Home Improvement Contracts and Working with Suspended or Expired Licenses

While the Legislature writes the rules governing contractor’s licensing in black and white, reading and understanding exactly how they will be interpreted can be confusing. That’s why experts are hired to avoid mistakes. But first a contractor playing by the rules has issues with some others who aren’t…

Q: I’m a licensed contractor and read your column regularly but don’t recall seeing this issue covered.    I went through my local newspaper and decided to check all the contractors that advertise in the business section.  I found several that had license Suspensions and some that had Expired nearly a year ago (he also had a cancelled Bond).  I know the CSLB does sting operations to catch individuals who are unlicensed but maybe they should look at “licensed” contractors who are operating illegally.  Any thoughts on what I can do as a contractor who is active with the proper Bond in place?

 

A:  Thank you for the email and for reading the column.  You’re correct, in that the Contractors Board regularly conducts sting operations to catch unlicensed operators; however, these same operations can also catch contractors whose license is

Suspended or Expired.  Since I do not know who these contractors are, it is possible these suspensions are temporary due to issues with a Bond or Worker’s Compensation Insurance.  Sometimes, if the suspension is only a few weeks old, a Contractor’s Bond or Worker’s Comp certificate may have been sent to the Board but not yet processed.  On the other hand, an Expired license (“for nearly a year”) and Bond cancellation would almost certainly mean the contractor has decided this by choice.  Either way, none of these folks should be contracting until their license is active and in good standing.

 

You could file a complaint with the CSLB or write a letter to the Board’s Enforcement Division.  They may contact the offending contractor or may even “invite” him to their next sting.  It would help if you provide a copy of the newspaper ad and any other information you think will help with their investigation (i.e. if you happen to know of any job he is working on)

 

Q:  In your Capital Connection articles for the week of 11/18/13, you address the impact of AB2337 on home improvement sales contracts.  My company is a remodeling corporation with our CEO holding a class B license.  We maintain two salespeople who are registered as Home Improvement salespeople with the CSLB.  In reading your article, I am trying to determine if under this law I am going to need to have my project lead carpenters registered with the CSLB as well.  They are production employees that also oversee the project when the CEO is not onsite.  While they do not handle sales, they do manage other employees on site, our subcontractors, and schedule materials as part of the project oversight.

Thank you for the clarification, I appreciate being able to call for more help.

A:  Actually that bill is related to construction consultants needing a contractor’s license in order to handle Home Improvement Contracts.  The bill was not related to HIS (Salespersons).  As long as your carpenters are working under your ‘B’ license you are good to go!

Contractor’s Legislation Round Up

As we gather for the Thanksgiving holiday many families take time to look back at the year past and ahead to the New Year coming. For our Capitol Connection‘family’ of readers it has been a busy year for the Legislature in creating new laws, promoting new bills and adding to the complex nature of doing business as a contractor.

In 2013 we got new rules on Indemnity, Retention, Insurance, Worker’s Compensation, Employees, Public Works, Environment and, of course, new Licensing regulation.

Starting this year construction businesses responsible for losses on commercial projects can’t  ‘indemnify’ or share the blame for problems they caused with any other parties who may be connected to the job. (SB 474, Evans)

 

The politicos did extend the Zero Retention policy at CalTrans thru 2020. The law prohibits CalTrans from withholding retention proceeds in any amount when making progress payments for work by contractors. (AB1671, Huffman)

 

SB 863 (DeLeon) on Worker’s Comp reform, all 120 pages, was enacted in this year. The changes are extensive and we don’t have space, but you should take a look if you have employees.

 

Additional Worker’s Compensation changes affecting “C-39” (Roofing) contractors require filing Worker’s Comp coverage with CSLB, even if the contractor has no employees. (AB2219)

 

 

 

 

Other new rules affect employee information and how it can be used, primarily as an enforcement tool. (AB 1794 Williams & SB 691 Lieu)

 

Another enforcement measure keeps the investigatory jurisdiction for CSLB in cases where a license has been revoked, cancelled, expired, forfeited or surrendered. (AB 2254 Berryhill)

Construction managers now must be licensed for Home Improvement Contracts (HIC). A person who provides a bid, who arranges for or sets up work and maintains oversight, with HIC needs a license. This one carries substantial criminal penalties for violations. (AB2237 Monning)

With thousands of bills passed one, SB 341 Lowenthal, sounds the alarm for contractor worksites. The law also applies to mines, but any vehicle over 14,000lbs must now have an audible backup alarm if it operates or delivers materials, to or from, a worksite. And, you better be able to hear it at least 200 feet away.  Other rules on projects (AB1598/AB 1565/, special districts and schools also are a ‘must read’ in 2013.

