Section R156-55a-602 - Contractor License BondsUnder Subsections 58-55-306(1)(b) and 58-55-306(5)(b)(iii), a contractor shall provide a license bond issued by a surety acceptable to the Division in the amount, form, and coverage as follows:
(1) An acceptable surety is one that is listed in the Department of Treasury, Fiscal Service, Circular 570, "Companies Holding Certificates of Authority as Acceptable Sureties on Federal Bonds and as Acceptable Reinsuring Companies" at the date of the bond.(2) The coverage of the license bond shall include losses that may occur as the result of the contractor's violation of the unprofessional or unlawful provisions in Title 58, Chapter 1, Division of Professional Licensing Act, and Title 58, Chapter 55, Utah Construction Trades Licensing Act and Rules R156-1 and R156-55a, including: (a) failure to maintain financial responsibility;(b) failure of the licensee to pay its obligations; and(c) failure of the owners of a licensed unincorporated entity to pay income taxes or self-employment taxes on the gross distributions from the unincorporated entity to its owners.(3) The Division may review the financial history of the applicant, licensee, qualifier, or any owner, as outlined in Section R156-55a-306, in determining the bond amount required under this section.(4) If the licensee is submitting a bond under Subsection 58-55-306(5)(b)(iii)(B), the amount of the bond shall be 20% of the annual gross distributions from the unincorporated entity to its owners. As provided in Subsection 58-55-302(10)(c), the Division, in determining if financial responsibility has been demonstrated, may consider the total number of owners, including new owners added as reported under Subsection 58-55-302(10)(a)(i), in setting the amount of the bond required under this subsection.(5) If the licensee is submitting a bond for any reason other than Subsection 58-55-306(5)(b)(iii)(B), the minimum amount of the bond shall be the greater of: (a) if a bankruptcy petition has been filed, is pending, or discharged by any owner or qualifier, by the licensee entity, or by any prior entities of the owners or qualifiers within the last three years from the date of application or renewal or request for financial review of the licensee, 30% of the total liabilities listed on all Forms 106 filed with the bankruptcy court for the owners, qualifiers, the licensee entity, and any prior entities of the owners or qualifiers; or(b) if the total amount of the cumulative outstanding debts, judgments, child support obligations, liens, and obligations owing by the owners, qualifiers, the licensee entity, and any prior entities of the owners and qualifiers, is $1,000 or more, the greater of: (i) 30% of that total amount; or(ii)(A) $50,000 for any general contractor classification except the R100 classification;(B) $25,000 for the R100 classification; or(C) $15,000 for other classifications.(6) A higher or lower amount of the bond in Subsection R156-55a-602(5) may be determined by the Division and the Commission as provided in this section.(7) The bond shall be maintained during licensure until the licensee receives written permission from the Division to discontinue maintaining the bond.(8) The amount of the bond under Subsection R156-55a-602(5) may be increased by an amount determined by the Commission and Division if the financial, criminal, or disciplinary history of the applicant, licensee, qualifier, or any owner indicates the bond amount is insufficient to reasonably cover risks to the public health, safety and welfare. The Division and Commission may review the financial, criminal, and disciplinary history of the applicant, qualifier, licensee or any owner, as outlined in Section R156-55a-306, in determining the bond amount required.(9) A contractor may provide a license bond issued by a surety acceptable to the Division in an amount less than the bond amount in Subsection R156-55a-602(5) if: (a) the contractor demonstrates by clear and convincing evidence that:(i) the financial history of the applicant, licensee, qualifier, or any owner indicates the bond amount specified is in excess of what is reasonably necessary to cover risks to the public health, safety and welfare;(ii) the contractor's lack of financial responsibility is due to extraordinary circumstances that the contractor could not control as opposed to general financial challenges that contractors experience; and(iii) the contractor's scope of practice will be restricted commensurate with the degree of risk the contract presents to the public health, safety, and welfare; and(b) the Commission and Division approve the amount.Utah Admin. Code R156-55a-602
Amended by Utah State Bulletin Number 2014-21, effective 10/9/2014Amended by Utah State Bulletin Number 2019-2, effective 1/1/2019Amended by Utah State Bulletin Number 2020-19, effective 9/22/2020Amended by Utah State Bulletin Number 2023-02, effective 1/3/2023