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#1 |
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Pro
Trade: Building/Remodeling
Join Date: Apr 2007
Location: OKC, OK
Posts: 101
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Bonding For New Home Building
Anyone ever been asked to provide Bonding of a New Home? The customer had asked once if I were bonded, the problem is I am a DBA and I have been told by numerous insurance companies that for a Sole Proprietor to be bonded would be extremly difficult seeing I have only been in business for 3yrs. I have never been asked to provide Bonding papers before (yet have built many homes)....are Bonding papers to protect them only or myself as well...
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#2 |
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The Duke
Trade: Cabinet Maker
Join Date: Mar 2006
Location: Portland, Maine
Posts: 10,087
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Re: Bonding For New Home Building
The insurance thing is not true. Call any insurance broker and talk to him. We had to be licensed, bonded, and insured in WA state. The bond costs like 300 for the year or something.
Price depends on how your credit is. Bad credit = higher premiums. Even for a balls-to-the-wall contractor who pulls in millions was only required to post $6k bond.
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If you correct your mind, the rest of your life will fall into place ~Lao Tzu Custom Cabinetry - Portland, Cape Elizabeth, Scarborough, Kennebunkport, Yarmouth, Falmouth, Cumberland, Ogunquit, Maine Salmon Falls Cabinetry |
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#3 | |
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Super B
Trade: General Contractor Lic. since 1985
Join Date: Mar 2007
Location: Socal Ground Zero
Posts: 4,166
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Re: Bonding For New Home BuildingQuote:
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#4 |
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Member
Trade: General Contractor and also commercial Drywall and Painting
Join Date: Dec 2004
Location: VA
Posts: 58
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Re: Bonding For New Home Building
Depends on the type of bond the owner or contractor requires. We have only worked with performance and payment bonds. The reason for this is because the contractor wants to make sure of a couple of things
1.) that you have at least 3 years of experience 2.) your company is financially capable of handling the project 3.) In case you cannot complete the project the contractor/owner have some sort of insurance that your bonding company will pay for the unfinished work or pay for a different contractor to finish it. If I missed anything is because I am not an expert in bonding, so please let me know what else I missed. The bond also depends on the amount of the contract, for example, for you to able to qualify for a performance and payment bond of say about $ 1,000,000, your company PROFIT for the previous year must be in the area of $ 100,000, I believe revenue of at least half, so $ 500,000 revenue. Last edited by NSolano; 04-30-2007 at 01:30 PM. |
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#5 |
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Pro
Trade: General, Electrical, and Plumbing Contractor
Join Date: Feb 2007
Location: Portland, OR & Eatonville, WA
Posts: 1,264
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Re: Bonding For New Home Building
Your business structure should not have anything to do with it. Sole Proprietor, Partnership, LLC, Incorporated, etc.
We are also licensed in Washington State so a bond has always been required to get our contractors license. We have also had performance bonds through the years for government and commercial jobs. A bond is really not as important as your insurance to the homeowner, unless they want a performance bond. What I mean by this is like for us a $12,000 bond is required for our license. This is really not going to pay for much of anything if things go wrong, its our insurance that is going to foot the bill. But if we don't make things good and they do go after our bond, then we will really have problems getting a bond later or are going to really pay for it. Depending on the bond besides your financial condition and history, a bond will also be based on your work history, i.e. number of jobs completed successfully, size of jobs, etc. etc. |
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#6 | |
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Member
Join Date: Jan 2005
Posts: 31
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Re: Bonding For New Home BuildingQuote:
The fact that you are a sole-proprietor is not so much a problem. However, the fact that a homeowner is requiring it is...What do they want the bond to guarantee? The contract? If so, you likely will not be able to obtain the bond. If your state of local municipality requires a bond to be filed with your license you can easily apply for one and provide them a copy. |
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