Contract Language (Owner Liability Limitation)

An RCAC member has shared an example of contract language that his company is encountering with greater frequency recently in owner-created contracts, and we are sharing that contract language and encouraging roofing contractors to aggressively resist such contract provisions.

Essentially, it is a provision that limits the liability of the owner to “its interest in the property” and it is an attempt to shield the owner from any personal responsibility for payment. It’s normal and accepted practice to limit stockholder/member liability in limited liability entities, but this is a significant step farther.

Following is an example of the language:

If you have concerns or similar contract language you would like to share with other roofing contractors, please reply to Marc Connerly at mconnerly@connerlyandassociates.com, and we will circulate the information and/or seek ways to assist you with your contract language concerns.

The most effective way for contractors to prevent contract language such as this from becoming accepted practice is for all of us to work together to resist such provisions in contracts.

Marc Connerly, Executive Director, mconnerly@connerlyandassociates.com

CSLB Contractor’s Bond Amounts Increasing January 1, 2023

Contractor’s bond amounts with the Contractors State License Board (CSLB) will increase to $25,000 on January 1, 2023. The increase applies to the contractor license bond (from $15,000 to $25,000) and the bond of qualifying individual (from $12,500 to $25,000).

CSLB distributed notices to 203 surety companies on September 28, 2022, with instructions for automatically increasing all licenses’ bonds and bonds of qualifying individuals currently on file with CSLB. If you are a licensed contractor, your surety company or broker should contact you soon to inform you of any changes to your bond premium.

You can also contact your surety company directly to ensure they have returned documentation to CSLB to increase your bond. If you know the name of your surety company, you can look up their contact information here. The name and contact information of your surety is also on your bond agreement itself or your broker can provide it. Questions about any increase to your bond premium must be directed to your broker or surety company and not CSLB.

Revised contractor bond and bond of qualifying individual forms with the new bond amounts will be available to the sureties in December 2022.

The increase occurred in part due to a license bond study CSLB conducted as required by Business and Professions Code section 7071.6. The study determined that the current $15,000 amount of the contractor bond is not sufficient and an increase may be necessary.

More information about bonds can be found on CSLB’s website.