Instantly purchase a North Carolina Contractor License Now.
North Carolina requires General Contractors to be licensed. As part of the licensing process, contractors can either submit financial statements that meet certain requirements or post a North Carolina Contractor License Bond. Learn more about these bonds, including how to easily obtain them.
Under North Carolina Statute 87 Article 1, North Carolina defines a General Contractor as,
“any person or firm or corporation who for a fixed price, commission, fee, or wage, undertakes to bid upon or to construct or who undertakes to superintend or manage, on his own behalf or for any person, firm, or corporation that is not licensed as a general contractor pursuant to this Article, the construction of any building, highway, public utilities, grading or any improvement or structure where the cost of the undertaking is thirty thousand dollars ($30,000) or more, or undertakes to erect a North Carolina labeled manufactured modular building meeting the North Carolina State Building Code.”
You will notice by this definition that contractors who are normally considered a subcontractor and self-perform work can be considered general contractors IF they are contracting directly with the property owner and the work is valued at more than $30,000.
The required amount of North Carolina Contractor License Bond or financial requirements depends on the type of license the contractor is applying for. There are three categories of licenses which include a Limited License, an Intermediate License and an Unlimited License. The financial requirements for each license are below and can be found in North Carolina Code 21 NCAC 12A .0204:
A Limited Contractor in North Carolina is a general contractor that may build any project up to $750,000 in value, excluding the value of the land and land improvements.
A limited contractor must post a surety bond in the amount of $175,000 or meet one of two financial requirements. These requirements include:
North Carolina General Contractors applying for Limited License that are currency in or have been in bankruptcy in the previous five (5) years will need to submit an approved procedures report to the Board or an Audited Financial Statement. This also includes any owner, or qualifying individual of the company. Public companies are excluded from this requirement.
An Intermediate Contractor in North Carolina is a General Contractor who can build a single project up to $1,500,000 in value, excluding the cost of the land and land improvements.
An intermediate contractor must post a surety bond in the amount of $500,000 OR have working capital (Current Assets – Current Liabilities) in the amount of $75,000. If the limited contractor is qualifying on working capital, they must submit an approved procedures report or Audited Financial Statement.
An unlimited contractor in North Carolina may act as a general contractor on a project of any value.
An unlimited contractor is required to post a surety bond in the amount of $1,000,000. As an alternative, the contractor can show working capital (Current Assets – Current Liabilities) of at least $150,000. A contractor showing working capital must provide an approved procedures report, or an Audited Financial Statement.
A North Carolina Contractor License Bond guarantees that the contractor will comply with all laws, statutes, rules and ordinances pertaining to construction contracts in the state. If a contractor fails to uphold these laws and ordinances, a claim can be made against the surety bond.
North Carolina Contractor License Bonds benefit the general public. Anny person who is damaged by an act or omission of the North Carolina Contractor constituting breach of a construction contract, breach of a contract for the furnishing of labor, materials, or professional services to construction can make a claim on the bond to the state.
Regardless of the size of the claim or the number of claims made against the Contractor License Bond, the bond amount is the most the bond company is required to pay out. This is also regardless of how many years the bond has been in place. This is referred to as the bond’s penal sum. However, the bond company’s payments may not relieve the North Carolina contractor of additional amounts that may be owed.
Most North Carolina Contractor License Bonds cost about 1% of the required bond amount for each year that the bond is required. For example, a Limited Contractor will pay about $1,750 each year, an Intermediate Contractor will pay about $5,000 each year and an Unlimited Contractor will pay about $10,000 each year. Some bond companies do offer discounts of up to 30% for contractors who purchase multiple years in advance. You can learn more about the cost of surety bonds.
Most contractors can purchase North Carolina Contractor License Bonds online in minutes. A simple credit check is all that is required. A contractor can then just pay the premium and print the bond.
Contractors that do not qualify on credit alone can still usually get these bonds by submitting additional information.
North Carolina Contractor License Bonds are required to be continuous in nature for as long as the contractor maintains a license. Surety bond companies may cancel the bond at any time by giving the contractor and the state thirty (30) days written notice. A contractor will either need to replace the bond, or their license will be suspended. A contractor may also choose to cancel the bond by meeting the financial requirements and getting approval from the state.
North Carolina requires that Contractor License Bonds be written with a surety bond company that is rated either Superior (A++ or A+) or Excellent (A or A-) by A.M. Best. It is important to verify the bond to meet these requirements.
An important consideration for contractors providing a license bond is indemnity. License Bonds are not insurance. If a claim is made against the bond, the surety bond company will investigate the claim. If they are required to pay out, they will seek to be reimbursed for the claim and any associated costs under the indemnity agreement. Learn more about indemnity.
North Carolina Contractor License Bonds are required to be licensed, but they do not take the place of other bond requirements. Many municipalities still require additional license and permit bonds. Those bonds can also be purchased online at the North Carolina Surety Bonds Page.
Commercial Contractors may also need contract bonds such as bid bonds, performance bonds and payment bonds. Although some of these can be purchased online, many require contractors to provide additional information such as financial statements.
North Carolina Contractor License Bonds are required for licensing, unless a contractor wants to meet certain financial requirements. Fortunately, these bonds are easy to obtain and help protect the public against abusive contractors. North Carolina Contractors can learn more about surety bonds by visiting our Complete Guide, or by contacting the bond experts at Axcess Surety anytime.
Axcess Surety is the premier provider of surety bonds nationally. We work individuals and businesses across the country to provide the best surety bond programs at the best price.
