D.C. Mun. Regs. tit. 16, r. 16-802

Current through Register Vol. 71, No. 49, December 6, 2024

Rule 16-802 - BONDS OR OTHER SECURITY

802.1

Each applicant for a contractor's license shall file in the Office of the Director a bond issued in support of the license for which application is made, extending to third-party recovery, in the penal sum of twenty-five thousand dollars ($ 25,000) running to the District of Columbia, with corporate surety authorized by the Secretary of the Treasury pursuant to Title 6, U.S. Code and by the Commissioner of the Department of Insurance, Securities, and Banking to do business in the District.

802.2

Each bond shall be in a form approved by the Director and shall be conditioned as required by, and shall be subject to, the provisions of § 2 of the Act approved September 6, 1960 (74 Stat. 815; Pub. L. 86-715).

802.3

The conditions of the bond under § 802.2 shall not be construed or understood to require any surety to be responsible for the completion of a home improvement contract entered into by the principal on the bond, nor shall a surety be liable under the bond for any claim other than a claim for financial loss suffered by a homeowner in connection with the transaction between the owner and the principal and arising out of a violation of statute or regulation for which the principal was subject to criminal prosecution by the United States or the District of Columbia.

802.4

In lieu of a corporate surety bond under § 802.1, an applicant for a license as a contractor may deposit with the D.C. Treasurer other security for the protection of members of the public against financial loss by reason of the failure of the licensee, or of any officer, member, salesperson, employee, or other person acting on behalf of the licensee, to observe any statute or regulation in force in the District of Columbia applicable to the licensee's conduct of the business licensed pursuant to this chapter.

802.5

The security which may be accepted by the D.C. Treasurer under § 802.4 shall be one of the following:

(a) Cash in the amount of twenty-five thousand dollars ($ 25,000);

(b) A certified check or cashier's check in the amount of twenty-five thousand dollars ($ 25,000) made payable to the order to the D.C. Treasurer; or

(c) A marketable bond or bonds or a note or notes having in the aggregate a maturity value of at least twenty-six thousand dollars ($ 26,000) and issued by the government of the Unites States or by any agency or instrumentality of the government, together with an irrevocable power of attorney and agreement, on a form provided by the D.C. Treasurer authorizing the D.C. Treasurer to collect or sell, assign, and transfer that bond or note; Provided, that no such bond or note shall be collected or sold until such time as it may be necessary to make payment to any person entitled to recover damage from the security which the bond represents.

802.6

Cash, certified checks, and cashier's checks deposited for the purposes of this section and the proceeds of the collection or sale of any bond or note made pursuant to this section shall be deposited to the credit of a District of Columbia trust fund account, and shall be available for the payment of any judgment rendered against the licensee in favor of any person who has sustained damage by reason of the violation by the licensee or by his, her, or its officer, member, salesperson, employee, or other person acting on his, her, or its behalf, of any statute or regulation in force in the District of Columbia applicable to the licensee's conduct of the business licensed pursuant to this chapter.

802.7

No payment from the security deposited pursuant to this section on account of any judgment shall be made until that judgment has become final and remains unsatisfied and the period for filing an appeal has expired or the judgment debtor has waived in writing the right to take an appeal.

802.8

If the security deposited pursuant to this section is other than bonds or notes and is reduced below twenty-five thousand dollars ($ 25,000), or if the security is in the form of marketable bonds or notes and, by reason of the payment of or on account of any final judgment, is reduced to an amount less than twenty-six thousand dollars ($ 26,000), the licensee shall, within five (5) calendar days after having been notified in writing by the Director to do so, make an additional deposit to bring the amount on deposit with the D.C. Treasurer for the purpose of this subsection up to the amount required under the appropriate provision of this section.

802.9

Payment made from security deposited pursuant to this section for or on account of a judgment shall include interest and costs as specified in the judgment or as may be required by statute.

802.10

Any security deposited pursuant to this section shall be retained by the D.C. Treasurer for at least three (3) years after the expiration of the license in connection with which the security was deposited.

802.11

If the D.C. Treasurer is notified in writing that suit has been filed against any licensee as a result of which a judgment may be payable out of the security, the security shall be held until such time as appeal from the judgment has expired or until the suit is otherwise disposed of.

D.C. Mun. Regs. tit. 16, r. 16-802

Final Rulemaking published at 56 DCR 3098 (April 24, 2009)