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Can a claim be filed on a contractor's bond? Is a contractor's bond different from a payment or performance bond?

CaliforniaBond Claims
Anonymous Contractor

Contractor for a project with the City of Los Angeles. There were several change orders that increased the expenses and the City is unwilling to pay.

2 replies

To answer the question in the title of this post, a claim on a contractor's license bond is different from a claim on a public works' payment/performance bond. Subcontractors or suppliers on public works projects may proceed with claims on payment bonds when they remain unpaid, but they may or may not have a right to assert a claim on a license bond depending on whether there is a sufficient basis to make such a claim under the California Business and Professions Code. The road to recovery for direct (general) contractors is different.

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A contractor’s bond usually refers to the $15K license bond that a contractor has to post with the CSLB in order to keep their contractor’s license. This is different from a payment bond (which guarantees payment to subs & suppliers) and a performance bond (which guarantees completion of the project if the general contractor goes bankrupt or is terminated for cause). The license bond protects homeowners up to $15K from damages for certain things that a contractor has done wrong, such as abandoning the project before completion, not paying their subs & suppliers, not following the plans, etc. It also protects suppliers & subs up to $7,500 when the contractor fails to pay them despite having been paid by the owner. I’m happy to answer any questions you may have about this.
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