Claims against a contractor's $25,000 license bond total more than the full amount of the bond. Under Bus. & Prof. Code §7071.11, how are the bond proceeds distributed?
Explanation
B&P §7071.11(a) is one sentence: if the bond cannot pay all claims in full, "the sum of the bond shall be distributed to all claimants in proportion to the amount of their respective claims." There is no ladder — a homeowner, an unpaid framer and a supplier all take the same percentage of what they are owed (a). (d) is the trap, and it is seductive because the section DOES single out wages once: the surety's aggregate liability for wage and fringe-benefit claims on this bond is capped at $4,000. That is a ceiling on one category, not a head start for it. (b) inverts the purpose of a bond, which exists for claimants and not for the surety or the board. (c) is the rule for recording real-property interests, not for bond proceeds.
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