Utah Admin. Code R156-55a-602 - Contractor License Bonds
Under Subsections 58-55-306(1)(b) and 58-55-306(5)(b)(iii), a contractor shall provide a license bond issued by a surety acceptable to the Division in the amount, form, and coverage as follows:
(1) An acceptable surety is one that is
listed in the Department of Treasury, Fiscal Service, Circular 570, "Companies
Holding Certificates of Authority as Acceptable Sureties on Federal Bonds and
as Acceptable Reinsuring Companies" at the date of the bond.
(2) The coverage of the license bond shall
include losses that may occur as the result of the contractor's violation of
the unprofessional or unlawful provisions in Title 58, Chapter 1, Division of
Professional Licensing Act, and Title 58, Chapter 55, Utah Construction Trades
Licensing Act and Rules R156-1 and R156-55a, including:
(a) failure to maintain financial
responsibility;
(b) failure of the
licensee to pay its obligations; and
(c) failure of the owners of a licensed
unincorporated entity to pay income taxes or self-employment taxes on the gross
distributions from the unincorporated entity to its owners.
(3) The Division may review the
financial history of the applicant, licensee, qualifier, or any owner, as
outlined in Section R156-55a-306, in determining the
bond amount required under this section.
(4) If the licensee is submitting a bond
under Subsection
58-55-306(5)(b)(iii)(B),
the amount of the bond shall be 20% of the annual gross distributions from the
unincorporated entity to its owners. As provided in Subsection
58-55-302(10)(c),
the Division, in determining if financial responsibility has been demonstrated,
may consider the total number of owners, including new owners added as reported
under Subsection
58-55-302(10)(a)(i),
in setting the amount of the bond required under this subsection.
(5) If the licensee is submitting a bond for
any reason other than Subsection
58-55-306(5)(b)(iii)(B),
the minimum amount of the bond shall be the greater of:
(a) if a bankruptcy petition has been filed,
is pending, or discharged by any owner or qualifier, by the licensee entity, or
by any prior entities of the owners or qualifiers within the last three years
from the date of application or renewal or request for financial review of the
licensee, 30% of the total liabilities listed on all Forms 106 filed with the
bankruptcy court for the owners, qualifiers, the licensee entity, and any prior
entities of the owners or qualifiers; or
(b) if the total amount of the cumulative
outstanding debts, judgments, child support obligations, liens, and obligations
owing by the owners, qualifiers, the licensee entity, and any prior entities of
the owners and qualifiers, is $1,000 or more, the greater of:
(i) 30% of that total amount; or
(ii)
(A)
$50,000 for any general contractor classification except the R100
classification;
(B) $25,000 for the
R100 classification; or
(C) $15,000
for other classifications.
(6) A higher or lower amount of the bond in
Subsection R156-55a-602(5)
may be determined by the Division and the Commission as provided in this
section.
(7) The bond shall be
maintained during licensure until the licensee receives written permission from
the Division to discontinue maintaining the bond.
(8) The amount of the bond under Subsection
R156-55a-602(5)
may be increased by an amount determined by the Commission and Division if the
financial, criminal, or disciplinary history of the applicant, licensee,
qualifier, or any owner indicates the bond amount is insufficient to reasonably
cover risks to the public health, safety and welfare. The Division and
Commission may review the financial, criminal, and disciplinary history of the
applicant, qualifier, licensee or any owner, as outlined in Section
R156-55a-306, in determining the
bond amount required.
(9) A
contractor may provide a license bond issued by a surety acceptable to the
Division in an amount less than the bond amount in Subsection
R156-55a-602(5)
if:
(a) the contractor demonstrates by clear
and convincing evidence that:
(i) the
financial history of the applicant, licensee, qualifier, or any owner indicates
the bond amount specified is in excess of what is reasonably necessary to cover
risks to the public health, safety and welfare;
(ii) the contractor's lack of financial
responsibility is due to extraordinary circumstances that the contractor could
not control as opposed to general financial challenges that contractors
experience; and
(iii) the
contractor's scope of practice will be restricted commensurate with the degree
of risk the contract presents to the public health, safety, and welfare;
and
(b) the Commission
and Division approve the amount.
Notes
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