Construction Law: California Contractor's Bond Limit Must Be Raised By January 1, 2016 To Avoid License Suspension
California Business and Professions Code Section 7071.6 requires all contractors have either a contractor's license bond or cash deposit filed with the California State Licensing Board. The purpose of the bond or cash deposit is to compensate consumers who are damaged by licensed contractors' acts which are violations of licensing laws. Examples of such acts include contractor work which does not meet building codes, abandoning a construction project, or diverting funds from one job to another. Under Senate Bill 467, On January 1, 2016, the bond or cash deposit amount increases from the current $12,500.00 amount to $15,000.00. The CLSB strongly urges licensed contractors to make sure their bond amount or cash deposit is increased by January 1, 2016, or they risk having their contractor's licenses suspended.