District of Columbia Contractor License Bonds

Who needs a license and a bond

The District requires a bond for three contractor licenses, and the rules differ by trade. A home improvement contract is one for a contract price of $300 or more. Home improvement covers residential property, meaning a single-family or two-family dwelling, including a condominium or cooperative unit. Construction work outside the scope of home improvement is treated as general contracting or construction management. Licensed electricians, plumbers and gas fitters, and refrigeration and air conditioning mechanics are outside the home improvement rules as long as their work stays within their licensed occupation. You cannot require or accept payment for a home improvement contract before the work is fully complete unless you are a licensed home improvement contractor. The Department of Licensing and Consumer Protection (DLCP) has the final word on what any given license requires.

The home improvement bond and the cash alternative

Each home improvement license applicant files a $25,000 bond running to the District of Columbia and extending to third-party recovery. The surety must be listed by the U.S. Treasury and also authorized by the D.C. Department of Insurance, Securities, and Banking (DISB). The DLCP bond form names the District and any aggrieved person as obligee, sets the sum at $25,000, and requires a surety authorized to do business in the District. Instead of a surety bond, you may deposit with the D.C. Treasurer $25,000 in cash, a $25,000 certified or cashier's check, or US government bonds or notes with an aggregate maturity value of at least $26,000. A deposit pays only final judgments that remain unsatisfied, and the Treasurer holds it for at least three years after the license expires. These home improvement rules were adopted by final rulemaking in 2009.

Home improvement insurance must be cancelable only after 30 days' notice to the Director and must provide at least $50,000 for bodily injury or death of one person in a single accident, $100,000 in the aggregate per accident, and $10,000 property damage per accident. DLCP lists a valid certificate of liability insurance and a $25,000 surety bond among home improvement application items. The form requires a bond for the license year, ending not more than two years from the bond's effective date; confirm your license year and renewal dates with DLCP.

The bond form, term, renewal, and claims

For an electrical bond, the surety may end its liability by giving 30 days' written notice to the principal and the Director, and the license terminates unless a replacement bond is filed. An aggrieved person may sue the surety on an electrical bond up to the bond penalty, and the principal must restore the bond to its original amount after a recovery. The electrical term is unresolved: the prescribed form in 17 DCMR 210.7 says it stays in force for five years from its date, while 17 DCMR 205.3 says occupational licenses run two years from the first of the month they take effect; confirm the term with DLCP. The DLCP plumbing and gas fitting form says the bond stays in force through March 31 of an even year, a term that comes from the form only.

On a home improvement bond, an aggrieved person has a right to sue the surety up to the penalty of the bond, alone or jointly with the principal. The surety is not responsible for completing a home improvement contract; it is liable only for a homeowner's financial loss arising from a violation of statute or regulation for which the principal was subject to criminal prosecution.

Steps

1. Choose your license. Decide whether your work is home improvement, electrical, plumbing and gas fitting, or general contracting / construction management, since the bond follows the license.
2. Confirm the bond and amount. Home improvement is $25,000, electrical runs $1,000 to $4,000 by class, and plumbing and gas fitting is $5,000 on the DLCP form, with a separate bond for each licensee.
3. Get the bond. Ask a surety that is Treasury-listed and authorized by DISB for the home improvement bond. What you pay is a small share of the bond amount, set by the surety from your credit and business details.
4. File it with DLCP. File the bond with your license application; DLCP lists a certificate of liability insurance and a $25,000 surety bond among home improvement application items.
5. Add the dual bond where it applies. For electrical and plumbing, file a separate bond for the designated master as well as for the business; for electrical, a contractor that designates only itself does not file a second master bond.
6. Keep the bond in force. For electrical, a surety can cancel on 30 days' notice and the license ends unless you file a replacement; renew the bond with the license, and confirm the plumbing March 31 even-year term and any home improvement renewal dates with DLCP.

Sources

• D.C. Code § 47-2883.01
• D.C. Code § 47-2883.02
• 16 DCMR § 802 (Home Improvement Bond)
• 16 DCMR § 899 (Definitions)
• 16 DCMR § 803 (Home Improvement Insurance)
• 16 DCMR § 800 (Home Improvements)
• 17 DCMR § 210 (Electrical Bonding)
• 17 DCMR § 205 (Electrical Licensing)
• 17 DCMR Title 17 chapter list
• 17 DCMR ch. 39 section list
• 17 DCMR § 3901 (GC/CM Licensing)
• 17 DCMR § 3902 (GC/CM Insurance)
• DLCP Home Improvement Surety Bond form
• DLCP Plumbing and Gas Fitting Bond form
• DLCP Home Improvement Contractor notice

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