Specialty Contractor License ($25,000) Bond - Statewide in Utah

Brief Summary

$25,000 is the minimum for the R100 Residential and Small Commercial Contractor classification, and for most applicants it is the number DOPL will accept. What catches people is that it is a floor rather than a fixed figure. If you carry $1,000 or more in cumulative debts, judgments and liens, the rule sets the bond at the greater of 30 percent of that total or the $25,000 minimum. Add up what is on your record before you order, because a contractor with $120,000 in judgments is looking at $36,000 rather than $25,000.

Utah Admin Code R156-55a-602(5) sets a minimum contractor license bond of $25,000 for the R100 classification, which is the Residential and Small Commercial Contractor. The bond is filed with the Division of Occupational and Professional Licensing as one of the two ways an applicant or licensee may demonstrate financial responsibility under Utah Code 58-55-306, the other being the division's financial responsibility questionnaire. The surety must be listed in the Department of Treasury, Fiscal Service, Circular 570 at the date of the bond, and the bond covers losses caused by the contractor's violation of Title 58, Chapters 1 and 55, including failure to maintain financial responsibility, failure to pay its obligations, and failure to pay taxes.

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How to Apply for a Specialty Contractor License ($25,000) Bond:

• Confirm your classification code. $25,000 is the minimum for R100, Residential and Small Commercial Contractor.
• Add up your cumulative debts, judgments and liens. If the total is $1,000 or more, the bond is the greater of 30 percent of that total or $25,000.
• If a bankruptcy was filed, pending or discharged within the last three years, calculate 30 percent of the total liabilities listed on all Forms 106 filed with the bankruptcy court.
• If you operate through an unincorporated entity, check whether the 20 percent of annual gross distributions bond applies instead.
• Confirm the surety is listed in Department of Treasury, Fiscal Service, Circular 570 as of the date of the bond.
• Legal entity name exactly as it will appear on the DOPL application.
• Owner or principal information, a current credit report and financial statements. The surety reviews the same material the Division does.
• Have your judgment, lien and collection totals documented, with an explanation of how each arose and how it was resolved.
• Complete the bond application, review the quoted premium, and pay it.
• File the executed bond with the Division of Occupational and Professional Licensing with your application.
• If the required amount looks disproportionate to your situation, consider the R156-55a-602(7) reduction request, which needs clear and convincing evidence and both Commission and Division approval.
• Maintain financial responsibility for the whole licence period. The division may audit at random or on reasonable need.
• Diary the renewal. The cycle is two years and expires November 30 of odd numbered years.
• Complete six hours of continuing education per two year term, including at least three hours of core education.

Detailed Information About the Utah Specialty Contractor License ($25,000) Bond:

$25,000 is a floor, not a fixed number

This is the part worth getting right before you order anything.

R156-55a-602(5) sets $25,000 as the minimum for the R100 classification. But the rule does not stop at the minimum. Where your cumulative debts, judgments and liens total $1,000 or more, the required bond is the greater of 30 percent of that cumulative total or the classification minimum.

So $25,000 is your number only when 30 percent of what is on your record comes out lower. An R100 contractor carrying $120,000 in judgments and liens is looking at $36,000. At $200,000, it is $60,000.

Pull your own totals together first. Judgments, tax liens, collection actions, unpaid balances. The Division is going to add them up, and so is the surety.

Confirm you are in the R100 tier

Three tiers, and the classification code on your application decides which one you are in.

$50,000 for any general contractor classification except R100. That means E100 General Engineering and B100 General Building.

$25,000 for the R100 classification, Residential and Small Commercial Contractor.

$15,000 for other classifications, which is where the S series sits. That covers more than fifty specialty codes including S200 General Electrical, S210 General Plumbing, S220 Carpentry, S260 General Concrete, S280 General Roofing, S290 General Masonry and S350 HVAC.

If your application says R100, this page is yours.

A bond is one of two routes

Utah Code 58-55-306 gives an applicant or licensee two ways to demonstrate financial responsibility. Complete a questionnaire the division provides, or submit a bond in an amount and form determined by the commission with the concurrence of the director.

The bond route is the one that gets used when the questionnaire alone does not carry the file. R156-55a-602(5) attaches the minimum amounts to two specific situations. A bankruptcy filed, pending or discharged within three years. Or cumulative debts, judgments and liens of $1,000 or more.

If DOPL has told you to post a bond, one of those is almost certainly why.

The bankruptcy calculation runs on its own formula

Worth separating out, because it does not use the tiers at all.

Where a bankruptcy was filed, was pending, or was discharged within three years, the minimum bond is 30 percent of the total liabilities listed on all Forms 106 filed with the bankruptcy court.

That figure comes off the schedules you already filed. Have them to hand when you apply, because the surety is going to ask for the same numbers.

