Unlicensed Contractors & Business Names

While justice is often done, for some victims it comes too late. The Placer Co. District Attorney issued an unlicensed contractor alert after an 87 year-old resident was bilked of $13,500 for a tree removal. The Sacramento Bee reported the unlicensed contractor was arrested, tried on theft and contracting without a license charges, found guilty and sentenced. He is spending one year in jail, was placed on five years probation, ordered to pay back the victim and was given a suspended prison sentence of five years. Unfortunately, his elderly victim died prior to his conviction and never saw justice done…

The CSLB Statewide Investigative Fraud Team (SWIFT) had a very busy early August. With a recent sting in Grass Valley and sweeps throughout Los Angeles, San Diego, Orange and Kings counties, they netted a Registered Sex Offender and several other non-licensees.

Partnering with various state and local governmental agencies, the Board swept through a number of active construction sites looking for unlicensed activities, verifying compliance with State regulations, and inspecting newly permitted construction projects. As has been the case throughout California, in Grass Valley, the Board also worked closely with the local Contractor’s Association.

In their ongoing effort to protect California consumers and level the playing field for licensed contractors, the CSLB has a page on its web site to identify the worst unlicensed violators. These “Most Wanted” are known to prey on vulnerable and unsuspecting homeowners and are involved in home improvement scams.

One of these “Most Wanted” was recently extradited to California where he faces multiple charges of fraud and theft. He is suspected of conning consumers in Butte, Colusa, Mendocino, Napa, Sacramento, Yolo and Sacramento Counties.

Q: I will be applying for a new contractor’s license and want to use a specific business name. I’m concerned that the name is already taken and I’ll end up getting my application rejected. Can you suggest a way to ensure that my application – name and all – will be accepted by the CSLB?

A: We’re you recently at CSLB headquarters in Sacramento? While waiting in line to deliver some documents, I over heard a prospective contractor asking a very similar question. If establishing a sole owner business, the CSLB will look to see that the name is not misleading. For instance, they would not allow you to use the name “XYZ Remodeling” with a “C-36” plumbing license. On the other hand, if you applied as “XYZ Plumbing” they would not deny this even if there were 20 other companies around the State with the same name.

I suggest you register your fictitious business name in the city or county where you intend to operate. If there is already a business registered with the exact name this could become a local issue. If applying as a corporation, there can only be one “XYZ Plumbing Inc” since the Secretary of State regulates this.

As to the second part of your question – ensuring that your application will be accepted – it is important that you properly complete all sections of the application, certify at least 4 years in your trade, respond accurately to all questions (including Question 11 criminal background), and study at least 20 hours to pass the law and trade exams.

Bonds, Bankruptcy & Suspended Licenses

Having options is great. However, for a contractor the choices sometimes are really limited to ‘one or the other’. Bankruptcy is a painful decision for anyone, but doubly so when I tell a contractor his problem hasn’t been solved despite drastic action on his part…Q: We received paperwork today from the CSLB and it states we need to pay an additional $12,500 per application. Is this correct or do we just need to provide more information?You received a standard “bond and fee” letter. This is typically sent by the CSLB after they accept an application. You now have two options: Your company can file a $12,500 Bond of Qualifying Individual for each Qualifier or you could file a $12,500 cash deposit in lieu of the bond. Most contractors opt for the Bond since they don’t want to tie up thousands of dollars in a CD or bank account.Q: Due to the economy, I had to declare personal bankruptcy. I am listed on a corporate license, which has a significant judgment; however, the company is no longer in business. An attorney told me that I should now be able to apply for a new license. I would appreciate your opinion before I spend the money on a new application.A: If the judgment is on the corporation, this will need to be resolved first. Declaring personal bankruptcy likely DID NOT clear the judgment so it is still on record. And as long as it is on record, the CSLB will not allow you to Qualify, or even be listed on, a new license. You may want to consult with an attorney that specializes in bankruptcy law and to see if the corporation can get out from under this judgment.Q: I have a legal dispute with a contractor. I checked his license some months ago on the CSLB web site and it was suspended due to a Worker’s Comp cancellation. Now when I check the license, the suspension has been lifted and I have no way of telling when this took place. Can you answer a few questions: First, how do I find out if the license was suspended for a specific time period and second is there a way to get this information in writing from the CSLB?A: Thank you for the email. On the CSLB web site under the Current Worker’s Compensation information tab there is a link to a company’s “Workers Compensation History”. Not knowing the name of the company you are referring to I chose one at random as an example. This particular corporation has been licensed for over ten years and has had coverage from a series of insurance companies. The effective date each year is 12/31 and the expiration date is 12/31 of the following year. In other words there is no lapse that I can see during this ten-year period.The company you’re referring to likely filed a backdated certificate. This is allowed under Code Section 7125.1 which states, “the Registrar shall accept a certificate…as of the effective date shown…if the certificate is received by the registrar within 90-days of that date and shall reinstate the license…if otherwise eligible, retroactive to the effective date of the certificate.”Further if the licensee can show that the failure to file the certificate within this 90-day period was due to circumstances beyond his control, he can petition the Registrar to accept the form and lift the suspension retroactively.The sure fire way of determining if and when a license was suspended (or in good standing) is to request a Certification of Records for the time period in question. This can be done by paying the $67.00 fee and filing the prescribed form by mail, or by delivering the form directly to the CSLB, which I often do for clients.

