Mr. Richard Rozansky
City of Winter Springs
1126 East State Road 434
Winter Springs, Florida 32708
RE: MUNICIPALITIES--CONTRACTING--SURETY BONDS--Requirement by municipality of payment of surety bond by certified contractor prior to engaging in contracting in municipality, unauthorized
Dear Mr. Rozansky:
This is in response to your request for an Attorney General's Opinion on substantially the following question:
Is the City of Winter Springs authorized to require a certified contractor to provide the city with a surety bond for the protection of city property as a prerequisite to issuance of a building permit?
Your letter states that the surety bond under consideration "is for the protection of . . . water/sewer lines, swales, drainage pipes, sidewalks, curbs, streets, etc." Your letter does not identify the specific type of contractor involved in your inquiry except to mention the construction of swimming pools. I would note that this type of construction is not restricted to one group of certified contractors as defined in s. 489.105, F.S. (1986 Supp.). See s. 489.105(3)(a), (j), and (k), F.S. (1986 Supp.), defining respectively a "[g]eneral contractor" as one whose services are unlimited regarding the type of contracting work he can do, a "[c]ommercial pool contractor" as a contractor whose work involves but is not limited to the construction of public or private swimming pools, and a "[r]esidential pool contractor" as one whose scope of work involves but is not limited to the construction of residential swimming pools. In the absence of any specific direction, my comments will, of necessity, be of a general nature rather than directed to a specific type of certified contractor.
As provided in s. 2(b), Art. VIII, State Const., and implemented in s. 166.021, F.S., municipalities possess the governmental, corporate, and proprietary powers to enable them "to conduct municipal government, perform municipal functions, and render municipal services, and may exercise any power for municipal purposes, except when expressly prohibited by law." Section 166.021(1), F.S. Certain matters are placed outside the scope of municipal legislative action by s. 166.021(3), F.S., including, in subsection (c) thereof, "[a]ny subject expressly preempted to state or county government by the constitution or by general law . . . ." Cf. s. 166.221, F.S., which provides that a municipality may levy certain business, professional, and occupational regulatory fees when such regulation has not been preempted by the state or a county pursuant to a county charter.
State regulation of the field of construction contracting is codified in Part I, Ch. 489, F.S. (1986 Supp.). And see s. 489.101, F.S., stating that the Legislature recognizes the significance of the construction and home improvement industries and that "it is necessary in the interest of the public health, safety, and welfare to regulate the construction industry" as significant harm to the public may occur "when incompetent or dishonest contractors provide unsafe, unstable, or short-lived products or services."
Part I of Ch. 489, F.S. (1986 Supp.), regulates the construction industry by requiring contractors to be licensed by the Department of Professional Regulation as a prerequisite to practicing in Florida. Section 489.113(2), F.S. (1986 Supp.). To be licensed a person must be either certified as a contractor or registered as a contractor. Section 489.113(1), F.S. (1986 Supp.). A contractor, for purposes of Ch. 489, F.S. (1986 Supp.), is defined in pertinent part as
"[t]he person who is qualified for and responsible for the entire project contracted for and means, except as exempted in this act, the person who, for compensation, undertakes to, submits a bid to, or does himself or by others construct, repair, alter, remodel, add to, subtract from, or improve any building or structure, including related improvements to real estate, for others or for resale to others."
Section 489.105(3), F.S. (1986 Supp.). And see s. 489.105(a)-(c), F.S. (1986 Supp.), defining respectively the terms "[g]eneral contractor," "[b]uilding contractor," and "[r]esidential contractor"; and s. 489.105(3)(d)-(m), F.S. (1986 Supp.), including definitions for, inter alia, (j) "[c]ommercial pool contractor," (k) "[r]esidential pool contractor," and (m) "[p]lumbing contractor."