 

Looking ahead thousands more bills will be created in the Assembly and Senate, but these few are dead, dying or may become law in 2014.

 

Among the dead is an effort by both parties (AB2027 Valadao & AB 249 Berryhill) to reduce the penalties for legitimate contractors who are suspended for a short time.

 

A pilot program was scrubbed by veto as AB 2309 (Hill) a public/private pilot program for community colleges was set aside.

SB 975 Wright, intended to prohibit local government and special districts from imposing additional licensing requirements was stopped by veto.

AB 2353 Knight intended to bolster subcontractor’s status; requiring a notice be sent before a substitute ‘sub’ was brought in was considered dead on arrival.

While these, and hundreds more, new bills are set aside, vetoed or considered dead, don’t kid yourself some will be back, some revived and others created in regulating the work contractors perform by law in California.

Sole Owner to Corporate, Statute of Limitations on Judgements & More on Displaying License Numbers on Vehicles

Some things in life and contractor’s licensing require more time, money or explanation, some less and some can’t be ‘satisfied’ no matter how long you wait, explain or would be willing to spend. But, first there’s more…

We always appreciate the sharp eyes of readers, some of whom got in touch about the way company names and contractor license numbers must be displayed on vehicles. The key is how the vehicle is registered with the DMV.

While space limits our answers at times, this one does need further clarification, as the real practice by many may be out of synch with the actual letter of the law which spells out how and when names and license numbers are required:

 

“C-36” Plumbing, “C-45” Sign, and “C-57” Well-Drilling contractors must display the following information on each side of every business vehicle with commercial registration in letters at least 11⁄2 inches high (B&P Section 7029.5): Business name, permanent business address and contractor’s license number.  All other licensed contractors must display their business names and contractor license numbers on every one of their commercially registered vehicles. The name and number must be in a clearly visible location in letters at least 3⁄4 inch high and wide (B&P Section 7029.6).  For more visit: www.cslb.ca.gov/Resources/GuidesAndPamphlets/AdvertisingGuidelines.pdf

We are always interested in reader feedback and welcome any inquiry for additional information at Capitol Services.

 Q:  I had a judgment on my previous Sole Owner license but it is over 8 years old.  I recently applied for a new contractor’s license in the name of my corporation.  The application was denied based on the 8-year old judgment that is still “unsatisfied”.  It was my understanding that judgments go away after a period of 7 years.  Is that not true?

 

A:  It is our understanding that the CSLB has no statute of limitations for a judgment on a license.  The Superior Court of California does have a 10-year statute of limitations.  After 10 years, if the Superior Court does not renew the judgment, you can provide proof of non-renewal to the CSLB in order to have the judgment forgiven.

Q:  I currently have a Sole Proprietorship contractor’s license and I am in the process of incorporating.

I will submit a “Licensed Sole Owner Applying for Corporate License” form.  The current license is in good standing; and the corporation is formed by the individual licensee; and the Sole Owner licensee has at least 51% ownership of the new corporation.  I am aware that once the number is transferred, it belongs to the corporation and cannot be reissued to an individual at a later date.

 

My question is:  How are my contracts in progress affected by the change in business structure? For example, if the license is transferred to the corporation in January, and work covered under a contract signed with the Sole Proprietor entity is still in progress when the transfer occurs, are we still in compliance with being licensed at all times?

 

I appreciate any information, as I am not able to find it anywhere.

A:  If you will still have work in progress under the Sole Owner/Proprietorship license when the conversion takes place, while you will still be in compliance, you will want to also inform each of your customers that have work in progress that the change has taken place.  You should do this in writing and you can inform them that the license number, ownership, bonding company, Worker’s Comp, etc. remains the same, but that you have converted from a Sole Proprietorship to a Corporation.

Also just FYI, beyond the Sole Owner to Corporation form you will also need to complete and submit a waiver application.

RME, AZ Contractor Licensing Rule Reciprocity and License Numbers on Vehicles

Always a good idea to keep your license and business information up-to-date with the Board, and file a copy for your own reference later. Another contractor will be appalled, as he discovers own failure to understand the full extent of a license regulation leaves him with no appeal…

 

Q:  How can I find or get an update of my license status? I used to be the Responsible Managing Employee (RME) for my former employer and I cannot remember what license(s) I held or was responsible for since I have been out of the trades for a period of time. Thanks in advance for your assistance.

 

A:  Thank you for contacting Capitol Services. We can always help find important licensing history and other information for you. However, the Contractor State License Board keeps records of all past licenses and most of them can be found online on the CSLB’s website by just plugging in your personal or business name.

