Residential-basic and residential-light commercial contractors are required to prove financial responsibility in order to obtain a license. The State Licensing Board for Residential and General Contractors provides an option for licensees to obtain a $25,000 contractor license bond to satisfy this requirement.
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This bond ensures the contractor will obey the rules and regulations under O.C.G.A. Section 43-41.
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Licensed residential contractors must prove financial responsibility by one of the following:
The best way to show financial responsibility is simply showing a net worth of $25,000. However, if a contractor does not have $25,000 total equity, then a contractor license bond would be the most efficient and cost-effective option.
The contractor license bond must be filed to the following address:
Office of Secretary of State
Professional Licensing Boards Division
237 Coliseum Drive
Macon, GA 31217
The Georgia General Assembly created the State Licensing Board for Residential and General Contractors in 2004 to regulate individuals engaged in construction. A residential contractor performing a total value of work above $2,500 must have a license with the Residential Contractor Division. General contractors defined by Code Section 43-41-2 must be licensed with the General Contractor Division.
There are five other Boards: Georgia State Board of Conditioned Air Contractors, Georgia State Board of Electrical Contractors, Georgia State Board of Low Voltage Contractors, Georgia State Board of Master and Journeyman Plumbers, and Georgia State Board of Utility Contractors. These trades are required to be licensed under their respective division. None of these are required to carry a bond or general liability insurance at this time.
Where licensing is required and an unlicensed contractor has agreed to provide work, the contract is “unenforceable in law or in equity”. If a proper license isn’t obtained for the work being performed, the contractor has no legal right to enforce the contract. If the owner decides not to pay a contractor, a lawsuit, or any legal action whatsoever, cannot happen.
There are two licenses for residential contractors; residential-basic contractor and residential-light commercial contractor. A residential-basic contractor can perform work on detached one- and two-family residences as well as one-family townhouses below three stories in height. Residential-light commercial contractors can perform the same activities and work on multifamily or multi-use light commercial buildings and structures that do not constitute a special hazard as defined by Code Section 25-2-13, as seen on the licensure comparison chart.
General contractors are easier to understand. They are separated as general contractors and general contractor limited tier. A general contractor limited tier must show a net worth of $25,000 and can only work on contracts below a one million dollar value, while a general contractor has no contract limit, but must show a $150,000 net worth.
Yes, general and residential contractors must carry general liability insurance. All licenses are required to carry a minimum of $500,000 per occurrence, except for residential-basic contractors who must carry a minimum of $300,000 per occurrence.
Proof of workers' compensation is required if a contractor has less than 3 employees.