Arizona Financial Responsibility & the License Bond
Arizona backs its licenses with a contractor's license bond and expects applicants to show financial strength. This chapter covers the bond requirement, its purpose, and how net worth is measured.
The contractor's license bond
Before a license issues, the applicant must post a contractor's license bond (or an approved cash deposit) under A.R.S. §32-1152, in an amount the Registrar sets based on the license class and the contractor's volume of work. The bond is a condition of licensure, not an optional add-on.
Purpose of the bond
The license bond gives injured parties - owners, workers, or suppliers - a source of recovery when a contractor violates the licensing statutes or breaches a construction contract. It is a consumer-protection device; it does not guarantee the contractor a profit or pay the contractor's own taxes.
Measuring net worth
Financial strength is shown on the applicant's financial statement, where net worth (owner's equity) equals total assets minus total liabilities. For example, $250,000 in assets against $160,000 in liabilities yields a net worth of $90,000. An accurate statement is the foundation of the ROC's confidence in the applicant.