The state of Oregon requires most contractors to be licensed and to provide an Oregon Contractor License Bond. Contractor licenses in the state are managed by the Oregon Construction Contractors Board (CCB). These license bonds are easy to obtain and inexpensive. Learn more about what an Oregon Contractor License Bond guarantees and how to obtain one.
An Oregon Contractor License Bond is a three-three party guarantee between an Oregon Contractor (the principal), the obligee (the state of Oregon) and a Surety Bond Company (the Surety). The bond guarantees that the licensed contractor will pay amounts due under Oregon’s Construction Code 701. The surety bond company is guaranteeing that if the contractor does not pay, they will step in and pay valid claims. The public, via the state of Oregon, benefits from the bond.
Generally speaking, anyone who performs construction or repairs to real property for compensation will need to be licensed in Oregon and obtain an Oregon Contractor License Bond. The type of license depends on the type of work being performed.
The following are professionals are excluded from needing an Oregon contractor license and license bond:
Gutter cleaning
Additional excluded parties include:
**Please Note that effective January 1, 2024, Oregon HB2922, increased the amount of each bond by $5,000**
The amount of an Oregon Contractor License Bond is set by the state and depends on the type of work the licensed contractor is performing. The bond amount for each type of contractor is listed below:
A Residential Limited Contractor is a contractor who performs work as a contractor of $40,000 or less in gross annual volume. OR enters into contracts of $5,000 or less.
For contractors holding dual licenses such as a residential and commercial license, a license bond will need to be obtained for both licenses in the amount specified for each license.
If a contractor has their license suspended because they owe more money than the bond amount, the CCB will require the contractor to pay all outstanding amounts before reinstating their license. As a condition of reinstatement, the CCB may also require the Oregon contractor to provide a bond for five (5) times the normal amount.
“The board may reduce the amount of bond it would otherwise require if the contractor demonstrated satisfactory completion of approved elective classes on dispute resolution and prevention, basic accounting and record keeping or such other classes as the board may prescribe.”
Oregon Contractor License Bonds are easy to obtain. They can be approved online and issued immediately. Residential Bonds do not even require a credit check and are instantly approved. Commercial Bonds do require a simple credit check for most applicants.
Most contractors can obtain an Oregon Contractor License Bond, even if they have bad credit or bankruptcies. Contractors may need to provide additional information or pay a higher cost, but these bonds can still be obtained in most cases.
Oregon Contractor License Bonds cost between 0.5% – 1% of the bond amount annually. Some bond companies provide discounts for paying multiple years in advance. These discounts can be between 10% – 30% depending on the bond company.
Oregon requires that an Oregon Contractor License Bond be continuous and in force as long as the contractor is licensed in the state. After the initial license bond is received, the state allows it to be renewed annually with a continuation certificate. However, regardless of the amount of years a surety bond company is on the bond, the bond liability for any period will not exceed the bond amount.
Claims should be avoided by contractors at all costs. Oregon Contractor License Bonds are not insurance. If a claim is made against the bond, the surety bond company must investigate the claim. If the claim is valid, the surety bond company must pay it and will seek reimbursement from the contractor under the indemnity agreement.
Under Oregon Statute 701.150:
“If a licensed contractor fails to pay a complainant amounts due under a court judgment or under a final order of the Bureau of Labor and Industries, the Construction Contractors Board shall issue a determination stating the amount that a surety must pay the complainant.”
The surety bond company cannot pay a claim until notified by the CCB that the claim is ready for payment. The surety shall pay the amount based on the type of work and bond type whether residential or commercial.
If the surety fails to pay a claim within 30 days after notice from the CCB, a court action can be taken against the surety. Although rare, if this happens, the court may assess the surety attorney’s fees, costs and twice the bond amount as a penalty.
It is important to understand that Oregon contractors may need many other types of bonds in addition to the contractor license bond. Many municipalities also required licenses and license bonds. Oregon also requires an additional Oregon Public Works Bond for any contractor performing more than $100,000 on a single public project. Many of these bonds can also be purchased instantly on the Oregon Surety Bond page.
Commercial contractors may also need Contract Surety Bonds such as Bid Bonds, Performance Bonds and Payment Bonds. These bonds may require more information to obtain such as financial statements.
You can find a copy of an Oregon Contractor License Bond Form here or by clicking the image below:
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