The SB 1432, which became effective on January 1, 2009, amended California’s law for claims toward home improvement contractors. The new law states that a homeowner may make a claim against the contractor’s bond only if the damages happened when the homeowner did not intend on selling the home. The law also makes a change to the time limit of making the claim, based on the contractor’s licensing period.
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California Contractor’s License Bond Amendment
August 17, 2009 by Lisa GrimsleyDiscuss: Comments (0)
Category: Commercial Bonds, Contractor License Bonds, Surety News
Tags: bond requirements, ca, california, contractor, Contractor License Bonds, contractors, legislation, surety bond
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Stimulus Package: Pros & Cons For The Construction Industry
February 24, 2009 by Michael WeisbrotThe stimulus package is absolutely gigantic. So much so, I thought I would create a list of pros and cons related to the construction industry pertaining to the bill. Many of the cons are items that the industry was pushing for, but did not get.
Overall, the bill looks like a victory for the construction and surety industries. See below for details.
PROS: CONS: The biggest investment in infrastructure for 50+ years No specified amount for school construction Passed with $8 billion towards high-speed rail (previous Senate version included $2 billion, while previous House version included $0) “State fiscal-stabilization� funds cannot be used for new construction of schools, only modernization General Stimulus: $110.7 billion (35%) is appropriated for projects in 2010 General Stimulus: Only $34.8 billion (11%) of the $308.3 billion will be spent on “shovel-ready� projects by 9/30/09, the fiscal year end for 2009 Infrastructure Stimulus: 50% of funds spent on work to be started within 120 days of the enactment “Use it or lose it� policy for DOT, a 50% expenditure for within 120 days “Use it or lose it� policy is not in force for the following departments, but they must report to Congress on how they are spending their funds:
DOD & VA – 30 days
GSA – 45 days“Build Americaâ€? tax-credit bonds can be issued by local and state governments in 2009 & 2010 Small businesses may deduct income up to $250K of capital expenditures as well as a 50% deduction on depreciable assets (e.g. construction equipment) Businesses can carry 08’ operating losses to offset profits from previous years Only companies with less than $15 million in revenue can qualify A bill that requires public companies to withhold 3% of their contracts will no longer be effective for 2011 The bill will be effective for 2012 Discuss: Comments (0)
Category: Contract Bonds, General Bonding, Other, Surety News
Tags: construction, construction industry, contractor, contractors, legislation, stimulus package
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Compliance Issues for Electrical Contractors Aiding in the Disaster Recovery Efforts in Texas
October 7, 2008 by Michele HaddonIn the aftermath of Hurricane Ike, many out-of-state electrical contractors are traveling into Texas to assist in the disaster recovery efforts. In order to operate in accordance with the law, it is necessary to become familiar with the both the State’s laws and the local ordinances of the municipality that you plan on performing work in.
Electrical Contractors, who have an equivalent license in their own state, are able to quickly obtain an Emergency License issued by the Texas Department of Licensing and Regulation (TDLR). The specific application for this license is available on their website and must be submitted with a copy of your current license and the application fee. An Emergency License can be issued for the following classifications: Master Electrician, Master Sign Electrician, Journeyman Electrician, Journeyman Sign Electrician, Residential Wireman, and Maintenance Electrician. With this license, you must work under another contractor licensed in Texas. The Emergency License is valid for 90 days and will only allow you to perform within the designated disaster area and during the time of a declared disaster and its recovery period.Another quick way to get licensed is to apply for a temporary apprenticeship license. This temporary license would be valid for 21 days – hopefully giving you enough time to obtain your permanent license. Again, you must work under another contractor licensed in Texas.
Be sure to research specific municipality requirements as well. Many cities require contractors to be registered with the municipality. Along with your registration, they may require varying registration fees, additional insurance coverage, and a surety bond.
As an example, here are the licensing requirements for contractors to become registered in the City of Galveston:
• Completed Contractor License Application
• $200.00 Registration Fee
• $300,000 minimum liability insurance listing “City of Galveston� as an additional insured
• $5,000 Surety Bond for permitting/general contractingYou can find their Contractor License Application and other helpful information regarding their requirements on their website:
City of GalvestonThe State of Texas has adopted the NFPA 70 Electrical Code as published in the NEC 2008 Edition. Check with the local code enforcement office in the city you will be performing work in to find out what electrical code requirements they’ve adopted. It is important to learn state and local standards for electrical work because they could differ from your home state.
It is inspiring to hear from so many contractors wishing to help out those who have faced devastation due to natural disasters such as Hurricane Ike. With great intentions in the front of your mind, it is easy to act in haste and overlook the proper steps essential to stay in compliance. Be sure to protect yourself and your company by doing the necessary research and paperwork. This will save you valuable time and money, so you can put more effort towards what really matters – helping those in need.
Discuss: Comments (1)
Category: Commercial Bonds, Contractor License Bonds, Surety News
Tags: contractor, Contractor License Bonds, hurricane, texas, tx
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What Bonding Companies Look For In A Contractor
November 8, 2005 by Michael WeisbrotBonding companies look at far more than just owners’ personal credit when it comes to contract surety over $250,000. A surety wants to have confidence in their bonded contractors prior to approval. There are numerous different actions a contractor can take to instill confidence in a bonding company. A contractor must be organized and practice restraint when necessary to gain the trust of an underwriter.
For most, the best way to run a company in an organized fashion is to hire professionals they can count on to assist in decision making. A bond producer well versed in contract bonding should be a top priority. If your agent is not knowledgeable enough or does not have the markets to fit your company’s needs, then there is little they can do to help with your bonding needs. An experienced bond producer is a must to ensure you are competitive in your bids and to allow for a bond line size that suits the needs of the contractor. An accountant that understands construction is a must. The business financial statements are the highest weighted item for underwriting a contractor. You can think of them as the underwriter’s window into your company. A contractor must walk away if their accountant does not know how to complete financial statements on a percentage of completion basis. A good relationship with a banker is a rather obvious need for any business that relies heavily on loans to operate. There are numerous other professionals that one could utilize such as a good controller and legal counsel, but we will stop our list here so it still applies to most contractors.
Surety underwriters will want to periodically meet with their medium to larger sized contractors. The underwriter will want to see that the contractor knows their cash flow and their receivables that are over 90 days. The underwriter will also want to see that the contractor can answer all other questions regarding their company. In other words, the underwriter will want to leave feeling confident that the contractor knows their industry and the specifics on their company.
Earlier, I mentioned that a contractor must practice restraint when necessary. By restraint, I mean that they can not be blinded by profits and take risks above and beyond their ordinary work. A surety will not be comfortable approving a bond twice the size of any previously bonded work for a new company. A red flag is raised for any contractor that wants to do work outside of their niche and or territory. If an underwriter is not comfortable with the contract for any reason, they will decline the contractor.
A contractor must keep in mind that they are essentially obtaining surety credit. Underwriters must use the financial documentation provided and personal relationships to decide the risk on a particular account. A contractor that is well organized with a team of professionals to assist them will create a great deal of confidence in a surety’s underwriters.
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Category: Bid Bonds, Contract Bonds, General Bonding, Performance Bonds, Subdivision Bonds
Tags: bonding companies, bonding company, bonds, contract bond, contractor, surety bond, surety bonds, underwriting
