Dothan Homebuilder Bond: A Comprehensive Guide

May 27, 2022

Dothan Homebuilder Bond

This guide provides information for insurance agents to help their customers obtain a Dothan Homebuilder bond

*Important Note: Homebuilders operating in Alabama are required to obtain a statewide license from the Alabama Home Builders Licensure Board, and homebuilders applying for a Residential Roofer License must purchase and maintain a $10,000 surety bond. This page focuses exclusively on the bonding and licensure requirements for homebuilders operating in Dothan, Alabama. For information on the Alabama Residential Roofer Bond, click here.

At a Glance:

  • Average Cost: $100 per year
  • Bond Amount: $10,000
  • Who Needs it: All homebuilding contractors operating in Dothan, Alabama undertaking projects costing more than $10,000
  • Purpose: To ensure the public will receive compensation for any damages should the contractor violate licensing law
  • Who Requires the Bond: The City of Dothan

Background

Dothan Municipal Code Sec. 14-127 requires all homebuilders operating in the city to obtain a business license. The Dothan City Council enacted the licensing laws and regulations to ensure that homebuilders engage in ethical business practices. To provide financial security for the enforcement of the licensing law, homebuilders that work on jobs costing more than $10,000 must purchase and maintain a $10,000 surety bond to be eligible for licensure.

What is the Purpose of the Dothan Homebuilder Bond?

Dothan requires homebuilders that take jobs that cost more than $10,000 to purchase a surety bond as part of the application process to obtain a business license. The bond ensures that the public will receive compensation for financial harm if the contractor fails to comply with the regulations outlined in Dothan Municipal Code Sec. 14-41. Specifically, the bond protects the public in the event the homebuilding contractor engages in any acts of fraud or fails to return land altered throughout the course of a project to a safe condition. In short, the bond is a type of insurance that protects the public if the contractor breaks licensing laws.

Dothan Homebuilder Bond Form

Dothan Homebuilder Bond Form

How Can an Insurance Agent Obtain a Dothan Homebuilder Surety Bond?

BondExchange makes obtaining a Dothan Homebuilder bond easy. Simply log in to your account and use our keyword search to find the “Dothan” bond in our database. Don’t have a login? Enroll now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone at (800) 438-1162, email, or chat from 7:30 AM to 7:00 PM EST to assist you.

At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.

Not an agent? Then let us pair you with one!

BX Agent Finder Link

Click the above image to find a BX Agent near you

Is a Credit Check Required for the Dothan Homebuilder Bond?

No, a credit check is not required for the Dothan Homebuilder bond. Because the bond is considered relatively low risk, the same low rate is offered to all Homebuilders in Dothan regardless of their credit history.

How Much Does the Dothan Homebuilder Bond Cost?

The Dothan Homebuilder bond costs just $100 per year.

Who is Required to Purchase the Bond?

Dothan requires all homebuilder contractors undertaking projects of $10,000 or more to purchase a surety bond as a prerequisite to obtaining a business license. To paraphrase Alabama Statute 34-14A-2, a home builder is a person that constructs, or supervises the construction of, a residential home that is not over three stories where the cost of construction is over $10,000.

How Do Homebuilders Apply for a License in Dothan?

Homebuilders in Dothan must navigate several steps to secure their license. Below are the general guidelines, but applicants should refer to the city website’s licensing page, as well as the licensing statutes.

License Period – All Dothan Business Licenses expire annually and must be renewed before the expiration date

Step 1 – Obtain a State License

All homebuilders operating in Alabama must obtain a statewide license from the Alabama Home Builders Licensure Board. To apply for a license, applicants must:

1.A Determine the License Type

Homebuilders in Alabama are required to obtain a license corresponding to the types of jobs they accept. Below are different Alabama Homebuilder License classifications:

        • Unlimited: Can perform any and all homebuilding jobs
        • Limited: Performs only residential homework that involves a single trade that the contractor specializes in. License is required for jobs over $10,000

1.B Hire a Qualifying Individual

If the contractor is applying for licensure as a business entity, they must hire a qualifying individual that has obtained an individual license and passed the required exam.

1.C Complete the Application

All Alabama Homebuilder License applications should be mailed to the following address:

Home Builders Licensure Board
P.O. Box 303605
Montgomery, Alabama 36130-3605

Homebuilders must complete the application in its entirety, and submit the following items:

1.D Pass the Exam

Applicants for an unlimited license must pass the required exam, or have thier company’s qualifying individual pass the exam, before receiving their license.

1.E Obtain a Local Business License

Applicants for a limited license must currently hold a local business license as a contractor or have held one less at any point during the past year.

Step 2 – Purchase a Surety Bond

Homebuilders operating in Dothan must purchase and maintain a $10,000 surety bond

Step 3 – Complete the Application

Homebuilding contractors are eligible to apply for a Dothan Business License after purchasing a surety bond and obtaining a state license. All Dothan Business License applications should be completed online or mailed to the following address:

City of Dothan
P.O. BOX 2128
Dothan, AL 36302

How Do Dothan Homebuilders Renew Their Local and State Licenses?

Homebuilding contractors can renew their Dothan Business Licenses online here. Additionally, contractors can renew their state licenses online here. Both the Dothan Business License and Alabama Homebuilder License expire annually and must be renewed before the expiration date.

Homebuilders may need to complete 6 hours of continuing education to renew their state licenses.

Do Dothan Homebuilders Need to Obtain a Permit?

Homebuilding contractors will usually need to obtain a permit before beginning work on a project. Dothan requires permits for all new construction, alterations, or additions and all electrical and plumbing work. To obtain a building permit, contractors must submit an application online here. Homebuilding contractors do not need to renew their permits. However, they must obtain a permit for each project they undertake.

What are the Insurance Requirements for Homebuilders in Dothan?

Homebuilders are not required to purchase any form of liability insurance as a prerequisite to obtaining either a state license or Dothan business License. However, Alabama Code Sec. 34-14A-19 requires homebuilders to inform customers as to whether they have such insurance prior to the commencement of construction. Homebuilders operating in Dothan must purchase and maintain a $10,000 surety bond.

How Do Dothan Homebuilders File Their Bonds?

Homebuilders should mail their completed bonds form, including the power of attorney, to the following address:

City of Dothan
P.O. BOX 2128
Dothan, AL 36302

The bond requires signatures from both the surety company that issues the bond and from the contractor. The surety company should include the following information on the bond form:

  • Legal name and address of entity/individual(s) buying the bond
  • Surety company’s name
  • Date the bond is signed

What Can Dothan Homebuilders Do to Avoid Claims Against Their Bonds?

To avoid claims on their bonds, Homebuilders in Dothan must follow all license regulations in the city, including some of the most important issues below that tend to cause claim

  • Do not engage in any acts of fraud
  • Return land altered throughout the course of a project to a safe condition
  • Ensure the safe conditions of all altered land for a period of 1 year after the completion of a project
  • Replace all excavated soil

What Other Insurance Products Can Agents Offer Homebuilders in Dothan?

Dothan does not require homebuilders to purchase liability insurance as a prerequisite to obtaining a business license. However, most reputable homebuilding contractors will obtain this insurance anyway. Bonds are our only business at BondExchange, so we do not issue liability insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.

How Can Insurance Agents Prospect for Dothan Homebuilder Customers?

Alabama conveniently provides a public database to search for active home building contractors in the state. We also suggest contacting the city directly for a list of active homebuilding contractors within Dothan. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.

2022-07-08T10:07:03-04:00