Unincorporated entities have a separate bond

A fourth calculation that has nothing to do with the classification tiers.

Under Utah Code 58-55-306(5)(b)(iii)(B), where the division determines an owner of an unincorporated entity has not demonstrated financial responsibility, it may require a bond of 20 percent of the annual gross distributions from the unincorporated entity to its owners. R156-55a-602(4) confirms that calculation and notes the number of owners can affect it.

That one covers unpaid contractor obligations and unpaid income and self employment taxes.

The amount can move either way

Neither the tier nor the formula is the end of the conversation.

R156-55a-602(6) lets the Division and the Commission require a higher amount where the specified amount is insufficient to protect the public, based on the financial history of the applicant or its owners.

R156-55a-602(7) runs the other direction. A contractor may provide a lower amount on clear and convincing evidence that the specified amount exceeds what is reasonably necessary to cover risks to public health, safety and welfare, that the financial difficulties arose from circumstances beyond the contractor's control, and that the scope of practice is restricted accordingly. Both the Commission and the Division have to approve it.

That reduction is available and it is used. It is an argument you build, not a box you tick.

Who can write the bond

R156-55a-602(1) requires the surety to be listed in the Department of Treasury, Fiscal Service, Circular 570 as of the date of the bond.

That is a narrower field than companies simply admitted in Utah. Confirm the Circular 570 listing before you get far into a quote.

What the bond secures

Broader than a plain compliance bond. It covers losses caused by the contractor's violation of Title 58, Chapters 1 and 55, and the rule specifically names failure to maintain financial responsibility, failure of the licensee to pay its obligations, and failure to pay taxes.

Unpaid suppliers and subcontractors are inside that. It is why the required amount scales with the debt already on your record rather than with your revenue.

The obligation continues after you are licensed

Section 58-55-306 requires a licensee to maintain financial responsibility throughout the period of licensure, and lets the division audit on a random basis or when there is reasonable need.

R156-55a-306 sets out what that audit looks at. Judgments, tax liens, collection actions, bankruptcy schedules and a history of late payments to creditors. Financial statements and tax returns, including whether the contractor can prepare competent statements. An acceptable current credit report. An explanation of the reasons for any financial difficulties and how they were resolved. The financial history of the owners. Any guaranty agreements. And any history of prior entities that failed to maintain financial responsibility.

A bond requirement can appear part way through a licence period as a result of that audit, not only at application.

Renewal and continuing education

Contractor licences run a two year cycle and expire November 30 of odd numbered years under R156-1-308a. That is a fixed statewide date rather than an anniversary of the day you were licensed.

Continuing education is six hours during each two year licence term, with a minimum of three hours of core education.

Before you assume you need a licence at all

Utah Code 58-55-305 exempts a long list of work from contractor licensure.

Alterations or repairs valued at under $7,000, including both labour and materials, are exempt, but with carve outs that still require licensed trades for plumbing, electrical, gas appliances, fire suppression, alarms, HVAC and radon systems. Work over $3,000 requires an insurance affirmation.

The owner builder exemption covers a sole owner of property building up to one residential structure per year, or three residential structures per five years, for personal non commercial use, plus incidental structures such as sheds, carports and detached garages. Anyone other than the property owner performing that work still needs a licence if one would otherwise be required.

Other exemptions cover government employees, farming, mining, quarrying, well drilling and lumbering, public utilities, uncompensated helpers working under the owner's direction, and several narrow trade specific situations.

Eligibility and Requirements for a Utah Specialty Contractor License ($25,000) Bond:

• A minimum bond of $25,000 for the R100 classification under Utah Admin Code R156-55a-602(5).
• Where debts, judgments and liens total $1,000 or more, the greater of 30 percent of that total or the $25,000 minimum.
• Where a bankruptcy was filed, pending or discharged within three years, 30 percent of the total liabilities listed on all Forms 106 filed with the bankruptcy court.
• A surety listed in Department of Treasury, Fiscal Service, Circular 570 at the date of the bond.
• Coverage for the contractor's violation of Title 58, Chapters 1 and 55, including failure to maintain financial responsibility, failure to pay its obligations, and failure to pay taxes.
• The Division of Occupational and Professional Licensing as the filing authority.
• A minimum of $50,000 for any general contractor classification other than R100, and $15,000 for other classifications, if your code is not R100.
• For an unincorporated entity under Utah Code 58-55-306(5)(b)(iii)(B), 20 percent of the annual gross distributions to its owners.
• Financial responsibility maintained throughout the period of licensure, subject to random audit.
• A two year licence cycle expiring November 30 of odd numbered years.
• Entity name on the bond matching the DOPL application exactly.

Utah Specialty Contractor License ($25,000) Bond FAQs:

Official and Additional Resources for the Utah Specialty Contractor License ($25,000) Bond: