§ 40-11-262 — Surety bonds in lieu of providing financial statements.

(A) In lieu of providing a financial statement showing a minimum net worth or working capital for a license group as required by Section 40-11-260, an applicant may provide a surety bond from a surety authorized to transact surety business in this State in the same amount as the net worth for the applicant's license group with his initial or renewal application. (B) The surety bond provided in subsection (A) must: (1) be continuous in form and must be maintained in effect for as long as the applicant maintains the license issued by the department or until the applicant submits a financial statement showing that he meets the net worth requirements for his license group as provided in Section 40-11-260; (2) list the State of South Carolina as obligee for the bond; (3) be for the benefit of any person who is damaged by an act or omission of the applicant constituting a breach of construction contract or a contract for the furnishing of labor, materials, or professional services for construction undertaken by the applicant, or by any unlawful act or omission of the applicant in performing construction; and (4) be in addition to, and not in lieu of, any other surety bond required of the applicant by law or regulation, or by any party to a contract with the applicant. (C) The surety bond provided in subsection (A) only may be canceled by notification to the board by the surety and the applicant thirty days prior to cancellation. When the surety bond is canceled, the licensee shall provide proof of net worth or working capital for his license group as required by Section 40-11-260 within ten days of cancellation or his license is suspended until written proof of net worth or working capital is provided. (D) Claims may be filed against the bond on a form approved by the board in accordance with procedures established by the board in regulation. (E) The board, upon a finding of a violation by a licensee or that an applicant is unable to meet the financial responsibility guidelines, may further require the licensee to increase the amount of a surety bond or other approved security. An increase must be proportioned to the seriousness of the offense, the repeated nature of the licensee's violations, or related to the financial condition of an applicant. The board, after one year, may reduce an increased surety bond or other approved security when satisfied that violations have been cured by appropriate corrective action and that the licensee is otherwise in good standing.

Legislative History

HISTORY: 2018 Act No. 217 (H.4612), SECTION 1, eff May 18, 2018; 2023 Act No. 69 (H.4115), SECTION 10, eff May 19, 2023. Effect of Amendment 2023 Act No. 69, SECTION 10, in (A), inserted "or working capital" following "minimum net worth" and substituted "in the same amount as the net worth" for "in an amount of two times the required net worth"; in (C), in the second sentence, inserted "or working capital" in two places; and added (E).