Joint Venture Licensing in CA, Replacing a RMO & “Leaseback” License Requirements

Real world problems can sometimes be easy to solve. At other times, the complex nature of the problem seems to require a ‘by the numbers’ approach if you expect to reach your goal successfully. A contractor looking at a new ‘venture’ shows everyone the route to ‘jointly’ profiting…

Q: I’m the president of our company and we’ve had a “C-39” (Roofing) License for four years. It will expire at the end of this month and my Responsible Managing Officer (RMO) is leaving the company. We don’t have another RMO. What will happen to the corporation?

A: Once the RMO disassociates, your company will have 90 days to replace him. Normally, during this time, the license would remain in good standing. However, you may have problems renewing the license until the new Qualifier is officially on board since the current RMO cannot sign the renewal application. Nevertheless, for a number of reasons I would suggest sending in the renewal prior to the end of the month.

Unless you have someone who already holds the “C-39” classification an Officer or supervising employee will need to sit for the exam. Upon passing the law and trade test, and meeting the Board’s other licensing requirements, this person would become the new Responsible Managing Officer or Employee (RMO/RME).

Q: Is it your understanding that an organization (likely an LLC) that contracts with a public entity for a lease-leaseback project needs to hold a contractors license?

A: Based on my understanding of a “lease-leaseback” arrangement with a public agency (such as a school district), the contractor would be required to hold a CA contractors license. By year’s end the rush will be on to obtain contractor licensing for Limited Liability Companies or LLC’s in California. If you are considering this licensing avenue, getting in ‘line’ now is advised as a high volume of applications is expected. Capitol Services is already getting requests to help with this completely new application for LLC licensing.

Q: I have asked you several questions previously regarding my current company and our pursuit in securing a contractors license. You and your staff have been very helpful and I thank you for all the assistance. A couple more questions have come up that I am hoping you can answer.

We are in preliminary talks with a couple firms for a Joint Venture (JV) arrangement on a pending project. One of the entities is not a licensed contractor. They are a manufacturer and equipment supplier but have done some contracting. My understanding is that all partners on a JV must be licensed contractors. Is that accurate even if one of the proposed team members would not be involved in the “construction” activities, but only manufacturing and equipment supply?

My second question with regard to the license — is there any issue with applying for a JV license too soon after we secure our corporate license?

A: 1) You’re correct; all entities must have an active CA contractor’s license in good standing. 2) If the manufacturer were only a material supplier, they would not independently require a license. If a company were both a supplier and “contractor” a license would be necessary. Regardless, since the JV will be handling the actual construction their inclusion or exclusion as the “material supplier” is up to you. 3) Once your license # is issued, you can apply for the JV license the next day. This application can be prepared ahead of time for your review and signatures and be ready to submit to the Contractors Board.

Finally, The Governor has lifted the CSLB hiring freeze so they can begin filling long-vacant positions in both Enforcement and Licensing Divisions. At a recent CSLB meeting the Board publicly thanked all those who may have played a part in securing this policy change. Good work.