Bonding in Kansas

A surety bond is a 3-party promise. The contractor (the principal) pays a surety company for a bond that a customer, subcontractor, or a government entity (the obligee) can draw against if the contractor breaks the rules the bond covers. The surety pays valid claims up to the bond face value. The contractor then owes the surety for what the surety paid out. A bond protects the public. It is not insurance for the contractor. Kansas is one of the most municipally-driven states for trade bonding. No state-level trade license exists for electrical, plumbing, HVAC, or general contracting, so almost every contractor license bond is set by city or county ordinance. Public-works bonds are the main place state law controls the amount and conditions. 1. No statewide license bonds. Kansas does not license electricians, plumbers, HVAC contractors, or general contractors at the state level, so there are no statewide license bonds to post. Kansas-specific trade bonding occurs at the city or county level. 2. Municipal license bonds. Cities and counties that license a trade typically require a local bond with each contractor registration. Amounts and obligees vary. Representative examples: - Wichita (and parts of Sedgwick County). MABCD administers trade licensing and requires a local license bond in amounts set by ordinance. - Kansas City, Kansas (Unified Government). Requires local license bonds for electrical, plumbing, and mechanical contractors. - Johnson County Contractor Licensing. Administers shared trade licenses recognized in many Johnson County cities, with license bond amounts set by the Johnson County regulation. Source: Johnson County Contractor Licensing (https://www.jocogov.org/department/contractor-licensing). - Topeka, Lawrence, Manhattan, Salina, and others. Each sets bond amounts by ordinance. Confirm the local bond requirement in every jurisdiction where you register before estimating or permitting. 3. Public works bonds under Kansas Statutes 60-1111. Kansas Statutes Annotated 60-1111 requires any public officer who enters into a contract exceeding $100,000 for public improvements or construction or repair of a public building to take a bond to the State of Kansas with good and sufficient sureties in a sum not less than the total contract amount. The bond is conditioned on payment of all indebtedness incurred for labor furnished, materials, equipment, or supplies used or consumed in connection with the public project. The bond must be filed with the clerk of the district court of the county where the public improvement is to be made. Persons to whom any labor or material payment is due may bring an action on the bond, but no action may be brought more than six months after completion of the public improvement. The 60-1111 bond is a substitute for mechanic's liens for the benefit of those who would otherwise have lien rights. Source: Kansas Statutes 60-1111 (https://ksrevisor.gov/statutes/chapters/ch60/060_011_0011.html). 4. Private projects and mechanic's liens. On private Kansas projects, subcontractors and suppliers use the mechanic's-lien procedures in Kansas Statutes Chapter 60, Article 11. An owner or original contractor may post a lien release bond to clear title. That is a project-based tool, not a license bond. Premium math. A surety charges an annual premium, typically 1% to 3% of the bond face value for a contractor with strong credit and no prior claims. Weaker credit, tax liens, prior surety losses, or a new business can push the rate to 5% to 10% or more. Public works performance and payment bonds are priced per job, usually 0.5% to 3% of the contract price depending on contract size, job type, and the contractor's financial statements. Bond, insurance, and workers' compensation are separate requirements. A Kansas trades firm should plan for (1) each city or county license bond in its service area, (2) general liability and workers' compensation insurance, and (3) statutory public-works bonds on any public contract exceeding $100,000 under K.S.A. 60-1111.