Florida Contractor License Bond

While Florida licenses certain contractors at the state level, state licensing does not require a contractor’s license bond. Until April 13th, 2022, the Florida Department of Business and Professional regulation did require a construction license bond for contractors whose FICO credit score did not meet the threshold for financial responsibility.

That is no longer the case. Now, the only contractors who may be required to furnish a contractor license bond in the state of Florida are those seeking registration in one of the municipalities requiring both a local license and a contractor license bond.

It’s up to every contractor to determine whether the area in which they want to work requires both registration and bonding.

There are three parties to a Florida contractor license bond:

• The local authority requiring the contractor to register and provide a contractor license surety bond is known as the bond’s “obligee.”
• The contractor required to furnish the local authority with the bond is called the “principal.”
• The party guaranteeing the bond is referred to as the “surety.”

The bond is legally binding on all three parties.

Any violation of the terms of the surety bond agreement, such as failing to meet local building codes, can result in a claim against the bond. The bond provides a way to compensate the injured party, which could be the obligee or a project owner, for monetary damages. It’s up to the surety to determine whether a particular claim is valid. The principal is legally obligated to pay all valid claims.

However, the surety will pay the claimant directly, as an extension of credit to the principal. The principal must subsequently repay the surety within a certain period of time. Failing to repay the surety for claims paid on the principal’s behalf can result in the surety taking legal action against the principal.