Pocket Licenses, Qualifiers and Renewal Scam Alert

Like Truman and MacArthur or Obama and McChrystal I will explain to an unhappy specialty contractor what a ‘General’ can and can’t do in California. Scammers have found a new way to ‘pick the pocket’ of contractors and you should be on alert. I start with a Responsible Managing Employee with a question many Qualifiers may have asked themselves…

Q: When will I get an RME license certificate or pocket license for my company? I passed my test a month ago and became our company’s new qualifying person but have not received anything from the Contractors Board.

A: The CSLB does not send a new pocket or wall certificate when there has been a replacement of the qualifier (RME or Responsible Managing Officer/RMO). They only do this when a new license is issued or when adding a classification to an existing license.

Q: I enjoy reading your column in our local Builder’s Exchange newsletter. I checked back issues to try and find an answer for this, but didn’t find anything that quite fit. I’d appreciate any light you could shed on this.

I had a “B” licensed contractor tell me they can self-perform all of the work required for a TI building contract. Is this true? The work includes framing, plumbing, mechanical, and electrical, etc. The plumbing portion includes the installation of a boiler, and the mechanical includes HHW piping. A “C-36” Plumbing Contractor cannot install a boiler unless they also possess a “C-4” license. So if a plumber can’t perform some related plumbing work without having additional specialty licensing, how can a “B”? Also, the test for a “B” license doesn’t address much in the way of plumbing, electrical, etc., so how can they be considered qualified in these fields?

A: This “B” contractor you spoke with was correct. A General building contractor may self perform all trades except fire sprinklers (“C-16”) or well drilling (“C-57”). This would include, but not be limited to boilers, plumbing, electrical, etc. While many specialty classifications do not allow for work in another trade, the “B” does allow for this as long as the project involves 2 or more unrelated trades (other than framing or carpentry). Regardless of whether the state exam addresses the many trades allowed under the “B” this no way invalidates the ability of the General to self-perform most all work if he or she chooses.

Thanks for reading the column; I hope this clarification helps. In the future, if you need more information, please visit my web site (www.cutredtape.com). It contains a keyword function to search by topic from my past 12 years of columns.

Contractor’s Alert! Beware of License Renewal Fraud According to The California Contractors State License Board (CSLB) some states are experiencing incidents of license renewal fraud. Licensees have received notices in the mail that instruct the contractor to send their renewal fee to a name and address that is different from the regulating government agency. This is similar to a SCAM the CA Secretary of State reported on last year whereby companies were having corporations send their Statement of Information to a phony address along with an exorbitant fee.

Do not be fooled if you receive this type of notice. In California, renewals should be sent to: Registrar of Contractors, Contractor’s State License Board, P.O. Box 26999 Sacramento, CA 95826. Licenses are renewed every two years and the CSLB typically mails a renewal application to active licensees approximately 60 days before their expiration date. The application must be completed, signed, and returned to the CSLB with the appropriate fee. Inactive licenses are renewed every four years.

Anyone who believes he or she has been a victim of license renewal fraud should contact the CSLB immediately.