Alaska’s consumer protection laws regarding contract construction work updated
July 09, 2014
State law requires all contractors in Alaska to file a license bond with the Department of Commerce, Community and Economic Development (DCCED) to ensure contractors have adequate financial resources to pay taxes and other obligations as well as providing the public an avenue to seek recourse in the event there is a negligent or improper work or breach of contract. These statutes also help provide protection to the business community by helping contractors and vendors to collect for unpaid work or equipment rental. However, the bond amounts were set in 1982 and have not been updated since. “The current levels of $10,000 for general contractors and $5,000 for specialty contractors are too low and no longer protect the public like they used to,” said Senator Micciche. “If you consider even a bathroom remodel can easily now exceed $5,000, the bond balances are quickly drained and aggrieved parties are unable to be made whole when something goes wrong. SB192 brings the bonds in line with modern project costs.” “The construction industry prides itself on having the highest in skills, talent and integrity- this legislation is part of that,” said John MacKinnon, Executive Director of the Associated General Contractors of Alaska in a support statement. “We all agreed there needed to be some changes. Thank you for sponsoring this piece of legislation that I believe is important for consumer protection and to the integrity of the industry.” SB193 increases license bond amounts to $25,000 for general contractors and $10,000 for specialty and mechanical contractors. The legislation also adds a new residential only category for general contractors with a license bond amount of $20,000 and helps “handymen” by establishing a $5,000 license bond amount for contractors performing minimal work. “SB193 also closes a loophole that allowed some contractors to avoid the licensing requirements because the law exempted projects worth less than $10,000 from the licensing and bonding requirements. It was intended for the kinds of cases where two students come home from college and paint a house. But unfortunately, some unscrupulous contractors would use this loophole to do work and the public had no recourse when the work was shoddy or incomplete,” said Senator Micciche. “This bill corrects that by establishing a modest bond level for professional contractors.” “However, I do want to make it clear, if you paint houses once in a while, or do other small projects worth less $2,500, and you are not considered a contractor, this law does not apply to you,” added Senator Micciche.
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