AB 3126: Contractors’ State License Law: cash deposit in lieu of a bond.

Existing law, the Contractors State License Law, provides for licensing and regulation of contractors by the Contractors State License Board, which is within the Department of Consumer Affairs. Existing law requires an applicant for licensure or a licensee to file or have on file certain bonds, including a contractors bond in the sum of $15,000. Existing law authorizes an applicant or licensee to instead post a cash deposit in lieu of a required bond.

This bill would revise the authorization to post a cash deposit in lieu of a bond to prohibit, among other things, certificates of deposit, and instead would require the contractor to deposit the appropriate amount of lawful money or a cashiers check with the registrar pursuant to specified statutes on and after January 1, 2019, and would require each person licensed under that law and subject to any bond requirement to maintain the required bond as executed by an admitted surety insurer or the money deposited with the registrar in the appropriate amount, except as specified. The bill would require all existing alternatives in lieu of a bond or the specified deposit with the registrar, currently filed with the board, to be replaced for a surety bond or the specified deposit with the registrar by January 1, 2020. The bill would provide that the information required from the contractor to obtain the surety requirements be consistent with the information required to obtain a contractors license. The bill would require that any deposits of money or cashiers checks to the registrar under these provisions be deposited in an interest-bearing or share account, as specified.

The bill would also require a contractor who deposits money or a cashiers check with the registrar to submit a $100 fee to the registrar to, upon appropriation by the Legislature, be used to cover the expenses incurred in processing the deposits and paying claims made against the deposits. The bill would create the Contractors Deposit Fund in the State Treasury for these purposes.