What is a New Jersey Contractor License Bond?

Contractors in New Jersey are often required to obtain a contractor license bond as a part of their licensing process. While New Jersey does not have a statewide mandate for all contractors to obtain bonding, specific classifications of contractors in certain cities are still obligated to secure bonds. The contractor license bond serves as a form of financial protection for the state and the public of New Jersey by ensuring that contractors comply with state laws, regulations, and licensing requirements. A contractor license bond is required in the following New Jersey cities: Oakland, Franklin Lakes, Hoboken, Jersey City, West Deptford, and Wyckoff.

Pricing

The bond amount in New Jersey varies depending on the contractor’s license type and the work being done. 

• State Board of Examiners Master HVACR Bond: $3,000, starting at $90
• State Board of Examiners Master Plumber Bond: $3,000, starting at $90
• State Board of Examiners Electrical Contractor Bond: $1,000, starting at $158
• Borough of Oakland Contractor Bond: $20,000, starting at $90
• Borough of Franklin Lakes Contractor Bond: $30,000, starting at $90
• City of Hoboken Contractor License Bond: $10,000, starting at $90
• City of Jersey City Contractor Bond: $15,000, starting at $135
• Township of West Deptford Sewer Contractor Bond: $5,000, starting at $90
• Township of Wyckoff Contractor Bond: $10,000, starting at $90

What Contractors Are Required a Contractor License in New Jersey?

In New Jersey, according to the Contractor Registration Act, businesses that sell or perform "home improvements" must register with the Division of Consumer Affairs. This registration applies to all types of businesses, except plumbers and electricians, which have their own licensing requirements. So, if a business is involved in activities related to "home improvements," it is considered a contracting business and needs to be registered. Therefore, any business organization engaged in the following activities is considered a “contractor”:

• Construction
• Installation
• Remodeling
• Altering
• Painting
• Repairing
• Renovating
• Restoring
• Moving
• Demolishing
• Modernizing

Note that constructing a new residence is not considered a home improvement under this act. 

How to Get a New Jersey Contractor License Bond

A general process of getting this bond can be condensed into these four steps:

• Step 1: Find a reputable surety broker
• Step 2: Contact surety broker and provide them with the necessary information. This includes SSN, contact infor and business name/address
• Step 3: Receive quote from the surety broker, and if you find a suitable price, make payment on the bond.
• Step 4: Receive the bond in the mail and file it with the local authority

Feel free to contact us with any questions

Who Regulates Licensing for Contractors in New Jersey?

In New Jersey, contractor licensing is regulated by the New Jersey Division of Consumer Affairs (DCA). The DCA is responsible for protecting the interest of consumers and ensuring the competence and integrity of contractors operating within the state.

Contact Information:

973-504-6200

General questions

askconsumeraffairs@dca.lps.state.nj.us 

Initial Applications

initialapplications@dca.lps.state.nj.us 

Renewal Applications

renewalapplications@dca.lps.state.nj.us 

How to Get a New Jersey Contractor’s License

To become a registered and licensed contractor in the state of New Jersey, the applicant must:

• Have a completed application and submit it to the New Jersey Division of Consumers Affair
• Have a completed Disclosure Statement Page that within the New Jersey Contractor License Application
• If you need financing options, you must fill out and submit a Home Improvement Contractor Business Entity Licensing Application to the New Jersey Department of Banking and Insurance (DOBI).
• File proof of liability insurance with the DCA . The insured amount required is $500,00 per occurance of property damage or bodily injury.
• Pay a fee of $110.00 to the New Jersey Division of Consumers Affair

What if I do not Register as a Home Improvement Contractor?

Home improvement contractors that operate without a license are not permitted to sell or engage in home improvement work. Continuing to sell or perform home improvements without registration may result in civil and potentially even criminal penalties for unregistered contractors. This includes:

• Civil monetary policies of up to $10,000 for the first offense and up to $20,000 for each subsequent offense.
• Considered guilty of a crime of the fourth degree and face additional fines as well as possible jail time.

As a result of these regulations, municipalities are no longer allowed to issue construction permits to unregistered home improvement contractors who are obligated to be registered, effective as of January 1, 2006.

Does The Contractor Registration Act Apply to Out of State Contractors?

Any contractor, no matter where they're from, must register with the Division if they sell or improve residential or non-commercial properties in New Jersey.

Once I become registered as a New Jersey Contractor, how long will my registration be valid?

After obtaining the initial registration, it is essential to renew it annually before March 31. In January of each year, all registered home improvement contractors will receive reminder notices by mail, containing instructions on how to proceed with the renewal process.

I was convicted of a crime in the past. Am I ineligible to become registered as a New Jersey Contractor?

If someone has a conviction, they won't be automatically disqualified or have their registration revoked for it. They can still register if they provide clear and convincing evidence of their rehabilitation to the New Jersey Division of Consumer Affairs. The Division considers several factors when assessing rehabilitation, such as: 

• The nature and responsibility of the position the convicted individual would hold.
• The nature and seriousness of the offense.
• The circumstances surrounding the offense.
• The date when the offense occurred.
• The age of the individual at the time of the offense.
• Whether the offense was an isolated incident or a repeated pattern.
• Any social conditions that might have contributed to the offense.
• Evidence of rehabilitation, such as good conduct displayed during incarceration or within the community, as well as any counselling or psychiatric treatment received, among other relevant factors.

How can I avoid claims on my New Jersey Contractor License Bond?

If a business/bondholder fails to fulfill its obligations, its customers can make a claim against the bond. To avoid claims on your New Jersey Contractor License bond, you must operate to the guidelines set forth on your license and make good promises to customers.  

To comprehend ways to prevent claims on a New Jersey contractor’s license bond, let’s examine the most frequent reasons for such explains:

• Abandoning an unfinished project 
• Neglecting to address faulty workmanship
• Delayed payment to employees or vendors

To steer clear of claims on your New Jersey contractor license bond, we advise contractors to follow these guidelines:

• Ensure that all jobs are completed in accordance with the contract specifications, prioritizing customer satisfaction. One effective approach is to withhold a portion of payment until the project is fully completed, as this can serve as proof of project fulfillment.
• Address any issues that arise from previous jobs. 
• Always make timely payments to vendors and employees, as claims on your contractor bond can be made by employees or subcontractors if they experience payment delays.