Joint Venture License & Contractor Scam Alert

Even in the best of times some people will try to ‘fool’ you out of your hard earned dollars. In today’s economy the idea of ‘buyer beware’ is always a good caution before writing the check, especially when fear is used to motivate your spending that buck…

Q: I received a mailing from the CA Secretary of State (I think). It says I have a deadline to complete this form or my corporation could be suspended. I was about to send off the form but decided to call you first as our registered agent. Could you tell me if this is real, and what should be done? Thank you.

A: I have been receiving daily calls from clients and others regarding this same issue. The form you’re referring to is NOT from the Secretary of State and is in fact subject to an OFFICIAL CONSUMER ALERT by the Secretary of State entitled: MISLEADING BUSINESS SOLICITATIONS.

Businesses throughout the State are being warned that the companies behind these mailings have no affiliation with the California Secretary of State’s office or any other government agency. If you have received a solicitation letter and believe it is misleading or confusing, it is recommend that you write the California Department of Justice, Public Inquiry Unit, P.O. Box 944255, Sacramento, CA 94244-2550 or contact their office by phone (toll free in California) at 800-952-5225

According to the Consumer Alert, the solicitation requests that a fee and a completed form be submitted in order for the business to comply with applicable California laws. As we discussed, this official-looking solicitation is not from the SOS but is similar to the real Statement of Information form and includes a ‘misleading’ official-looking seal. The Secretary of State urges those receiving these forms to look out for one or more of the following misleading characteristics: 1) The form quotes a specific statute or other law inapplicable to the type of entity being solicited; 2) Implies that failing to return the form and pay the requested fee may place your company in legal jeopardy or might cause the entity’s filings with the California Secretary of State to be in default; 3) It contains a reference to a “file number,” “Corporation Number,” or “Control Number” that does not match the number assigned to the entity by the Secretary of State; and/or 4) The solicitation references an “annual fee” or “annual payment” that is nearly 10X greater than the $25.00 filing fee for a legitimate Statement of Information.

To view the full text of this Consumer Alert, visit www.sos.ca.gov/business/be/alert-misleading-solicitations.htm

Q: I have always appreciated your column in our local Builder’s newsletter and now have a few questions. I hold a contractor’s license and have been in business for 35 years. I’m considering a design/build venture with an architect who does mostly “green” projects but does not hold a license. We are looking at several options: 1) form a new LLC; 2) Start a Joint venture; or 3) Keep everything under my existing license.

Can my existing license be used to qualify the LLC? Do the joint venture partners both need to be licensed contractors?

A: As I have noted often in this column, the CSLB will not license a LLC. While there is a bill pending in the State Legislature to change this law, there is no telling if it will be passed or even signed by the Governor. Regarding your second option, all partners in a Joint Venture (JV) must be licensed and in good standing. Probably best to go with the third option and keep everything under your existing license.

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