Penalties for working as unlicensed contractors in california

While some law is subject to interpretation in implementation, most rules & regulations mean exactly what they say. Two answers for our first contractor every licensed entity should remember. Unlicensed contractors make everyone look bad, but when they prey on disaster victims they are really playing with ‘fire’. For anyone who considers themselves ‘owner builders’ a caution about time and experience at work…

Q: I have a sole owner license and will be applying for a corporate contractor’s license soon. Two questions: first, can I transfer my sole owner license number to the corporation, and second, could I run into any problems if I begin signing contracts under the corporate license (hopefully with the same number)?

A: The answer to your first question is YES. You can transfer your sole owner license to the new corporation if you own 51% or more of the company. If you own 50% or less of the corp., a new license number will be issued automatically. The answer to the second question is also YES, particularly in light of a recent court decision.

According to an article by Sam K. Abdulaziz, a noted Southern CA attorney, the courts have tightened up even more on their interpretation of Business and Professions Code section 7031. This code section basically says you must be properly licensed if you want to have any chance of winning a court action. This involved a case, whereby a subcontractor was barred from bringing a suit against a general contractor because they were not licensed at all times.

According to Mr. Abdulaziz the sub was a corporation that had applied for, but not yet obtained, their corporate contractor’s license at the time it submitted a bid. The company had entered into the contract, ordered parts, and submitted plans before the corporation was actually licensed. However, it had not started actual construction of the site. It did not matter that the RMO was licensed as an individual and a partnership, since he was not licensed on behalf of the corporation.

It would appear that if you sign a contract under the new entity using the number from a current license, you could be asking for trouble The existing laws (and judicial rulings) in this area are extremely harsh and the case in question continues that trend.

Representatives from the Contractors State License Board (CSLB) have been among the first responders entering the various fire/disaster zones in California when it was deemed safe. Investigators and other staff members have been providing information to residents, canvassing burned neighborhoods to give warnings and offer helpful information about hiring contractors.

The CSLB’s Statewide Investigative Fraud unit (SWIFT) teamed up with investigators from the California Department of Insurance (DOI) in the Santa Clara/Santa Cruz Mountains after one of the first fires in May to post warning signs about the dangers of unlicensed activity in disaster zones. SWIFT also conducted a total of four sweep operations in the fire ravaged areas of Butte County during the months of June and July. According to the Board, over one million acres have burned in the state so far this year.

Q: I am an individual preparing to apply for a General Contractor’s License in California primarily utilizing my owner/builder experience as qualification. Can you send me examples of successful applications under that provision?

A: Owner builder experience is the hardest to qualify with since the CSLB rarely gives the applicant full credit. Every applicant is different; however, a rule of thumb is if you spent a year working on building your own home, they will likely give you only three to four months credit towards the four-year experience requirement. I have handled successful applications, however, I have also had to discourage other applicants knowing they would not qualify.

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