Contractor licensing in CA RME and RMO

The balance between a contractor’s worksite and the surrounding community can sometimes become strained. Often it’s because of noise created by the work. Can a contractor be fined by the CSLB when the decibels rise and tempers flare? Why should a Responsible Managing Officer always file to disassociate from the company when he leaves? One contractor offers us an example, and another, some basics on financial responsibility for RMO and RME qualifiers…

Q: Love your Q&A!! Question – What are the legal hours of operation for a contractor to start banging around at the construction project next door to my house? Our local ordinance says 0700, but I wondered if the CSLB lets them start earlier?

A: Local governments regulate noise ordinances, including those affecting a contractor’s start time. To my knowledge, the CSLB has no rules or regulations addressing this issue.

Q: Can a Delaware corporation hold a California contractor’s license?

A: Yes, corporations from any State can become licensed in CA so long as the company registers as a “foreign corporation” with the Secretary of State (SOS).

Q: If we wanted to change the name of our corporation, what would that entail concerning the CSLB? Could we just show the change with the SOS or would more paperwork be involved?

A: Once you amend a corporate name with the Secretary of State (SOS), you must also officially change it with the CSLB. This involves filing an Application to Change Business Name.

Q: My Company is closed and was dissolved in 2008. However, there are several outstanding disputes and small claims that have come up over the years. The Responsible Managing Officer (RMO) disassociated in October 2007. If we choose not to defend all these small claims, what are the chances that the RMO will have a black mark on his record with the CSLB? I’m assuming someone will file a complaint and possibly make a claim on the company’s bond. We’re not concerned with the company, but how this affects the RMO’s record?

A: If there were judgments prior to the date your RMO disassociated, this would have an impact on his license record. On the other hand any judgments or bond claims after October 2007, will NOT likely cause any repercussions with the Contractors Board.

Q: I have a question regarding RME/RMO. I have a “C-10″ license and somebody asked me to become a RME or RMO for his corporation. Please tell me if I’ll have any financial liability in case something goes wrong with the business in the future. Also, is it my responsibility to apply for a bond or is the owner supposed to handle this? Thank you for your help, any advice is welcome.

A: I am often asked about potential “liability” for a RME or RMO. There is no way to give you a definitive response because a court, arbitrator or the CSLB would ultimately determine financial liability. What I can tell you is that, a Responsible Managing Officer (RMO) would potentially be more “financially liable”. If “something goes wrong with the business in the future” a company officer would likely have some fiduciary responsibility. The Responsible Managing Employee (RME), on the other hand, should have no control over financial matters and therefore, less likely to be held responsible.

It is usually up to the company to secure a bond for the RME or RMO. This $12,500 Bond of Qualifying Individual is only required if the RMO owns less than 10% of the company and is in addition to the Contractor’s bond.

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