Specialty Contractors & Business Names

I get a host of questions from contractors and most are pretty straightforward. Every once in awhile I get a contractor’s question from ‘left-field’ that ‘catches’ me off guard. It also is interesting when I get an inquiry from what some may consider my ‘competition’. Really, in your effort to ‘score’ a contractor’s license it’s no contest when I begin ‘pitching’ the answers…

Q: I recently received my specialty contractor license. Last week, a “B” contractor contacted me about becoming his Responsible Managing Officer (RMO). He says I don’t have to own 20%; he just has to buy a bond to cover this percentage of ownership. I’ve never heard of this. Is it true what he’s saying?

A: There is no requirement that a RMO own 20% (or any percentage) of a corporation. This minimum ownership is only required if you want to keep your existing license active. I’m not sure what he’s referring to regarding “buying a bond to cover 20%”? The only bonding requirement is if you own less than 10% of the company, in which case a $12,500 Bond of Qualifying Individual would be necessary.

Q: I probably shouldn’t tell you this but I’m from a license school. This being said, I’m hoping you can answer a question about use of a business name. A “C-10” contractor that has been licensed for 20 years, as “XYZ Construction”, wants to transfer his sole owner license to a new corporation. The CSLB has rejected his application telling him he cannot use the word “Construction” (as in XYZ Construction Inc.). Why, since he has been using this name for so long?

A: The rules have changed in the last 2 decades. Most contractors could use “construction” in their business name; however, about a dozen years ago, the policy was changed. To my knowledge, the Board did not retroactively require that contractors drop this name; however, today only an “A” (General engineering) or “B” (General building) contractor can use the word “construction” — unless it’s prefaced by a descriptor, as in XYZ “Electrical” Construction.

Q: I am a “B” contractor. Many of my projects have involved pouring concrete for foundations as part of this general construction. In fact, sometimes I’ll handle a job that only involves the “C-8” trade. In your opinion, do you think I could run into any problems?

A: Yes, you could have a problem in the future. As a “B” you should be working on projects that involve two or more unrelated trades – not including framing or carpentry. It is not proper to handle one trade alone unless you sub contract this work – or personally hold the specialty classification. Since it appears you have a number of years experience with concrete, I would suggest that you apply for the additional “C-8” classification.