Georgia Contractor License Bond

The Georgia State Licensing Board for Residential and General Contractors issues licenses for residential and general contractors domiciled in the state, which entails the purchase of a $25,000 contractor license bond. The Georgia Department of Revenue regulates contractors based in a state other than Georgia, which carries different bonding requirements.

Also, a number of Georgia towns and counties have their own licensing and bonding requirements. You’ll have to check with any jurisdiction you plan to work in to determine their particular requirements. Any locally required contractor license bond is in addition to a state-mandated license bond.

A Georgia contractor license bond is a legally binding contract among three parties; with different but related roles and responsibilities:

• The “obligee” is the Georgia State Licensing Board for Residential and General Contractors or a local licensing authority. The obligee establishes the bond’s required amount (its “penal sum,” sets the bond’s terms and conditions, and is protected financially by the bond.
• The “principal” is the contractor purchasing the bond and is legally obligated to pay all valid claims against it.
• The “surety” is the bond’s guarantor and agrees to extend credit to the principal, if necessary, for the payment of valid claims. The surety determines the premium rate the principal will pay to obtain the bond and investigates all claims to determine their legitimacy and whether they should be paid.

If the principal violates the terms of a Georgia contractor license bond, resulting in a financial loss to the obligee, the obligee can file a claim against the bond. If the surety finds the claim to be valid, the usual practice is for the surety to pay the claim initially, then be reimbursed by the principal within a certain period of time. Failure to repay that debt can result in the surety taking legal action to recover the funds from the principal.