papers.

Utah General Contractors License ($50,000) Bond FAQs:

Why do I need this bond when other Utah contractors I know did not?

Utah ties the bond to financial responsibility under 58-55-306. It is triggered by your file, such as $1,000 or more in outstanding debts, judgments, liens or child support, or a bankruptcy within the last three years.

Is the bond always $50,000?

No. For general contractor classifications other than R100, $50,000 is the minimum. If 30% of your outstanding liabilities is higher, that higher figure is the bond amount.

I hold an R100 license. Is my bond $50,000 too?

The R100 minimum under R156-55a-602 is $25,000, or 30% of outstanding liabilities if that is greater. The $50,000 minimum applies to the other general contractor classifications.

Can the amount be lowered?

The rule allows a lower amount when the contractor shows by clear and convincing evidence that the standard amount is more than public safety requires, with approval from the Division and the Commission.

How do I get rid of the bond later?

File DOPL's Bond Release Request Application with proof that three years have passed since a bankruptcy filing, that judgments and liens are satisfied, or that payment arrangements are in place with each creditor. Do not cancel the bond before DOPL approves the release.