A certified contractor (who may engage in contracting on a statewide basis) must establish his competency and other qualifications for certification, which requires the passing of the appropriate examination administered by the Department of Professional Regulation. Section 489.113(1), F.S. (1986 Supp.). Compare the requirements in s. 489.113(1), supra, regarding a certified contractor, to those imposed on a registered contractor (who may engage in contracting only in the counties, municipalities, or development districts where he or she has complied with local licensing requirements and only for the type of work covered by the registration) by s. 489.117, F.S., which states that to be initially registered an applicant shall submit the required fee and file evidence of holding a current local occupational license from a municipality, county, or development district for the type of work desired and evidence of successful compliance with local examination and licensing requirements; no standard examination administered by the Department of Professional Regulation is required for registration. Further, s. 489.115(4), F.S., requires that "[a]s a prerequisite to issuance of a certificate, the applicant [for certification] shall submit satisfactory evidence that he has obtained public liability and property damage insurance for the safety and welfare of the public in amounts determined by rule of the board . . . ." See Rule 21E-15.003, F.A.C., which sets forth the amount of liability and property damage insurance required by the board as a prerequisite to the issuance or renewal of specific contractors' certificates. As provided in part by s. 489.113(4), F.S. (1986 Supp.):
"When a certificateholder desires to engage in contracting in any area of the state, as a prerequisite therefor, he shall be required only to exhibit to the local building official, tax collector, or other person in charge of the issuance of licenses and building permits in the area evidence of holding a current certificate and to pay the fee for the occupational license and building permit required of other persons." (e.s.)
The surety bond you describe appears to be in the nature of a bond to recompense the municipality for damages done to municipal property during the course of the construction project involved or a financial guarantee of reparation for such damage. The requirement contained in s. 489.115(4), supra, that an applicant submit evidence of public liability insurance and property damage insurance as a prerequisite to certification when read with the provision of s. 489.113(4), supra, that "[w]hen a certificateholder desires to engage in contracting in any area of the state, [the certified contractor] shall be required only to exhibit . . . evidence of holding a current certificate and to pay the fee for the occupational license and building permit required of other persons" (e.s.), lead me to the conclusion that this area has been preempted to exclusive regulation by the state. And see AGO 73-399 wherein it is stated that a municipality may not require certified contractors to show evidence of liability insurance or to post a performance bond but that, pursuant to a proper nondiscriminatory regulatory ordinance, these requirements may be imposed on registered contractors as prerequisites to the issuance of a local regulatory license or certificate of competency; and AGO 70-48. Cf. AGO 73-27 ("The language of [what is now s. 489.113(4)] makes it abundantly clear that the Legislature intended that the presentment of a certificate issued by the board accompanied by the proper fee for the occupational license and permit would be the only additional requirement for engaging in business in any part of the state"). See also Tribune Company v. Cannella, 458 So.2d 1075, 1077 (Fla. 1984) (under the preemption doctrine a subject is preempted by a senior legislative body from action by a junior legislative body if the senior legislative body's scheme of regulation of the subject is pervasive and if further regulation of the subject by the junior legislative body would present a danger or conflict with that pervasive regulatory scheme).
It is clear that municipal ordinances are inferior and subordinate to state law. Therefore an ordinance may not conflict with any controlling provision of a state statute. If any doubt exists as to the degree of power attempted to be exercised which may affect the operation of a state statute, the doubt must be resolved in favor of the statute and against the ordinance. City of Miami Beach v. Rocio Corporation, 404 So.2d 1066 (3 D.C.A. Fla., 1981), pet. for rev. den., 408 So.2d 1092 (Fla. 1981); Rinzler v. Carson, 262 So.2d 661 (Fla. 1972); AGO's 86-54, 79-71. Cf. Tribune Company v. Cannella, supra.
Therefore, as it appears that the state has preempted regulation of the area of public liability and property damage insurance for certified contractors and has specifically determined the prerequisites for such a contractor to engage in contracting in any area of the state, no municipal regulation on this point is authorized.
In sum, it is my opinion that until legislatively or judicially determined otherwise, the City of Winter Springs is not authorized to require a certified contractor to provide the city with a surety bond for the protection of city property as a prerequisite to issuance of a building permit.
