How to Get a Contractor�s License in North Carolina

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Who Needs a North Carolina Contractor�s License?

North Carolina licenses contractors in many construction-related fields at the state level. General contractors are licensed by the North Carolina Licensing Board, while electrical contractors are licensed by the State Board of Examiners of Electrical Contractors. There is also a licensing board for plumbing, heating, and fire sprinkler contractors. Some municipalities also require contractors to be licensed in their jurisdictions.

This article focuses on the licensing of general contractors. There are different types of general contractor licenses for 1) building contractors, 2) residential contractors, 3) highway contractors, 4) public utilities contractors, and 5) specialty contractors (18 different specialties).

Each of these general contractor categories is further divided into limited, intermediate, and unlimited licenses, which are differentiated by the extent to which applicants� current assets exceed their current liabilities.

What Does the Licensing Process Involve?

To become licensed in North Carolina, a general contractor must pass a qualifying exam and submit an application and the required fee to the Board. Currently, the fees are $75 for a limited license, $100 for an intermediate license, and $125 for an unlimited license.

Applicants must also demonstrate the necessary level of working capital or obtain a surety bond before they will be issued a license. The required amount of the surety bond depends on the license limitation:

  • Limited = $175,000 bond
  • Intermediate = $500,000 bond
  • Unlimited = $1 million bond

Why is a Contractor�s License Surety Bond Required?

The surety bond is a substitute for proof of net worth to meet the Board�s requirement for adequate working capital. It also serves as a guarantee that the contractor will conduct business in accordance with all applicable laws, regulations, and industry standards. Finally, it provides funds to compensate anyone who suffers a financial loss due to the unlawful or unethical actions of the contractor.

How Does It Work?

The legally binding surety bond contract spells out the responsibilities of three parties:

  • The obligee (the licensing board that requires the bond)
  • The principal (the contractor who must purchase the bond)
  • The surety (the company that underwrites and issues the bond)

The bond contract is very specific about what the principal must do and not do to avoid violating the contract. If the principal does violate the contract and someone suffers a financial loss as a result, the injured party can file a claim against the surety bond.

If the principal doesn�t pay a claim in a timely manner, the surety will pay it, but only as a courtesy to the claimant. The surety has no legal responsibility for paying claims. That responsibility belongs solely to the principal. In fact, an indemnification clause in every surety bond contract holds the surety harmless and gives the surety the right to pursue the principal for reimbursement.

Understanding How Surety Bonds Work for Contractors in North Carolina

To purchase a surety bond, the principal pays an annual premium that is a small percentage of the required bond amount�typically 1% to 3% for those with very good credit.

Get The Bond You Need

Request a quote today for the surety bond you need to get or renew a North Carolina contractor�s license.

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