What is the required amount of a California contractor's bond?
Based on: B&P 7071.6
California Contractor Law & Business Exam · Bonds & Liens
California Contractor Bonds and Mechanics Liens 2026: The $25,000 Bond Explained
Every California contractor must post a $25,000 contractor's bond in favour of the State of California as a condition of licensure, under Business and Professions Code section 7071.6. The bond protects homeowners, consumers and unpaid workers, not the contractor, so most contractors also buy separate liability and errors-and-omissions insurance. Separately, the Civil Code gives unpaid contractors, subcontractors and suppliers the right to record a mechanics lien against the improved property. This guide covers the bond amounts and beneficiaries, the disciplinary and qualifying-individual bonds, and the mechanics lien process. See the Business and Professions Code for the bond law.
Practice
Free practice questions
In whose favor is a contractor's bond executed?
Based on: B&P 7071.5
Who must execute a contractor's bond?
Based on: B&P 7071.5
Filing a contractor's bond is a condition precedent to which of the following?
Based on: B&P 7071.6
Which of these parties is a beneficiary of the contractor's bond?
Based on: B&P 7071.5
An employee harmed by which failure of the licensee may recover on the contractor's bond?
Based on: B&P 7071.5
A property owner contracting for a single-family dwelling may recover on the contractor's bond only if the dwelling meets what condition?
Based on: B&P 7071.5
Excluding the subdivision (a) beneficiaries, what is the maximum aggregate surety liability on the contractor's bond?
Based on: B&P 7071.6
Bond proceeds in excess of $7,500 are reserved exclusively for whom?
Based on: B&P 7071.6
Is a contractor's bond required while a license is inactive?
Based on: B&P 7071.6
The contractor's bond: amount and who it protects
The contractor's bond is the license law's core consumer protection, and the exam asks about its exact figures. Under Business and Professions Code section 7071.6 the bond must be in the sum of $25,000, executed by an admitted surety in favour of the State of California under section 7071.5, and filing it is a condition precedent to the issuance, reinstatement, reactivation, renewal or continued maintenance of a licence. The bond is not a policy that pays the contractor: it benefits the public. The named beneficiaries under section 7071.5 are homeowners contracting for home improvements, owners of single-family dwellings, persons damaged by the licensee's willful or fraudulent violation of the license law, and employees owed wages or fringe benefits. There is a catch the exam loves: an owner of a single-family dwelling may recover only if the dwelling is not intended for sale or offered for sale at the time the damages were incurred. There is also a cap. Excluding the homeowner and consumer beneficiaries of subdivision (a), aggregate surety liability may not exceed $7,500, and bond proceeds above $7,500 are reserved exclusively for those subdivision (a) beneficiaries under section 7071.6. A bond received within 90 days of its effective date is accepted as of that date under section 7071.7. No bond is required while a licence is inactive.
- Homeowners contracting for home improvements (B&P Code § 7071.5).
- Owners of a single-family dwelling not intended for sale when the damage occurred (B&P Code § 7071.5).
- Persons damaged by the licensee's willful or fraudulent violation of the license law (B&P Code § 7071.5).
- Employees owed unpaid wages or fringe benefits (B&P Code § 7071.5).
Disciplinary bonds and the qualifying individual's bond
Two other bonds sit beside the standard contractor's bond, and candidates confuse them. A disciplinary bond, under section 7071.8, is required when a licensee has been disciplined, and the registrar fixes its amount by the seriousness of the violation, but it may be no less than $25,000 and no more than ten times the amount required by section 7071.6. It must remain on file for at least two years, and it is a separate, additional bond: it may not be combined with, and does not replace, any other bond required by the license law. A qualifying individual's bond, under section 7071.9, is a different creature entirely. It is required when the person qualifying the licence is not the proprietor, a general partner, or a joint licensee, because in that situation the qualifier has less personal stake in the business and the extra bond backs the public. Keeping these three straight, the standard contractor's bond, the disciplinary bond and the qualifying individual's bond, is a reliable source of exam marks. The bond protects the public; the contractor's own losses are covered instead by commercial general liability insurance and, for professional mistakes, errors-and-omissions coverage.
The mechanics lien and stop payment notice
The Civil Code gives builders a powerful collection tool. Under Civil Code section 8400, a person who provides work authorised for a work of improvement, including a direct contractor, a subcontractor, a material supplier and others, has a lien right against the property for the value of that work if they are not paid. The process is procedural and deadline-driven: a claimant generally serves a preliminary notice early in the job so that owners and lenders know who might claim, then, if still unpaid, records a claim of mechanics lien against the improved property, and finally must file a lawsuit to enforce the lien within the statutory period or the lien expires. Alongside the lien, the law provides a stop payment notice, which lets an unpaid claimant reach construction funds still held by the owner or lender rather than the property itself. Because these are technical steps with strict timing, the safe exam approach is to know the sequence, preliminary notice, then recorded claim of lien, then timely enforcement action, and to verify every deadline against the current Civil Code before relying on it in practice.
| Bond | Amount | When required (statute) |
|---|---|---|
| Contractor's bond | $25,000, with a $7,500 aggregate cap for non-subdivision-(a) claims | Always, as a condition of licensure (B&P § 7071.6) |
| Disciplinary bond | No less than $25,000, no more than 10 times the § 7071.6 amount | After discipline, on file at least 2 years (B&P § 7071.8) |
| Qualifying individual's bond | Set by statute, separate from the contractor's bond | When the qualifier is not owner, general partner or joint licensee (B&P § 7071.9) |
FAQ
Frequently asked questions
How much is the California contractor's bond?
In California, the contractor's bond must be $25,000, executed by an admitted surety in favour of the State of California, under Business and Professions Code sections 7071.6 and 7071.5. Filing it is a condition of issuing, renewing or maintaining a licence, and no bond is required while a licence is inactive.
Who does the California contractor's bond protect?
In California, the contractor's bond protects the public, not the contractor, under Business and Professions Code section 7071.5. Its beneficiaries are homeowners, owners of single-family dwellings not intended for sale, people harmed by the licensee's willful or fraudulent violations, and employees owed wages, with a $7,500 aggregate cap on non-subdivision-(a) claims under section 7071.6.
What is a disciplinary bond in California?
In California, a disciplinary bond is an additional bond the registrar requires after a licensee is disciplined, under Business and Professions Code section 7071.8. It must be no less than $25,000 and no more than ten times the standard bond, must stay on file at least two years, and may not be combined with or replace any other required bond.
When is a qualifying individual's bond required in California?
In California, a qualifying individual's bond is required when the person qualifying the licence is not the proprietor, a general partner, or a joint licensee, under Business and Professions Code section 7071.9. It is separate from the standard $25,000 contractor's bond and backs the public where the qualifier has less personal stake in the business.
Who can file a mechanics lien in California?
In California, a person who provides work authorised for a work of improvement, including a direct contractor, subcontractor or material supplier, has a mechanics lien right against the property when unpaid, under Civil Code section 8400. The process runs from a preliminary notice to a recorded claim of lien to a timely enforcement lawsuit.