 

I checked your previous licenses and it appears that you were listed on two.  The first license you had expired back in 2001.  You were the RME on a second license, but disassociated in October 2009.  Once you disassociate, you keep your “qualification” for 5 years, so you have until 10/15 of next year to re-apply for a license without needing to re-take the exams.

 

Q:  I am the Responsible Managing Officer (RMO) for our corporation here in California. The license was issued in December 1998.  I did not take any tests; since I was an Officer for so long they granted me a waiver of the exams.

 

In March 2013, I applied for an AZ contractor license.  I only took the law portion based on reciprocity in CA.  I passed the test; registered as an AZ Corporation; and obtained a Transaction Privilege Tax Number in AZ.  However, after the 7 ½ month process, the AZ Registrar’s office denied my license stating I didn’t take the trade test for CA.

 

Is this correct?  Or do I have something I can appeal with?

 

Q:  Yes, that decision is correct.  In order to qualify for reciprocity in Arizona you have to have taken the equivalent trade exam in CA.  If you obtained the CA qualification by a waiver you do not meet the requirements to be granted reciprocity. This is just one reason why many contractors seek expert assistance ahead of these decisions.

 

It is likely that you can “appeal” this, however in my opinion, it is unlikely that the AZ Registrar Of Contractors will grant the appeal.  In Capitol Service’s 30 years of history, we have never seen them go against the policy since it’s written in the statutes that you must’ve passed the equivalent trade exam in the reciprocal State.

 

Q:  We have a couple company trucks that have our logo and license number on them, but we also have several company trucks/vehicles that our project managers use without the company name and license number on them.  If these trucks are used or show up on project sites, is it a requirement that the company name/logo and license number be on them?

 

A:  The CSLB does not require that you have your company name and license number on all company vehicles.  However, if you choose to put your company name or logo on any of the vehicles than you are also required to list the Contractor License number since this is considered a form of advertising

Unlicensed Referrals, Door Knock Contractors, Licensing Rules on Jobs

An angry contractor shows there is a fine line between knowing something and actually proving it. We primarily serve contractor and industry licensing needs, but are also ready, willing and able to help consumers with questions. This also helps licensed contractors by exposing those unlicensed scam artists ‘un-leveling’ the playing field or driveway as the case may be…

 

 

Q:  Real Estate offices in our town may knowingly refer out business to unlicensed contractors.  Can they face penalties for doing this if reported?  This is not a fair practice and undercuts the licensed contractor.

 

A:  Thank you for contacting Capitol Services.  While there is no way to know until the complaint is actually filed, it’s possible that the CSLB might consider that referral “aiding and abetting” and cause for a disciplinary action.  B&P Code Section 7114 states “Aiding or abetting an unlicensed person to evade the provisions of this chapter or combining or conspiring with an unlicensed person, or allowing one’s license to be used by an unlicensed person with the intent to evade the provisions of this chapter constitutes a cause for disciplinary action.”

 

 

I agree that the agency is definitely out of line if they are referring work out they know amounts to over $500.00.  You would need to provide the CSLB with some sort of proof that the Real Estate agency is knowingly referring business to unlicensed contractors.

 

 

Q: I was given your name by my son, who said he found Capitol Services’ email on the Internet. He said you might be able to answer a question regarding hiring a contractor since this is what you deal with. Here’s my situation: A man came to my door saying he just happened to be in the neighborhood and had some left over materials. He told me he had just repaved a neighbor’s driveway and could also do mine for a “very low price”. After asking him some questions including the neighbor’s name, something sounded fishy so I sent him away.

 

However, my driveway does need repairs so what would you recommend to find someone to do this work. By the way, do you work for the State?

 

A: Thank you for the email. Just to be clear, we are not the State Contractors Board but from time to time receive calls and emails from people who think we are. In most cases my staff and I are happy to respond to these type of inquires if we can.

 

You were probably smart to send him away. Over the years, this type of door-to-door approach has been done by individuals who are unlicensed and do not carry the proper insurance and bonding. The best thing to do is contact at least three contractors who have a valid State contractor’s license. By getting bids from several contractors you’ll be able to compare prices and likely get a better deal. Look for a contractor who holds a “C-12” (Earthwork and Paving) or “A” (General Engineering) classification. Ask neighbors and friends if they’ve needed this type of work or search the Internet for legitimate contractors.

 

To determine if a contractors license is in good standing, I recommend you visit the CSLB web site (http://www.cslb.ca.gov). For any construction project $500 or more a state license is required to legally do this type of work. Local police might also be interested in these types of ‘door to door’ contractors as previous victims come forward.