How to Get a Massachusetts Contractor Bond

By: Brian Robertson, CIC, CRIS

Brian Robertson specializes in advising commercial and residential developers, home builders, remodeling contractors, trade contractors, and landscaping contractors.

If you want to obtain your contractor license in Massachusetts, you may need to post a contractor license bond. What does this mean, and how do you acquire one? Are you required to purchase a Massachusetts contractor license bond to get your general contractor license?

Here are all of your questions about Massachusetts contractor license bonds, answered.

What is a contractor license bond?

A contractor license bond is a type of surety bond. In essence, a surety bond is a type of insurance required by the obligee—which is in this case the state, city, or county—and purchased by the principal—you, the contractor. The principal purchases the bond from a surety company, which provides a line of credit to guarantee the payment of any claims made—for example, if the principal fails to abide by the law or causes damage. The surety company gives a financial guarantee to the obligee that the principal will fulfill their obligations.

Contractor license bonds are bonds that must be purchased by general contractors or home improvement contractors in Massachusetts. These bonds must be filed with the appropriate government agencies, and each type has its own unique requirements. In general, these bonds ensure that contractors comply with all cities and/or state construction laws.

Do I need a Massachusetts contractor license bond?

If you are looking to get a Massachusetts general contractor license or home improvement contractor license at the state level, you don’t need a contractor license bond.

You do need a contractor license bond if you are an out-of-state contractor working in Massachusetts. You must provide it to the state Department of Revenue. Your out-of-state contractor license bond must have a penal sum equal to 6.25% of the total price of the contract. If your contract’s price is modified, the bond must be altered, too, to maintain this percentage. This bond must remain active for six months after the contract’s completion.

If the project is less than $20,000, you may be exempt from having to purchase a bond as an out-of-state contractor. There are a few other exemptions, too, related to government agencies and religious or charitable organizations. In these three cases, you would need to fill out forms ST-5C and/or ST-12, so be sure to check with the state or the town in which you are working.

Contractor license bonds are required in some cities and counties. Check with your local authorities about whether you need to provide a bond in Massachusetts to do work as a contractor.

Individual towns or cities may have certain requirements for contractors doing work there. For example, the Town of Braintree requires that contractors post a bond of $5,000. The Town of Dighton requires $10,000. Check with your local authorities to find out what you need.

Why do I need a Massachusetts contractor license bond?

Contractor license bonds are important for ensuring that you, as a contractor, will follow all applicable laws in your work. The government wants to be sure they will be financially compensated for any damage or harm caused if you were to break construction laws.

If you fail to comply with the law, the surety company will pay the full amount of valid claims made by harmed parties, up to the penal sum of the bond. You will then need to reimburse the surety company due to your noncompliance.

How much does a Massachusetts contractor license bond cost?

Massachusetts contractor license bond costs start at $100 per year. Exact premium prices may vary, but most types required for city and county licensing cost $100. Bonds with higher penal sums can sometimes be purchased for higher prices.

How can I buy a Massachusetts contractor license bond?

Massachusetts contractor license bonds are purchased from companies that offer surety bonds.

If you’re doing work in Massachusetts, you can purchase a contractor license bond through C&S Insurance. We maintain relationships with the leading surety companies in the industry. We’re knowledgeable about complex construction issues and the construction industry in general. We have experience working with businesses of all sizes.

Learn more about why you should choose C&S for your surety bond needs, or get a quote today.