C-61’s, LLC & Contractors License

A General finds opportunity right under his feet as we share issues from contractors working across the West. Another question helps clarify a common misconception about corporate officers wearing multiple hats on the same license. With no budget to sign, another new bill from the Legislature gives the ‘Governator’ the chance to kick open a ‘door’ long closed to California contractors…

Q: I just formed a corporation where I am the President. I have designated two family members as the Secretary and Treasurer. I only did this because I was told I was required to have three officers and one person could not serve as all three. To your knowledge, is this correct?

A: California Corporations must designate a President, Secretary and Treasurer. When applying for a contractor’s license the CSLB will look to see that all three officers are listed. The Secretary of State also requires that corporations file a Statement of Information, which the CSLB will review. I am unaware of any limitation on how many positions one person can hold. You may wish to consult an attorney; however, my understanding is that you can hold one, two or three officer titles.

Q: As a “B” contractor, I was just offered the opportunity to do a flooring job. I’ve personally done this trade before but always as part of an overall remodel. This project is only flooring and I intend on hiring a licensed “C-15 sub”. Do you foresee any problems with me taking this flooring job?

A: I do not see any problem with you taking a flooring project. As a “B” you can take a prime or sub-contract for only one trade (like the “C-15”) as long as you use a properly licensed subcontractor to perform all the work.

Q: I hold several licenses and want to apply for a “C-61” classification to expand my business (specifically the “D-52”). Can you tell me what the CSLB requires and whether there is any test (I have heard there isn’t). Also, do you have a list of all the “C-61” classifications?

A: Back in 2002, the Board eliminated all exams for the “C-61” classification. This means that as a licensed contractor you can apply for any “C-61” category with no further testing. For new contractors, the law exam is still required. Like any license, the CSLB will want to see at least 4 years full time experience (within the past ten) in the category you’re applying for. Go to the Online Resources page on my website for a complete list of all 30 active “D” categories, or pick up a copy of my book, “What Every Contractor Should Know” (www.cutredtape.com).

Readers of my column know that over the years I have responded to many a question on licensing a Limited Liability Company (LLC). My answer was always the same – until now. With the recent passage of SB 392 (Florez), Contractors will be able to obtain a LLC license — if the Governor signs this bill.

The existing Beverly-Killea Limited Liability Company Act was amended to authorize the Contractors State License Board to begin issuing these licenses no later than January 1, 2012. However, unlike all other types of entities, this one will carry with it some severe financial requirements.

A Limited Liability Company licensee must carry a liability insurance policy of at least one million dollars ($1,000,000) and up to five million dollars ($5,000,000) depending on the number of members listed on the personnel of record. Where the license of a LLC is suspended by the Secretary of State, each person within the company may be personally liable, up to one million dollars each, for damages in connection with the company’s performance, during the period of suspension. Further each LLC applicant or licensee will be required to file a $100,000 surety bond.