Contractor Rules for California B License & RMO

Longevity in business is often one of the ways to tell who is providing quality work over time. That’s why for contractors having a ‘low’ license number can be important. Another question brings to light the fact some generals may be unintentionally breaking the law. Lastly, have we discovered a ‘loophole’ that may ‘rain’ on the parade of some “C-39″s . . .

Q: I’ve done quite a bit of research and have been unable to answer what seems like a straightforward question. If the personal license of a Responsible Managing Officer (RMO) is suspended (for bond suspension) is the corporation’s license affected. In other words, does the corporation’s license depend upon the status of the individual RMO’s license?

A: A bond suspension — or even expiration — of the qualifier’s personal (sole owner) license has no impact on the status of the corporation’s license for which he serves as RMO.

Q: I just received a letter from the CSLB telling me they could not reassign my partnership license to our new corporation. In fact they issued us a new license number that begins with a “92”. What happens to our old partnership license? Can I still use the old number (which begins with a “63”)?

A: Unfortunately, the CSLB cannot reissue a partnership license to any other entity. When conducting business as a corporation, you should use this new license number. If the partnership is still intact you can continue to use this old number but ONLY for the partnership – not the new corporation. If the partnership was dissolved or one of the partners has left or disassociated, this license will be cancelled.

Q: A friend of mine just faxed me one of your recent columns in a magazine (sorry I am not sure which one). It involved a “B” contractor bidding on a project with just one trade. I also have a general building license and often take projects involving one trade. Is this really a problem?

A: Yes it is a potential problem. As I have indicated in prior columns, a “B” may take a prime or subcontract involving TWO or more unrelated trades (framing or carpentry are exceptions). In most cases, it’s proper for the “B” to take a project that involves only one trade if it’s subcontracted to a properly licensed contractor.

Q: Thank you for the informative information that you contribute to my plan room publications. In regards to your recent question involving a general contractor not being allowed to perform roofing; wasn’t there a change in California a year or two ago that said that the general must have Workmen’s Comp on file and in force when performing roofing. I believe that may have been the intent of the question.

A: Thank you for the kind words. I am glad you find my columns so informative. I truly enjoy writing these every week and am happy to respond to those who take the time to call, write or email questions.

I believe you’re referring to Section 7125, which addresses Worker’s Compensation and the “C-39” classification. Only contractors holding the “C-39” classification are affected by this 2006 law. It states that any active license that includes a roofing classification must have a Certificate of Worker’s comp on file with the CSLB (even if they have no employees). Granted, it is nearly impossible to tear-off or install a roof without employees, but there is no specific requirement related to a General (“B”) contractor having this insurance coverage. This is one of those apparent ‘loopholes’ you hear about in laws.

California Contractor Business Names

When you build a company one of the first things you do is ‘construct’ a business name. Why can’t contractors use some names? Some lead, others follow and when you don’t know for sure, you consult an expert. Honestly, our last question seems to have an obvious conclusion. What do you think is up with that? . . .

Q: I was told by the CSLB that I could not use my business name since it has the word “construction” and I do not hold a general license. My attorney registered the name with the Secretary of State and they did not have any problems. Does the Contractors Board have the authority to deny my license simply because they don’t like the business name? What do you suggest?

A: Section 7059.1 allows the CSLB to disallow a name if they feel it would mislead the public. This is true even if your name is registered with the Secretary of State. CSLB staff have made the determination that “construction” may only be used by an “A” or “B” contractor, or if it has a descriptive word detailing the type of construction being performed. For instance a “C-36” could have a business name including the words “plumbing construction” or a “C-29” would be allowed to use a business name such as “ABC Masonry Construction”.

Your options at this point are to either amend the business name with the Secretary of State or use a ‘Doing-business-as’ or DBA describing the type of “construction” you intend on handling.

Q: I run a license school and recently had a prospective student ask me if I had heard of a new regulation stipulating that holders of a “B” license were not allowed to do roofing work without an additional classification. Is this true? I’ve heard nothing about it. Thank you for your time and assistance.

A: During my nearly 27 years helping contractors, I have often been asked about what a general building contractor can and cannot do. This question can be answered by reviewing Section 7057 (which I have dealt with often in this column). If roofing is part of an overall project involving two or more unrelated trades, there should be no problem with a general builder doing the work. If a contractor will ONLY be handling roofing then he would be advised to get an additional “C-39 class”. The “B” could also take a prime roofing project if he subs the work to a licensed “C-39” contractor. My response would be the same for most any other trade (plumbing, electrical, HVAC, etc.).

Q: I was wondering if you could help me. . . I would like to obtain my “C-10” license and once I have it would like to transfer it into my wife’s name with me having no connection whatsoever. Is that possible? Would I need to incorporate the license and then sell the corporation to her? How might this be possible?

A: No it is not legally possible. As described, you cannot “transfer” your license to another person — even your wife. You may qualify a second license as RME or RMO (or even as qualifying partner) but in doing so you would by definition have a connection to the business entity. It would be improper and unethical to qualify a license and then have no involvement. As a licensed contractor or the qualifying individual for another you have RESPONSIBILITY to ensure that work is being properly conducted.

