Two licensed contractors are putting their heads together but can’t decide whose license will work for their anticipated joint venture. A general engineering contractor discovers if- and where- they can ‘park’. A follow up question on whether a license is required to install a product helps contractors learn it’s not the size of the ‘fixture’ that makes the difference…
Q: As always, I enjoy reading your column. A question regarding the Q&A from a few weeks ago: A license isn’t needed for installing some products, right? For instance, a supplier of blinds who also installs them does not need a license, right? As I recall, it turns on whether the item installed becomes a “fixture,” which is a legal concept equating to whether the product is large, heavy and integrated into the building to such an extent that it becomes “part of the building.” Do I have this right?
A: No, not quite right but that’s why we’re here! Glad you enjoy the column. You’re referring to our prior question regarding the foreign manufacturer who wanted to install their product as part of a Southern CA building project.
While the example given was a very large structure, it is actually not the size of the “fixture”; rather it is the amount of the project that determines whether a license is necessary. Using blinds as an example, a license WOULD be required if the supplier also installs this product and the job is $500.00 or more. The key is the dollar amount. Blinds, which may be considered “temporary”, are covered by the “C-61/D-52” (Window Coverings) classification. Other examples might include store fixtures covered by the “D-34” (prefabricated equipment); metal cable racks included in the “D-24” (metal products); and vinyl or canvas awnings covered by the “D-03” (awnings).
Q: I need to change my license from a Sole to a ‘S’ corp. Myself and another contractor are going to do a Joint Venture (JV) and need to apply for the JV license. How does that typically work? Should we each open another S Corporation and put our licenses together? I have yet to talk with my accountant.
A: You’ll need to first secure a new license for the ‘S’ corporation. If you wish, the Sole Owner license number can be transferred to this entity if you own at least 51% of the company. Once this license is issued (or reassigned), you can then apply for the JV license. By definition, a Joint Venture License consists of two or more licensed entities each of which is active and in good standing with the CSLB. It is up to the joint venture “partners” as to which entities they want as part of this license. I would suggest talking with your accountant first; then call us with any further questions or if you would like any help with the application process.
Q: We’re an “A” contractor and have an opportunity to construct a new park. The project is mostly paving, grading, parking lots, etc.; however, there are a few small structures, such as the bathrooms. Are we permitted to build those structures as part of the overall project with our “A” license or does this need to be subcontracted?
A: A park is expressly listed in 7056 as one of the projects that fall under the General Engineering (“A”) classification. Consequently, a contractor holding the “A” license class can do ALL of the work that is part of the park project, OR ANY PORTION thereof. In short you can build these structures with your “A” license or subcontract the work if you wish.