What is a surety bond?
A surety bond is a guarantee and insurance in case of problems. The RBQ bond (Régie du bâtiment du Québec) is required to obtain your RBQ license. Before you can obtain your license from the RBQ, they require that you already have a license bond.
The bond is money set aside and inaccessible for the duration of the work. If the work contract is not respected, this money will be used to solve the problem.
Who is involved in the bond?
In other words, the bond protects both the service recipient and the service provider. The surety sets aside money to reimburse the service recipient if the service provider doesn’t live up to the agreement.
Service provider
The service provider is the person who performs the work. For example, a company that repairs and installs residential ventilation systems will be bonded for its work.
The service provider must respect the contract and its terms. But if problems arise and the service provider can’t fulfill the agreement, the service provider isn’t the one who pays.
A surety bond ensures that contractors don’t declare bankruptcy in the event of problems. What’s more, customers prefer licensed contractors, since they guarantee that the work will be carried out.
Surety
A legal entity (individual or company) “bonds” by setting aside money for the service provider. The bonding entity, also known as the surety, will usually be an insurance company, financial institution or contractors’ association.
Like all insurance, the surety charges the service provider an amount of money to bond.
Receiver of service
The receiver of service is the customer. It is the customer who pays the service provider for the work performed. The service provider and the service receiver have a contract or agreement to perform the work.
Under the agreement, the service recipient expects the work to be performed. However, if the service provider is unable to perform the work, the surety may pay an amount of money to the service receiver as compensation.
What is the RBQ license bond?
A license from the Régie du bâtiment du Québec has been mandatory for most construction contractors since 2008. Contractors must go to the Régie du bâtiment du Québec website and follow all the steps to receive their license.
Contractors must contact a financial institution, contractors’ association or surety insurance company before obtaining their RBQ license.
Would you like to be bonded to obtain your RBQ license? You’ve come to the right place. Get your license bond with our help.
Who doesn't need a license bond?
To find out who needs an RBQ license bond, please refer to the document “List of license subcategories“.
Contractors planning to do work in subcategories 1.1.1 and 1.1.2 only need a new residential building warranty plan. Subcategories 1.1.1 and 1.1.2 relate to new residential buildings.
Be aware that a company performing work in categories 1.1.1 and 1.1.2 AND other subcategories must then have a new residential building warranty plan AND a license bond.
What is not construction work
Many jobs do not require a license, as they are not construction work.
This page of the RBQ website lists all the work that does not require a license. You’ll find, among others
-Tree felling
-Consulting for construction work
-Management of quarry operations
-Delivery of construction materials
-Concrete pumping
Who needs a license bond?
To find out who requires an RBQ license bond, please refer to the document “List of license subcategories“.
All subcategories except 1.1.1 and 1.1.2 require an RBQ license bond.
Since all other subcategories require a license bond, the list is long.
Here are a few notable examples:
1.2 Small buildings
1.3 Buildings of all types
1.4 Roads and pipelines
3.1 Concrete structures
4.1 Masonry structures
13.2 Fire alarm systems
15.5 Plumbing
What the RBQ bond covers
With the RBQ bond, the customer is protected in the event of damage. The bond compensates the customer in the event of a problem such as a breach or damage.
The RBQ bond covers completion of work, advance payments and defects discovered within one year of completion.
Non-completion of work
Completion of the work means finishing the job in its entirety. By signing a contract, a service provider undertakes to complete the work.
If the work is not completed according to the requirements defined in the contract, the bond may reimburse the damage. This situation is called non-completion of work.
Down payments
A deposit is an amount that a service provider (worker) demands from a service receiver (customer) before work begins. This amount allows the service provider to purchase materials and pay for labor.
In the event of problems, the surety reimburses the service recipient according to the amount of the deposit paid with the bond.
Defects discovered
Defects are problems encountered by the customer after the work has been completed. For example, if a plumbing system is poorly soldered and leaks, this is a defect.
In the year following completion of the work, the service receiver may receive an amount from the bond to compensate for any defects discovered.
What the bond does not cover
Certain damages are not covered by the RBQ license bond. These include :
- Damages resulting from work delays
Labor wages
Damages for pain and suffering
Punitive damages
Delayed work
The customer can only claim a sum from the bond if the work cannot be completed. Damages for delayed work are not covered by the bond.
Labor wages
The RBQ license bond does not insure labor wages. However, labor bonds do exist and may be required by service receivers.
For example, a municipal agency may require a labour and material payment bond. Visit this Quebec government document for more details.
Damages for moral prejudice
According to the Civil Code of Quebec, moral prejudice is an injury to a person that is not related to money. For example, if an individual causes sadness, anxiety and unrest, then he or she is causing moral prejudice.
A bond cannot be used if a client is claiming damages for moral prejudice.
Punitive damages
In Quebec, the Civil Code only requires compensation for injury. A court determines an amount corresponding to the damage caused, and the person responsible for the injury pays this amount. However, in order to punish, a court may impose punitive damages. This is an amount greater than the compensation for the injury.
This practice is rare, and punitive damages are only awarded in certain circumstances. The RBQ bond cannot be used to pay punitive damages.
How much is covered by the RBQ bond?
The RBQ license bond is a fixed amount. It is a sum of money that customers can claim from the Régie. Service receivers can request a claim, and the Régie opens a file for a period of 6 months.
The amount of the bond depends on the sub-category of work. Please refer to this Régie document for all sub-categories of work.
For general contractors (Appendix I of the document): 40 000 $
For specialized contractors (Appendix II and Appendix III): 20 000 $
General contractors and self-employed workers
The subject of surety bonds is complex. To understand how surety bonds work, you’ve come to the right place. We’ve written the following articles to make sure you have all the information you need:
Support in bonding
Before starting construction, the Régie du bâtiment du Québec requires that you follow a number of steps. The RBQ license bond is one of the most complicated to follow and understand.
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