What is an Alabama contractor license bond?

In Alabama, those applying for a contractor license need to obtain an Alabama Contractor License Bond as a step in the application process. This bond's purpose is to ensure contractors fulfill their construction obligations, follow state laws, and offer compensation to the people of Alabama if any financial harm occurs due to the contractor not following licensing regulations.

How Much Does an Alabama Contractor License Bond Cost?

Our pricing table provides a comprehensive overview of different contractor bond types applicable to Alabama and their respective amounts. The bond is broken down by contracting subspecialties and also counties. You should purchase the bond that matches your license category and county.

• Heating and Air Conditioning or Refrigeration Contractor Bond: $15,000, starting at $90
• Termite Eradication and Pest Control Contractor Bond: $2,500, starting at $90
• Home Builders Licensure Board Residential Roofer Bond: $10,000, starting at $90
• City of Alexander Electrical Contractor Bond: $5,000, starting at $90
• City of Auburn Electrical Contractor Bond: $5,000, starting at $90
• City of Auburn General Contractor Bond: $1,000, starting at $90
• City of Auburn Plumbing Contractor Bond: $5,000, starting at $90
• City of Chickasaw Contractor Bond: $10,000, starting at $90
• City of Dothan Commercial Refrigeration Bond: $5,000, starting at $90
• City of Dothan Electrical Contractor Bond: $5,000, starting at $90
• City of Dothan Fire Sprinkler Installer Bond: $5,000, starting at $90
• City of Dothan General Contractor Bond: $10,000, starting at $90
• City of Dothan Heating and Cooling Installer Bond: $5,000, starting at $90
• City of Fairfield Plumbing and Gasfitter Contractor Bond: $5,000, starting at $90
• City of Gulf Shores Contractor Bond: $5,000, starting at $90
• City of Hueytown Contractor Bond: $5,000, starting at $90
• City of Mobile Contractor Bond: $10,000, starting at $90
• City of Montgomery Electrical License Bond: $5,000, starting at $90
• City of Mountain Brook Contractor Bond: $90,000, starting at $90
• City of Opelika Electrical Contractor Bond: $5,000, starting at $90
• City of Opelika Plumbing Contractor Bond: $5,000, starting at $90
• City of Ozark Tree Cutting/Stump Grinding Contractor Bond: $10,000, starting at $90
• City of Prichard General Contractor Bond: $10,000, starting at $90
• City of Russellville Contractor Bond: $2,500, starting at $90
• City of Saraland Contractor Bond: $10,000, starting at $90
• City of Satsuma Contractor Bond: $5,000, starting at $90
• City of Tuscaloosa Contractor Bond: $1,000, starting at $90
• City of Tuscumbia Electrical Contractor Bond: $2,500, starting at $90
• City of Wetumpka Contractor Bond: $5,000, starting at $90
• Baldwin County Contractor Bond: $10,000, starting at $90
• Cullman County Contractor Bond: $2,500, starting at $90
• Jefferson County Heating Contractor Bond: $5,000, starting at $90                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

What Contractors are Required to be Licensed in Alabama?

Two types of contractors are required to be licensed in the state of Alabama:

• Residential Contractors
• Non-Residential Contractors 

Residential contractors in Alabama are individuals engaged in constructing, remodeling, repairing, or improving residential structures where the project's expense surpasses $10,000. It's important to clarify that these residential structures are specifically buildings with no more than three stories and fewer than four separate units.

Non-Residential Contractors in Alabama are those who handle contracts for businesses or public projects that exceed $50,000. This category also encompasses specialty or trade contractors who take part in projects like:

• Building Construction
• Building Construction Under Four Stories (BCU4)
• Highways & Streets
• Municipal & Utility
• Heavy & Railroad Construction
• Specialty Construction

Who Regulates Licensing for Contractors in Alabama?

In Alabama, the Home Builders Licensure Board (HBLB) is responsible for licensing residential contractors, while the Alabama Licensing Board for General Contractors (LBGC) handles the licensing of non-residential contractors.

HBLB Contact Information

Email: information@hblb.alabama.gov

‍Phone:334-242-2230

Mailing Address:

445 Herron St

Montgomery, AL 36104

LBGC Contact Information

Phone: 334-272-5030

Fax: 334-395-5336

Mailing Address:

445 Dexter Ave, Suite 3060

Montgomery, AL 36104

How do Specialty or Trade Contractors in Alabama Differ from Each Other?

Here's an overview of the different contractor classifications in the state of Alabama:

• Building Construction: Construction of building structures, including modifications and additions, intended for shelter, protection, comfort, or convenience.‍
• Building Construction under Four Stories (BCU4): This is for creating buildings up to three stories high, including their roofs. It covers everything like building, changing, or fixing structures meant to be used for living or working. It also involves digging the ground and fixing foundations. And if a taller building project is led by a licensed General Contractor or Construction Manager, it's also part of this category.
• ‍Highways & Streets: This is about creating roads, bridges, and everything related to them. It includes things like guardrails, fences, parking areas, and drainage.
• ‍Municipal & Utility: This involves making and fixing things in cities, like paving roads, building sidewalks, and working on sewer, water, gas, and electric projects.
• ‍Heavy and Railroad Construction: This is about building railroads, bridges, tunnels, and irrigation systems. It also includes projects related to electricity and pipelines and marine and airport construction.
• ‍Specialty Construction: This is for tasks requiring special skills or crafts within the five categories mentioned earlier. For instance, a concrete contractor might work explicitly on building construction.

