Surety Bond Quarterly - Winter 2015 - (Page 10)

Practical Insights: What You Need to Know Unlicensed Contractors BY ERNEST C. BRoWN A Threat to Their Sureties ThE lAPSE OF a contractor's construction license can be a big problem for its surety. A surety must heavily rely upon its principal to comply with applicable business requirements, including the qualification to do business in the jurisdiction of the project and a valid contractor's license. However, a contractor's license can be quickly suspended or revoked for failure to pay fees, update names of officers, maintain worker's compensation insurance, or renew the license bond. A failure to obtain a proper license may occur when contractors  form joint ventures or enter a new state to obtain new work. These are generally matters of record that can be verified on the licensing board's website. 10 The principal's contractor's license can also be voided as a sanction for failing to appear at a disciplinary hearing or similar agency action. In addition, if the principal performs work outside of the scope of its license or if its work is not closely observed or managed by the licensed individual, the construction entity may be found to have performed unlicensed work. These are circumstances not likely to be reflected in public records at the time. In most states, contractors face serious consequences for performing unlicensed work. Contractor licensing laws generally reflect a public policy of protecting the public from dishonest and incompetent contractors. The licensing requirements provide a minimal degree of assurance surety BoNd Quarterly | WINTER 2015 that persons offering contracting performance have the requisite skill and character. once the lack of license is discovered, the contractor will generally be fired by its client and invoices will go unpaid. Further negative ramifications of doing unlicensed work may include a judicial finding of negligence per se for work performed, an assessment of civil penalties, a permanent license suspension, debarment, and other severe penalties. Where there has been a tragic loss of life or serious bodily injury, there is a very real threat of criminal prosecution. In California, a contractor is prohibited from enforcing a contract if it

Table of Contents for the Digital Edition of Surety Bond Quarterly - Winter 2015

NASBP Upcoming Meetings & Events
2015-2016 Executive Committee
From the CEO - Never Forget Your Latin: Ignorantia Juris Non Excusat
Practical Insights: What You Need to Know - Unlicensed Contractors A Threat to Their Sureties
Hot Topics in Federal Government Contract Compliance
Fraud Schemes and Related Controls in the Construction Industry
Unravelling the Mystery of Court Bonds
NASBP Attorney Advisory Council Participates in NASBP Regional Meetings
Public-Private Partnership Projects
Mining the Value of the NASBP Member Network
Applied Education
Index to Advertisers

Surety Bond Quarterly - Winter 2015