Partnership California Contractor Licensing

When husbands and wives can’t live together they get a divorce. What about licensed business partners? What then? As home building has cooled other areas of construction are heating up in California as contractors seek new opportunities. For many contractors a new license may be required. However, soon if you do not submit the most recent CSLB application expect to immediately return to square one and start over…

Q: What is the easiest way for two partners who no longer wish to be in a partnership together to start their own construction businesses? What applications/forms need to be filed by each partner? One partner is qualifier and the other is a general partner. Can each partner get a new license with no testing? Can we still go on with the current license until all work is done and everything split up equally? Can the qualifying partner keep the existing License number and name? The CSLB website does not seem to cover these questions so all information you can provide would be greatly appreciated.

A: Partners can decide to split up at any time. Please realize that once a partner leaves, the license will be cancelled. The remaining partner can ask for a continuance to complete projects in progress; however, no NEW work should be started. A partnership license number cannot be transferred. I do not know what your partnership name style is so I cannot say if this same name can be used for a sole owner license.

The qualifying partner can apply for a new license by completing and filing an Application for Original Contractor’s License (7065 waiver). The other (general) partner will be required to sit for the law and trade exam and must file a regular Application for Original Contractor’s License. New bonding and fingerprinting will be required as will a certificate of Worker’s Comp if either of you have employees. The CSLB has not allowed exam waivers for partners since 2003.

Q: The folks at the North Coast Builders Exchange told me that you could answer my question. My company has been building new homes for several years; however, with the slow-down in the current housing market, we are considering home remodeling until the market for new homes improves. My question for you is: Does the CSLB have specific codes or requirements for home improvement contractors? It’s been several years since I have reviewed these. Any information you can send me would be greatly appreciated.

A: My compliments to NCBE and thank you for your email. The CSLB has a Contractor’s Guide to Home Improvement Contracts entitled “Contracting For Success”. I have several copies in my office and will mail you one today. The guide covers specific codes and requirements involving contracts, disclosure statements, etc. Readers can contact my office or the CSLB to secure a copy of this publication.

Q: Can a General building contractor take a public work sub-contract that only involves cabinetry?

A: Yes, B&P Section 7057 allows general builders to take prime or subcontracts that only involve rough or finish carpentry (i.e. framing cabinets, millwork).

Contractor’s NOTE: Effective January 1, 2009, the CSLB will only accept the current version of their applications (dated 05/08), including those for Original Contractors License, Additional Classification; Replacing the Qualifying Individual; Asbestos and Hazardous Certification and Home Improvement Salespersons.

Whereas in the past, the CSLB would give contractors a year or more leeway, this time they are taking a hard line. According to a recent press release, “all older versions of the above-listed applications that are submitted to the CSLB (after 1/1/09) will be refused or rejected prior to cashiering of any fees and returned to the applicant. The applicant will have to complete and submit a new application and fees”. As Yoda might say, “forewarned you be”.

California Contractors Additional License Classifications

“May you live in interesting times” is both a compliment and a curse. More true than ever in an election year. However, for contractors these are times in our society when new paths are often explored, new business created and realized in ways they never considered. From the number of contractors looking at new opportunity to build, create new companies and profit from our current ‘interesting times’ many questions arise . . .

Q: I may be starting a new company that will do telephone and data system installations and some electrical. Does my current status as a licensed contractor allow this activity? What do I need to do when I set up the new company?

A: Thank you for your email. My research indicates you’re licensed in the “B” and “C-10” (electrical) classifications. Therefore, your current status allows you to perform and in most cases sub-contract the electrical work you describe.

To apply for a new corporate license, you will need to first file the proper articles of incorporation with the Secretary of State, file a contractor’s license application, pay the required fees and post a new contractor’s bond.

Q: I’m in the early stages of creating a business plan for a landscape services company in California. My question: is there any simple document that outlines when I will need a “C-27″contractor’s license? I have briefly searched the Internet and the Contractor’s Board site and have not found an answer as of yet but did locate your site cutredtape.com. My company will initially provide basic maintenance including mowing, trimming, fertilization, as well as basic repair and light installation (sprinkler/planting/sod/low voltage lighting etc.) I understand that if I remain under the $500 limit I am okay; however in the “C-27” license it states “maintenance”. So do I need a license to mow a property for $600 per month? I would appreciate any assistance you can provide.

A: If you are simply doing maintenance (mowing, trimming, fertilization,) no contractor’s license is needed. On the other hand, if the work is more than $500 and includes basic repair and light installation, sprinkler/planting/sod/low voltage lighting etc., a license would be required. The word “maintains” is used in the “C-27” definition and relates to “the development of landscape systems for public or private gardens and other areas which are designed for horticulture, or to aesthetically, architecturally, or functionally improve the grounds within or surrounding a structure or tract of land.”

Q: I recently got my “B” license and would like to qualify for the “A” license. Do I go through the whole fingerprinting and pre-qualifying again?A: Although you’re a general building contractor, the CSLB will require that you show the four or more years experience to take the general engineering exam. You will not need to re-take the law test nor will you need to be fingerprinted a second time.

A shout out to the Contractors Association of Truckee Tahoe for their recent newsletter reminder entitled: Are you registered to Vote? The registration deadline in CA to vote in the November 4 election is October 20.

Few rights are as important as the opportunity to express yourself — your beliefs and choices — at the ballot box. You can’t create change or make history by sitting on the sidelines.

I work with people in government jobs everyday, and they do the people’s business, at the direction of an elected leadership. It’s leadership determined by the voters. Get registered and express yourself. Contact your local Registrar of Voters or the CA Secretary of State’s Office (http://www.sos.ca.gov/elections) with any questions or for more information.