To gain a more comprehensive understanding of contractor classifications, refer to the detailed information available on the licensing board's website.

Are There Different Licenses Offered Within Residential Contractors in Alabama?

Yes, there are three types of licenses offered for residential contractors in Alabama:

• Unlimited License: permits contractors to work on the repair, and improvement of a residential property‍
• Limited License: limits contractors to installing or repairing the external covering of a residence or structure.
• ‍Roofers License: can generally perform any work on a residential project (including roofing).​

Does Alabama have Licensing Reciprocity?

As a reminder, licensing reciprocity occurs when states recognize a license obtained in another state, saving the contractor from completing the entire process of getting a new license. This is like how your driver's license works across different states. You don't need to demonstrate your driving skills each time you travel to a new state because they trust the validity of your license from your home state.

For the state of Alabama, licensing reciprocity is offered for both residential and non-residential contractors. Check below what states qualify for each contractor:

Residential Contractors

• Louisiana
• Mississippi
• North Carolina
• South Carolina
• Tennessee

Non-Residential Contractors: 

• Arkansas
• Louisiana
• Mississippi
• Tennessee

Get the application and guidelines for a license through reciprocity.

Are There Penalties for Unlicensed Contractor Work in Alabama?

Yes, there are consequences for an individual who does contractor work without a license in Alabama. As outlined in Alabama Code 34-8-4, for non-residential work and residential work, those who provide false details, assume another person's identity, or operate with an expired or revoked license can be charged with a Class A misdemeanor for each violation. Penalties for such breaches can include imprisonment for up to a year and fines of up to $6,000. 

How to Get a Contractor License in Alabama

In general, both residential and nonresidential contractors in Alabama follow similar steps to become licensed in the state. To find out the necessary steps, continue reading:

Step 1: Register the Business in Alabama

Everyone who operates a business within Alabama must be registered with the Alabama Secretary of State.

You'll have to decide on the kind of business structure you want based on how much liability and taxes you're comfortable with. The U.S. Small Business Administration offers a helpful guide to different business structures (like LLC, Corp., Partnership, etc.) to assist you in making your choice.

Step 2: Get The Required Insurance Coverage

All contractors in Alabama must have general liability insurance. If you intend to hire employees, you must also get worker's compensation insurance. Proof of both types of insurance should be provided alongside your application.

Step 3: Provide the Following Documentations

Contractors must submit three additional documents as part of their Alabama Contractor Application:

• Financial records
• Proof of experience
• References (non-residential only).

Step 4: Provide Financial Records

Contractors in Alabama must provide documentation to the appropriate board as evidence that they fulfill the financial prerequisites for obtaining a license.

• Unlimited and Limited License Applicants: Applicants must provide a business-related credit report, including a check for public records. This report should be sent directly to the Board by a credit reporting agency.
• Roofers: Roofers are required to secure a $10,000 license bond with the Homebuilders Licensure Board as the recipient. They are not required to submit a credit report.
• Contractors: Contractors must provide financial documents that are no more than a year old and prepared by a Certified Public Accountant (CPA). Audited financials are not required.
• Net Worth and Working Capital Requirements: Applicants must have a net worth and working capital of at least $10,000 to qualify for a license. If the requirement cannot be met, the Board allows obtaining a credit line to satisfy the working capital condition.

Step 5: Provide Proof of Experience 

Both licensing boards need evidence of experience, but the exact papers needed change based on the license type.

• Residential Contractors:
  • When applying for a homebuilder license, you must include a business or occupational license from an Alabama city, township, or county that has been issued for at least a year.
• Non-Residential Contractors:
  • General contractors must provide proof of at least three completed projects for each category they are applying for. The application form includes multiple pages for detailing each project.
  • Specialty contractors only need to complete the "Experience Statement" section of the application form.

Step 6: Provide References (non-residential only)

The General Contractors Licensing Board asks applicants to give three references from these sources:

• Registered Architect
• Registered Professional Engineer
• Someone qualified as per the Board's rules

Specialty contractors can also use references from licensed general contractors.

Step 7: Submit the Required Application and Fee

Once you have all the necessary information, you're ready to complete your application and send it in, along with the required application fee.

• Residential Contractors:
• Fees (New/Renewal):
  • • Unlimited: $350 / $250
    • Limited: $350 / $250
  • Roofers: $250 / $150
• Applications:
  • • Unlimited license applications
    • Limited license applications
  • Roofers license applications
• Non-Residential Contractors:
• Fees (New/Renewal):
  • • General contractor: $300 / $200
  • Specialty contractor: $150 / $100
• Applications:
  • • General contractor applications
  • Specialty contractor applications

Make sure to sign and get your application notarized before submitting it. Only complete applications will be accepted. Regarding timing, send your Alabama contractor license application at least 30 days before the quarterly Board meeting. After your application is reviewed and accepted, you can take the exams.

Final Step: Take the Required Contractor Examination

After submitting and reviewing a complete application, the applicant can proceed to register for the exams.

For exams, if you are a residential contractor, then you need to take the Alabama Home Builders Exam. Limited and roofer licenses do not require exams. For non-residential contractors, every contractor must pass a trade and business, and law exam.