California Contractor Bond Requirements — Everything Homeowners Need to Know

The Legal Basis for California's Contractor Bond Requirement

California Business and Professions Code §7071.6 requires that every licensed contractor maintain a contractor's license bond with a minimum face value of $25,000 as a condition of licensure. The bond must be continuously maintained — a lapsed bond results in automatic license suspension. The bond is filed with the Contractors State License Board and must name the CSLB as an additional obligee.

The bond is specifically intended to protect consumers. It is not a general insurance policy for the contractor — it is a guarantee that runs in favor of homeowners and others harmed by the contractor's misconduct.

What the Bond Covers — and What It Does Not

The bond covers:

• Financial loss from contractor failure to complete contracted work
• Losses from contractor abandonment of a project after receiving payment
• Property damage caused by the contractor during the course of work
• Losses from contractor fraud or willful misconduct
• Claims from subcontractors or material suppliers who were not paid (these can reduce what is available for homeowners)

The bond does not cover:

• Claims that exceed the $25,000 face value (you must pursue the excess through litigation)
• Claims where the contractor's conduct was not related to the licensed work
• Disputes about contract price or scope that are purely commercial disagreements without misconduct
• Claims filed after the bond has expired and been replaced (check the effective dates)

AB 521 — 2026 Change to CSLB Bond Liability

Effective January 1, 2026, AB 521 clarifies that the CSLB is not liable for attorney's fees or costs in civil actions involving a contractor's cash deposit filed in lieu of a bond. This is relevant when a contractor posts a cash deposit with the CSLB instead of a surety bond — both are permitted under California law.

For homeowners, the practical impact is limited: if your contractor's "bond" was actually a cash deposit with the CSLB, the process for making a claim is similar, but attorney's fees from the CSLB are off the table. Claims still proceed against the cash deposit fund. Verify on cslb.ca.gov whether your contractor has a surety bond or a cash deposit — the search results will specify.

Multiple Claimants — The Priority Problem

A $25,000 bond is a single pool of money that must be shared among all valid claimants against that contractor. Subcontractors, material suppliers, and homeowners all have potential claims against the same bond. If multiple parties file claims and the total exceeds $25,000, each claimant receives a pro-rata share.

This creates a critical timing issue: file your claim as soon as possible. Earlier claimants are not necessarily prioritized over later ones — the distribution is typically pro-rata — but filing early ensures your claim is established before the bond is exhausted by other claimants or before any statute of limitations issues arise.

If you know subcontractors were unpaid (which you may learn from SB 517 subcontractor disclosure requirements), they may be filing bond claims simultaneously with you. Coordinating with an attorney who can monitor and respond to the claims process protects your share.

When the Contractor Has No Bond

If a contractor's bond has lapsed, the CSLB should have suspended the license. A contractor performing work with a suspended license is functioning as an unlicensed contractor — and your §7031 disgorgement rights apply in addition to any other remedies.

To verify bond status: look up the contractor on cslb.ca.gov and check the "Bond" section of their license detail page. It will show the bonding company name, bond amount, and effective dates. If the bond shows as expired or cancelled, note this in your CSLB complaint.