Have you been told you need to complete contractors bond form 13b-1 by the CSLB but aren’t sure what it is? Lets back up and start with the basics. As most California contractors know, they are required to have an active $15,000 license bond on file with the registrars of the Contractors State License Board at all times, or bond alternative as a condition of having an active license. To make sure the bonds are uniform in nature, form 13b-1 is the bond format used by the Contractors State License Board that bonds are written on. Intuitively, this makes sense as the purpose of the bond would be compromised if each surety provided a bond on a different form that may not meet the specified provisions of the CSLB as outlined in the Building & Professions Code.
Who Completes Form 13b-1?
We often hear from new applicants that the CSLB is requesting they complete form 13b-1 as part of their application packet. However, this form is often completed by the surety that writes your bond and many surety’s will file this form with the CSLB on behalf of contractors, as they will generally require it to have the surety’s stamp to be acceptable. We have had contractors complete the form themselves as requested and send it to the CSLB, only to have the bond denied because it did not contain the surety’s stamp. To be on the safe side, contractors should ask their broker if the surety providing their bond also files this form with the CSLB to avoid delays in processing.
When a bond renews, we have seen instances when a surety will send over an updated 13b-1 form to the CSLB with the new effective and expiration dates, or alternatively, some surety’s will send over a continuation certificate for the bond. After speaking with a representative at the CSLB office, I was informed either option is acceptable.
What Is the Purpose of Form 13b-1?
The purpose of form 13b-1 is to outline the rights and responsibilities between the Principle (the contractor), the Obligee (The State of California Contractors License Board) and the surety with regards to the provisions of the bond as outlined in Business and Professions Code 7071.5-7071.11. The $15,000 license bond is for the benefit of a contractors employees or the contractors customers should they suffer financial damages as a result of the contractors actions. In addition, form 13b-1 should not be confused with a contractors bond indemnity agreement, which is an agreement between the contractor and the surety with respect to rights and responsibilities as part of the bond contract, with provisions provided should a claim occur. Please click here to see what form 13b-1 looks like.
Have more questions? Feel free to give us a call and we’d be happy to assist you in any way we can.
By Jeremy Schaedler