New Mexico Contractors License Bonds Explained
All licensed contractors in the state of New Mexico are required to post a contractor’s license bond, which provides a financial guarantee to the state and the contractor’s clients.
If a contractor fails to fulfill their contractual obligations, or doesn’t comply with relevant state regulations, they can face a penalty in the form of a bond claim. Bond claims can be made up to the total bond amount, which in this case is $10,000.
What constitutes lack of compliance can depend on the type of license you hold. In general, you need to comply with all provisions of NMSA 1978, Section 60-13-49, and perform construction work adhering to the building codes stipulated in NMAC Title 14, Chapters 7 - 10.
Read on for more information, including how to calculate your costs and what to expect from the application process. Or just call us (877)-514-5146 and we will address your question.
Questions about Contractor License Bonds
How much does a New Mexico contractors license bond cost?
As mentioned, the penal sum of this bond is $10,000. The bond cost, however, is just a percentage of it, usually in the 1%-3% range. For example, let’s say you get a 2% quote. This would mean the cost of your bond is $200.
Your exact percentage depend on factors such as your credit report, and especially your personal credit score.
|Bond Type||Surety Bond Amount||Above 700||Between 650-699||Between 600-649||Below 599|
|New Mexico Contractor License Bond||$10,000||$100-$150||$100-$300||$250-$500||$500-$1,000|
As you can see, changes in your credit score can greatly affect your premium, but they’re not the only factor. Financial strength or industry experience may also be considered. Learn more on our “What Does a Surety Bond Cost?” page.
Can I get this bond with bad credit?
Absolutely! Credit score is important because sureties use it to assess your ability to make good on your claims. However, a bad credit score alone will not prevent you from getting bonded.
Premiums for bad credit applicants are higher (usually between 3% and 10%) but you can expect them to decrease over time, as you gain industry experience and improve you credit and financials. Learn more about getting bonded with bad credit on our page dedicated to the topic.
How do I apply for a contractor’s license bond in New Mexico?
There’s good news: the application process isn’t complicated, and can be completed online. Our application is straightforward and quick to complete Once you’ve applied, you get a free no-obligations bond quote.
Depending on the specific situations, you may be required to provide extra documentations, such as personal and business financial statements or even a resumé. We will cooperate with you to make sure you go through the whole process smoothly.
When your bond is ready, we’ll mail it to you. You can only use the original bond when you apply for your license, and you must send it no later than 30 days after the date marked on the bond form.
How do I renew my contractor’s license bond?
New Mexico contractors license bonds can be issued for one-year or three-year terms. The second option means a higher upfront cost, but bond underwriters are sometimes willing to offer a discount on three-year bonds.
The renewal process is quite similar to the application process. The surety assesses your credit score and provides you with a premium. Upon payment, you bond will be renewed.
How do I get a New Mexico contractors license?
Make sure you contact the Regulation and Licensing Department to inquire about the full list of licensing requirements you need to meet. Some of them will be specific to your license type, but others are obligatory for everyone. Here is an overview of the steps:
- Choose a license classification
- Apply to become a Qualifying Party
- Pass the pre-licensing exam
- Obtain a tax ID number
- Register with the Secretary of State (only required from LPs, LLPs, LLCs and corporations)
- Pay applicable fees (application fee, certificate fee and a licensing fee)
If your application is approved, you will receive your contractor license in the mail. It will be valid for three years. However, keep in mind that if you have issued your bond for a one-year term, you will need to renew it each year or you license will be revoked.
How are claims handled for these types of bonds?
If you are in violation of the building code or you breach a contractual agreement, you will be notified and given a chance to remedy the violation. If you fail to fix it, the surety has a legal obligation to reimburse the claimant within 45 days of receiving the relevant documentation. Afterwards, it becomes your responsibility to reimburse the surety.
You should always take prompt steps to correct any violation that you have been found responsible for. The alternative– a bond claim– is not only costly, but most sureties will refuse to issue bonds for an applicant with a history of claims.