Contractor License Question: Disassociation for Contractor License

A failure to communicate will cost a contractor big time, when he could have avoided the whole expensive problem with a single postage stamp. But first, one of the largest investments most people make is in their home. With the high cost of homes, thats now truer than ever in California. This makes contracts involving home repair and improvement a top priority for lawmakers elected to protect the public from harm. As our first contractor helps us learn, there have been some changes that affect many readers of this column

Q: I am a plumber and do a lot of service work. I know there have been many changes during the past year regarding home improvement and, in particular, service and repair contracts. I want to make sure I am doing everything properly when Im asked to do an emergency repair on someones home. Isnt there an exclusion from regular contracts in these emergency situations such as fixing a broken pipe or leaky toilet?

A: There have been many legislative changes within the past year regarding home improvement contracts. One of these changes relates to the traditional three-day right to cancel, which, as you know, gives the homeowner the right to cancel specified contracts within three days after signing. One major exception to the “three-day right to cancel” is a ‘Service and Repair’ contract that covers emergency repairs or services that are requested by the consumer on short notice.

Excluding the legalese in Section 7159.10 of the Business and Professions Code, this boils down to the following: 1) The contract amount with the homeowner is $750 or less; 2) the homeowner initiates contact with you to request the work; 3) as the contractor, you do not sell goods or services beyond those reasonably necessary to take care of the particular problem; and 4) you accept no payment until the work is satisfactorily completed.

For a copy of the entire section 7159 (Requirements for home improvement contracts) or 7159.10 regarding service and repair contracts, contact my office and well be happy to provide this to you free of charge.

Q: I just received a notice in the mail from the Contractors Board that says my contractors license may be suspended at a future date because of my association with another license that has an outstanding civil judgment. My choices are to either disassociate from my current employers license or pay the civil judgment on the prior company I worked for. This is unfair because I left the company well before this judgment popped up and I shouldnt be forced to leave my present license. What are my options?

A: I checked your license on the Internet and sure enough, there is a note stating the license may be suspended at a future date because of its association with another license, if that other license fails to comply with an outstanding civil judgment. I also checked the prior license you were listed on and did some research. There was a judgment entered against the company last month for over $20,000. Since you are the only officer still listed on the CSLBs official record, they are going after you. Although you left the company well before the judgment popped up you apparently never bothered to inform the Contractors Board of this fact.

I often tell callers that it is extremely important to notify the CSLB in writing when you disassociate from a license even if you are not the qualifying individual as was the case here. You never know when a judgment, lien or consumer complaint may pop-up. Unfortunately, the Board is unwavering when it comes to enforcement of these judgments, so your options are to: pay the judgment; get a court to overturn the judgment; work out a payment schedule with the company that is owed the money; or disassociate from your present license until this issue is resolved.

Arizona Contractor License Question

Can you sell your contractors license? Many contractors spend a lifetime building a successful business and when retirement looks likely they want to profit from their hard work by selling the company. Does the law limit who can buy it? Could you sell yours? At the other end of the spectrum, an aspiring contractor who can hardly wait to get started has our first four questions

Q: I’ve just completed the Business and Trade Exam in Arizona. I now want to apply for my license; however, I have job offers for both California and Arizona. Can I be licensed in Arizona and still perform contracted work out in California? How much does it cost for a California Contractors License? How much does it cost for an Arizona Contractors License? Finally, how long will it take to get our license in each State?

A: Congratulations on passing the law and trade exams. To apply for your license, the State of Arizona requires completion of a comprehensive application including securing a Transaction Privilege Tax (TPT) Number from the Dept. of Revenue. Securing a separate California license is required in order to work in this State. It does not matter where else you are licensed or where your business is based.

Costs to obtain an AZ license should be around $700.00m (for a specialty class). Fees for a CA license are $400 (plus fingerprint expenses). If applying as a corporation, there will be added costs.

It is taking approximately 3 months to obtain a license in CA and about 2 months in AZ. However, this can vary widely depending on a number of factors including testing (in CA) fingerprinting (in CA); applying as a corporation in AZ and CA; or obtaining your TPT in AZ. A contractors bond is required in each state.

Q: Can I sell my roofing business to someone who doesnt have a license? Can my license number go to them? Is this as simple as filing a change of owner with the State? Please help me.

A: Thank you for the email. There are no contractors licensing rules or regulations that dictate who you can sell your business to. So if you want to sell it to someone who does not have a license this is up to you. This being said, since active contractor licenses must have a qualifying individual, the new owner will need to find someone who can qualify for the roofing classification. This might be an employee who is staying with the company after it’s sold or if the new owner has 4 or more years of experience, that individual can apply to qualify for the new license.

You do not say whether the license is a sole owner, partnership or corporation. In most cases, the existing license number cannot be transferred to the buyer. For instance, a sole owner cannot transfer his or her license number (unless it is being taken over by a family member); partnerships cannot transfer a license since changing a partnership will most always cause the existing number to be cancelled; and corporation numbers may only do so if the company is selling its stock (rather than just the assets) to the new owners.