Electric Specialty, Mechanic Liens and Qualifiers

I will help a contractor getting the ‘cold shoulder’ on his bids. Are you up to date on changes in the mechanics lien laws? A quick update for contractors will help you catch up. We also offer good advice for anyone who may have to replace an aging Qualifier…

Q: We hold a “C-38” contractor’s license. In the course of our work, my company actively pursues projects involving energy efficiency retrofits as they relate to refrigeration. Typical projects include installing highly efficient electric motors and anti-sweat heater controls, as well as simple things like gaskets and strip curtains. We also install new LED lighting in glass door walk-in coolers and freezers.

Our problem is we’re being shut out of some upcoming stimulus funded projects that involve refrigerated case lighting because we do not have a “C-10” license. Why can’t we do this work with our “C-38”?

A: I don’t know why your company is being “frozen out” of this program. By definition, a Refrigeration contractor can “construct, fabricate, erect, install, maintain, service and repair refrigerators, refrigerated rooms and insulated refrigerated spaces”. This means you should be able handle the entire project or any related portion of the project – including retrofitting the electrical portion of these units.

Q: I’ve heard there have been some changes in the CA mechanic’s lien law. Can you tell me anything about this and how I might be impacted?

A: Legislation passed last year made several changes in the mechanic’s lien law. Starting January 1st 2011, contractors, subcontractors and suppliers will need to take additional steps to ensure that their lien rights are protected.

For many years, filing a mechanic’s lien has involved a set of procedures and filing deadlines giving contractors and material suppliers the right to sell property where work was performed in order to obtain a payment that was never made. Starting next year, these liens will be required to include an Affidavit showing that it has been served by Certified Mail, return receipt requested or personal service. This can be delivered to the property owner’s residence or place of business; address shown on the building permit or another address as allowed under the preliminary notice statute.

As reported in the Sacramento Business Journal, “under current law there is no requirement that a claimant inform a property owner that a mechanic’s lien has been recorded on the owner’s property,” according to William Porter a Sacramento attorney who has served as a consultant and helped craft new construction industry law.

Since there is also a requirement that a notice of mechanic’s lien include very specific language notifying owners of their rights, I would strongly recommend contractor’s consider contacting a lawyer prior to the end of this year.

Q: My father is getting on in years (he’s over 80), and we’ve been looking at having someone else be the company’s Responsible Managing Officer (RMO). He is not very involved in the business any longer but wants to still be listed on the license. What do you recommend?

A: Life is fragile. One day we’re here and the next day we could be gone. This isn’t a tag line from a life insurance commercial but rather a heart-felt plea to my readers that planning for succession of your contractor’s license is one of the smartest business decisions you can make.

I‘ve received a number of calls and emails over the years from contractors like you where the qualifying individual has suddenly passed away or become disabled. Qualifying someone as a “back-up” licensee is one option. A second is to designate a family member or long-term employee as the eventual successor to ease the transition. In your specific case, I would be proactive and consider replacing your father as the Responsible Managing Office now while still keeping him as a listed company officer.