Robert A. Butterworth
Assistant Attorney General
In Florida, a contractor surety bond is often referred to as a “general contractor's license bond.” This type of construction bond is required if you alter or build any structure. Contractors in good financial standing can get the $25,000 bond coverage required by the state for an annual premium of $125.What does surety bond requirements mean? ›
A surety bond is a promise to be liable for the debt, default, or failure of another. It is a three-party contract by which one party (the surety) guarantees the performance or obligations of a second party (the principal) to a third party (the obligee).What are the 3 C's of surety bonds? ›
A number of these factors fall under what the Surety industry calls “The Three C's”; Character, Capacity, and Capital. All three of these are important to the underwriting process. The principal needs to exhibit the Character, Capacity, and Capital to qualify for surety credit.What determines the amount of a surety bond? ›
Surety Bond Costs Explained
Your surety bond cost is a percentage of the total bond amount, also called the bond premium. There are two main factors for how that cost is determined by underwriters: The type of surety bond and the bond coverage required. The credit history of the applicant.
Bail bond fees are set by the state
When bond is set for someone who was arrested in Florida, the amount is not made up. The bond is set based on pre-determined criteria depending on the crime. The criteria can include previous convictions, the likelihood of appearance, and the severity of the crime.
Florida Certificate of Title Surety Bond Information
A Title Bond (also known as a Bonded Title, Certificate of Title Bond, Defective Title Bond) are surety bonds that allow a vehicle owner to claim ownership and register the vehicle with the state of Florida when a title has been lost, stolen or is missing.
A: Surety bonds provide financial guarantees that contracts and other business deals will be completed according to mutual terms. Surety bonds protect consumers and government entities from fraud and malpractice. When a principal breaks a bond's terms, the harmed party can make a claim on the bond to recover losses.What are the two common types of surety bonds What are they used for? ›
Bid bonds guarantee that a contractor who puts in a bid will enter into a contract if the bid is accepted. Performance bonds guarantee that the contractor will fulfill the terms of the construction contract.What are surety bonds considered? ›
Most surety bonds are considered license and permit bonds, meaning it's a requirement of the business licensing or permitting process. If your state or municipality requires you to be licensed in order to do your job or run your business, you may need to have a surety bond.What are the elements of a surety contract? ›
Once you get into a surety bond contract, you should know that there are five elements that should be present before the law will enforce that guarantee. These elements include competent parties, agreement, consideration, lawful object, and prescribed form.
These bond types are also referred to as “commercial bonds" or “business bonds." Examples of license and permit surety bonds include auto dealer bonds, mortgage broker bonds, and collection agency bonds.What is the purpose of the $15000 surety bond? ›
The state of California requires every Notary to purchase a $15,000 Surety Bond in order to protect the public financially from the possibility of a negligent mistake or intentional misconduct.Who is the principle of a surety bond? ›
Who is the Principal? The principal is the party being required to obtain the surety bond by the obligee. When filling out a surety bond application, you are the principal. The obligee requires the principal to obtain a surety bond to ensure they uphold their end of the agreement.How many people are involved in a surety bond? ›
A Surety Agreement Defined
They differ from an insurance contract in that an insurance contract includes two entities (insurance provider and policyholder), whereas a surety bond involves three parties: the Principal, the Obligee and the Surety.
The carrying value of a bond, or carrying amount, is the net amount of the bond's face value plus unamortized premiums or minus amortized discounts. Formula for bonds issued at a premium = Face value + unamortized premium. Formula for bonds issued at a discount = Face value - amortized discounts.What is not eligible for bond for Florida? ›
Certain offenses will render you unable to bond out of jail. Per Florida law, these typically include murder charges and some domestic violence charges. If you are on probation for another offense or have an immigration or some other sort of hold, you may also be ineligible for release.What can be used as collateral for a bond in Florida? ›
use a bank account, real estate, a vehicle, or jewelry as collateral. In some cases, a qualified co-signer will be accepted to approve the bail bond. accused is guilty or innocent, collateral must be returned.How do I file a surety bond claim in Florida? ›
- Step 1: Obtain a Copy of the Payment Bond. ...
- Step 2: Send Notice to Contractor. ...
- Step 3: Send Florida Notice of Nonpayment. ...
- Step 4: Enforce Your Florida Payment Bond Claim.
The amount of time that your bond lasts varies depending on which company or agency provides them – some securities are for 12 months while others may last as long as 36 months!What is the difference between a bond and a surety? ›
The main difference between a cash bond and a surety bond is the number of parties involved. Cash bonds only involve two parties, you and the owner. In a surety bond, there is a third party, the surety company. The term surety refers to any party that guarantees the payment of a debt or performance of a contract.
