For contractors in Oregon, three new legislative changes are about to introduce stricter rules for obtaining the state license and contractor license bond.
If you’re running a contractor business in the state–performing residential restoration, landscape work, or construction flagging–in the coming years you’ll have to adapt to new requirements to stay in compliance with state law. The three bills instituting these changes have already been enacted: Senate Bills 574, 580, and 596. The first two will become effective on January 1, 2016, while the last one will come into effect only in July 2017.
Let’s go through each bill and see how the changes will affect the respective field of contractor work in Oregon.
Bill 574: Residential restoration
With Senate Bill 574, contractors performing residential restoration work are now required to be licensed and obtain a $10,000 contractor license bond. There was no bond requirement for this type of contractors prior to the bill, and the law comes into effect on January 1, 2016.
Restoration work includes debris removal, water removal, cleaning following a natural or man-made disaster, and the covering-up of openings in damaged structures. The full definition of the statutes is available in Chapter 701 of Oregon Statutes–Construction Contractors and Contracts.
The new requirement means slightly higher startup costs for residential restoration contractors. Now, they will have to pay between $100 and $400 for their bond, if they qualify for the standard bond market. At the same time, the new requirement guarantees that the standards in the field will be raised and customers will receive higher quality services.
Bill 580: Landscape work
The next bill in focus, Senate Bill 580, changes the requirements for contractors performing landscape work. It also comes into effect on January 1, 2016.
The amount of the contractor license bond that they need to provide depends on the price charged to the customer and the type of work performed:
- $10,000 bond is required from landscape contractors who also construct fences, decks, driveways, walkways, and the like
- $10,000 bond is required from contractors who charge between $10,000 and $25,000 for a landscape job
- $15,000 bond is required from contractors who charge between $25,000 and $50,000 for a landscape job
- $20,000 bond is required from contractors who charge more than $50,000 for a landscape job
As in the case of the previous bill, this new legislation also means higher costs for the contractors in question, namely landscape workers. If they have a good credit score, they’re likely to pay between $100 and $400 for their bond if they perform landscape jobs in the lowest price range. For the highest price range, the standard market bond is likely to be between $200 and $1,000.
However, the positive aspect of the new bill is that the landscape contracting field is becoming more stable through the improved regulation. This means less problems for consumers, which leads to higher trust in landscape specialists as a whole.
Bill 596: Construction flagging
Finally, let’s see what Senate Bill 596 brings to the table for contractors. The law will come into effect on July 1, 2017 and will require construction flagging contractors to be licensed and to obtain a $20,000 bond. Construction flagging contractors take care of managing the flow of motor vehicle traffic on in the vicinity of roadway construction projects.
If the contractor is already licensed as a construction contractor, this new licensing requirement is not applicable. When you get licensed as a construction flagging contractor, however, you cannot operate in any other contracting function under that license.
The new bill means a bit more complicated process for flagging contractors before they can start doing business. In terms of the finances, with a good credit score the contractor will have to pay a bond premium in the range of $200 to $1,000.
For contractors who haven’t needed to get bonded until now, let’s have a quick explanation of what a surety bond is.
A contractor license bond is a three-party agreement between your business as the principal, the state of Oregon as the obligee requiring the bond, and the surety which underwrites it. Its function is to provide an extra layer of safety for the state and its citizens that your contractor business will follow the law in its operations. For more details, here is a handy surety bond definition.
If this is the first time you have to go through the bonding process, make sure to check out our How to get bonded page to get a complete picture.
Getting acquainted with the upcoming changes can help you get prepared for the new setting in which contractors in Oregon will operate. If you still have any questions about the bonding process, don’t hesitate to contact us at (866) 450-3412.