Contractor Permit Bonds

Permit bond vs. license bond

The $25,000 CSLB contractor license bond is required to hold a California license. A permit bond is different: a city, county or Caltrans may require it before issuing an encroachment, street, right-of-way or grading permit, to guarantee the work in the public right-of-way is completed and restored.

How amounts are set

There is no single statewide amount. Each agency sets its own rules — for example, the City of San Diego bases right-of-way and grading bonds on an engineer's cost estimate, and the City of Los Angeles sets Class B street permit security from the City Engineer's estimate plus contingency. Some agencies accept cash or a letter of credit instead of a bond.

Common types of permit bonds

• Encroachment or street permit bond — work in a public street, sidewalk or right-of-way.
• Grading bond — earthwork and erosion control on a permitted site.
• Right-of-way restoration bond — guarantees pavement and improvements are restored.
• License and permit bond for a local business license, where a city requires one.

How long the bond stays in place

Most permit bonds stay open until the agency accepts the completed work and any warranty period ends. Because the bond is a guarantee to the agency, a claim paid by the surety is repaid by the contractor, so keeping inspection records and final sign-offs matters.

Because the surety is guaranteeing your performance to the agency, underwriting looks at you, not just the job. Clean financials, a good credit history and a record of closed permits make larger permit bonds easier to obtain. Plan ahead for jobs that need a bond so the permit is not delayed.

What you need to apply

• The permit application and the agency's bond form
• The bond amount the agency requires
• Business financials or credit for underwriting
• Your CSLB license information

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Frequently asked questions

Is a permit bond the same as my CSLB bond?

No. The CSLB bond is a license requirement; a permit bond is required by a city or county for a specific permit.

Who sets the permit bond amount?

The city, county or agency issuing the permit.

Can the city claim on my permit bond?

Yes, if the work isn't completed or restored to the agency's standards. The surety pays the agency, and the contractor repays the surety.

How fast can a permit bond be issued?

Smaller permit bonds are often issued quickly once the agency's form and amount are known; larger bonds need financial review.