The exact cost will vary depending on the surety bond amount required by the Florida Department of Highway Safety and Motor Vehicles. Bond amounts up to $6,000 cost just $100. Bond amounts from $6,001 to $50,000 cost $15 for every $1,000 of coverage, starting at $100.What is the obligation of a surety? ›
The surety is the guarantee of the debts of one party by another. A surety is a person or an organization that assumes the responsibility of paying the debt in case the debtor policy defaults or is unable to make the payments. The party that guarantees the debt is referred to as the surety or the guarantor.What is the duty of surety? ›
A surety is an entity or an individual who assumes the duty of paying the debt in the event that a debtor fails or is not able to make the payments. The party which guarantees the debt is called a surety, or the guarantor.What are the three parts of a bond? ›
The three basic components of a bond are its maturity, its face value, and its coupon yield. Bond prices fluctuate inversely to interest rates. A bond's current price is determined by its yield relative to other bonds along the yield curve, its rating (as set by ratings agencies), and whether the bond is callable.Which of the following is not a surety bond? ›
There are primarily two categories of surety bonds, including commercial bonds and contract bonds. Here, the commercial bonds consist of a bid bond, payment bond, and performance bond. Therefore, it can be said that a storage bond is not a type of surety bond.Are surety bonds refundable? ›
Since the bond agreement never technically went into effect, a surety may (but is not obligated to) issue a refund. You cancel a bond before it expires. Though it is very rare, some bond providers will agree to a prorated refund.What is the most common type of bond issued? ›
- U.S. Savings Bonds. ...
- Separate Trading of Registered Interest and Principal of Securities (STRIPS) ...
- Mortgage-Backed Securities. ...
- Corporate Bonds. ...
- Agency Securities. ...
- Municipal Bonds. ...
- International and Emerging Markets Bonds. ...
- Bond Funds.
One of the most common uses of surety bonds is to protect the public, by guaranteeing important obligations will be fulfilled. For example, a construction surety bond will ensure that a building construction project that benefits the public will be completed.Are surety bonds regulated? ›
Both surety bonds and traditional insurance policies, such as property insurance, are risk transfer mechanisms regulated by state insurance departments.What are the 5 C's of surety underwriting? ›
The five Cs of credit are character, capacity, capital, collateral, and conditions.
The surety may raise common defenses like incapacity (infancy), lack of consideration (unless promissory estoppel can be substituted or unless no separate consideration is necessary because the surety's and debtor's obligations arise at the same time), and creditor's fraud or duress on surety.What is the most common form of surety? ›
Contract surety bonds and commercial surety bonds protect private and public interests and are the most common. Fidelity surety bonds and court surety bonds protect against theft and litigation and are less common.Do surety agreements have to be in writing? ›
Yes. Surety contracts fall under the statute of frauds and must be in writing. Surety arrangements are when one party agrees to pay off the debt of another. The surety promise will be made with the original credit who has agreed to loan the money to the original debtor.What is the example of liability of surety? ›
There must be a principal debtor who has taken debt from the creditor. The surety comes into the picture and pays the debt on behalf of the principal debtor. For example, A, an individual comes up and tells the supplier of certain goods B, that he will pay for the goods bought by C, in case C fails to do so.How do you write a surety form? ›
- Name of the principal, surety and the obligee.
- Address of principal, surety and the obligee.
- The amount being lent/borrowed.
- The purpose for which the amount is being borrowed.
- The time period for which the amount is being lent.
- The interest to be levied on the amount.
Obligee (pronounced obb-li-jee) - the party who requires, and often receives the benefit of— the surety bond.How much is a $15000 surety bond cost? ›
California California Notary Bond – $15,000 Bond (4 Years) only $38.What is the required surety bond amount for a company that employs 20 or more individuals who are required to be licensed in CO? ›
Obtain a Surety Bond that must be renewed annually: a. A $200,000 surety bond is required for mortgage companies that have more than 20 licensed employees.What is right of surety in law? ›
A surety is entitled to the benefit of every security which the creditor has against the principal debtor at the time when the contract of suretyship is entered into, whether the surety knows of the existence of such security or not; and if the creditor loses, or, without the consent of the surety, parts with such ...Who gives surety called? ›
The person who gives the guarantee is called the "surety": the person in respect of whose default the guarantee is given is called the "principal debtor", and the person to whom the guarantee is given is called the "creditor".
