All contractors are required to have a contractor's license bond of $12,500 with the State of California. This does not guarantee performance (see surety bonds) or competence. Instead, it helps compensate victims when contractors violate licensing laws.

Checklist. Association boards of directors and managers should always check the Contractors State License Board before signing any contracts to make sure:

1. The contractor is licensed for the type of work performed,

2. No action has been taken against his license, and

3. The contractor is properly bonded with the state of California.