There are five main types of bonds: Treasury, savings, agency, municipal, and corporate. Each type of bond has its own sellers, purposes, buyers, and levels of risk vs. return. If you want to take advantage of bonds, you can also buy securities that are based on bonds, such as bond mutual funds.Who sets the amount of a bond? ›
A judge determines the amount of bail based on factors like the severity of the alleged offense, the likelihood that the defendant will commit additional crimes after being released, and the chances that the defendant will flee the jurisdiction before trial.What is surety bonding capacity? ›
Bonding capacity is the maximum amount of surety credit a surety company will provide to a contractor. It is generally expressed in terms of the largest single project the surety would be willing to issue and the maximum amount of contract backlog a contractor can hold.What two things must you estimate to calculate the value of a bond? ›
It involves calculating the present value of a bond's expected future coupon payments, or cash flow, and the bond's value upon maturity, or face value.How is carrying value calculated? ›
To calculate the carrying value or book value of an asset at any point in time, you must subtract any accumulated depreciation, amortization, or impairment expenses from its original cost.How much is a surety bond in Florida? ›
Florida certificate of title bond costs start at $100. The exact cost will vary depending on the surety bond amount required by the Florida Department of Highway Safety and Motor Vehicles. Bond amounts up to $6,000 cost just $100.How much is a 7500 surety bond in Florida? ›
How much does a Florida notary bond cost? A $7,500, 4-year notary bond in the state of Florida costs $40 through Notary Public Underwriters.What percent of bond do you have to pay in Florida? ›
A bail bond may be secured by the defendant or someone else, like a family member. The person contracting for the bond not only pays the 10% fee, but must also agree to be responsible for the remainder of the bail posted by the bond agent if bail is forfeited.How much surety in bond is required for a notary public in Florida? ›
Your Florida Notary Surety Bond. Florida law requires all Notaries to purchase and maintain a $7,500 Notary surety bond for the duration of their 4-year commission.What is an example of a surety bond? ›
Examples of Surety Bonds
Includes bid or proposal bonds, performance bonds, payment or labor and material bonds, maintenance bonds and supply bonds. These bonds are required by state or federal law for most public construction projects or by a private developer.
In many industries, obtaining a surety bond is a necessary but confusing part of the protocol. The fact is that surety bonds are good for business. They instill trust in your company, make it even more reputable and, in most situations, keep it compliant under the law or the governing body of your industry.How much does a $10000 I bond cost? ›
For example, the cost of a $10,000 dollar bond will vary depending on a number of factors, and will often cost between $100 and $1,000. The exact number varies between the different types of surety bonds, and the credit score of the business owner applying for the bond.Does Florida require a Notary bond? ›
The state of Florida requires every Notary to purchase a $7,500 Surety Bond in order to protect the public financially from the possibility of a negligent mistake or intentional misconduct. As the nation's Notary bond leader, the NNA is ready to issue your state-required bond.Does Florida allow remote notarization? ›
Additionally, 1N-7001, Florida Administrative Code outlines the duties and responsibilities of online notaries as well as the procedures for applying. This law authorizes Florida notaries to perform online remote notarizations after the completion of an application and training requirements.Can you pay your own bond Florida? ›
Once the bond has been set, either the defendant, a friend, or a family member can pay the full amount of the bond.How much money do you need to bond? ›
Bailing someone out of jail can be expensive, but is typically lower for minor charges and higher for severe crimes. In California, a bail bond is 10% of the total bail amount. If the bail amount is $40,000, the cost would be $4,000 to bail someone out of jail.What is the maximum a notary can charge in Florida? ›
May I charge a fee for my Florida notary services? Yes. The state of Florida allows you to charge a maximum fee of $10.00 per notary act.How much is a surety bond in the amount? ›
On average, the cost for a surety bond falls somewhere between 1% and 15% of the bond amount. That means you may be charged between $100 and $1,500 to buy a $10,000 bond policy.