“C-33” Waiver for “B” Generals, Owner/Builder Limits & Unlicensed ‘Stings’

We ‘fix up’ an answer for a homeowner who plans on ‘flipping out’ in Newport Beach. Another contractor is ‘generally’ interested in replacing his RMO, without being put to the ‘test’ or disassociating his current Qualifier…

Q:  I am 50% owner and President of a painting company.  Our Responsible Managing Officer (RMO) is not disassociating but I would like to replace him nonetheless.  I have been listed on the license since it was issued in 2009.  I also have an Inactive “B” (General Building) license.  I have never been the Qualifier for a “C-33” (Painting) license.  Is an exam going to be required?

A:  You can request a waiver of the trade exam based on the fact that you have been listed as an Officer on the license for over 5 years.  Keep in mind that it’s a request and not automatic, but as long as you can document the required experience, in most instances the waiver will be approved.

You can only have one Qualifier for each classification so if your RMO is not disassociating he will no longer be listed as an RMO, but he can still remain on the license as an Officer.

Q:  I have worked for a General Building contractor here in Newport Beach for about 7 years but I don’t have my own license.  I am planning on buying a “fixer-upper” house and renovating it so that I can turn around and sell it.  Do I need a license to do the remodel?  I was hoping that I would qualify for the owner-builder exemption.

A:  B&P Code section 7044 states that you cannot qualify for the owner builder exemption if the improvements are intended for the sale of the property.  In order to self-perform the renovations I would suggest applying for your own license.  The State requires that you document four years of experience and since you have worked for a General Contractor for 7 years, you will likely qualify for a contractor’s license. If you need further help get back in touch.

Just FYI, seeing that you reside in Newport Beach, the CSLB just recently put out a News Release stating that home remodeling is booming in Orange County and, that in Costa Mesa, the amount of building permits pulled has increased 21% over the past three years.

That being said, the Newsletter went on to report that the CSLB teamed up with other local agencies in Orange County to conduct undercover stings and combat unlicensed activity.  The CSLB issued citations to many unlicensed phony contractors for a range of criminal acts including unlicensed activity, illegal advertising, and several were also cited by Costa Mesa Code Enforcement for not having a city business license. Needless to say, it is risky business to do contracting work over $500 without a license!

 

Business Entity Licensing, Adding Classes to LLC’s and Generals in AZ

The name’s the thing in causing our first contractor to call. A bi-coastal contractor needs ‘expedited’ advice on how to move from current corporate license classes to his LLC, without affecting work in progress. We also share a lesson in Arizona licensing…

Q:  We currently have a contractor’s license for our corporation that operates out of Northern California we’ll call it ABC Roofing Inc.  We opened an operation in Southern California and our accountant formed a separate corporation for payroll purposes, we’ll call this one XYZ Roofing Inc.  Can we just add XYZ Roofing Inc. as a dba to ABC Roofing Inc.’s license?

A:  No, since these are two separate entities, each must have their own license number.  A corporate license number is issued exclusively to a specific corporation registration number.

Q:  We have a California corporation and also a Delaware Limited Liability Company (LLC), both that have licenses.  Our corporate license has an RME (Responsible Managing Employee) with eight different classifications.  We want to operate under just the LLC license and cancel the corporate license.  How do we go about moving our RME from the corporation to the LLC?  We need to keep all classifications active at all times.

A:  The CSLB only allows you to add classifications to your license one at a time, so you would first need to decide the order in which you’d like to add them to the LLC license and then submit the applications one by one.

Because RME’s can only be on one license at a time (except in some rare instances), once you add the first classification to the LLC license, your Qualifier will need to Disassociate from the corporation’s license.   I assume you will not be replacing the RME since you intend on canceling the corporate license, so once he Disassociates you have 90 days to complete the process of adding classifications to the LLC in order to keep them all active at all times.

Each additional classification application will take several weeks to process, and with 8 classifications to add one at a time, it may be difficult to complete the process in 90 days.  The CSLB has an expedite committee that will review your reason for wanting your application(s) processed on a more immediate basis.  The expedite requests are evaluated on a case-by-case basis, but it may be worth attempting in your case.  If you need assistance with this process please feel free to give us a call.

Q:  You’ve helped us in the past with our California license.  My company is licensed in California with the following classifications: General Building (“B”), Electrical (“C-10”), HVAC (“C-20”), Plumbing (“C-36”), and “C-43” (Sheet Metal).  We need to obtain a license in Arizona but I understand that each classification requires a separate application and has a separate license number.  Without being familiar with the laws in Arizona, if we were just to obtain a residential General Building license, can we use that to perform electrical jobs, plumbing jobs, etc?  Or do we need the specialty licenses as we do in California?

A:  While the laws do vary a bit from California, with a “B” (General Residential Contractor) license in Arizona you are not permitted to perform work related to electrical, plumbing, air conditioning systems, boilers, swimming pools, spas and waters well.  All work relating to these trades requires either the specialty license, or it must be subcontracted to an appropriately licensed contractor.

Corporate Surrender & Taxes, RMO & Revoked Licensing and DOSH Filing

Some things can change, and sometimes remain the same as our first contractor learns. We ‘dash’ the hopes of another contractor who has discovered you can’t work without ‘DOSH’.  What you don’t know can hurt you, as a Nevada contractor gets a tax bill from California he didn’t know was coming…

Q:  We will soon be making some structural changes to our corporation.  It will keep the same EIN number and Secretary of State registration number but we will be changing the name and Officers on our license.  Is there a certain amount of time that we have to report these changes to the CSLB?  Will this require the need for a new license number?

The CSLB allows 90 days to report a name and/or Officer change.  Please note that for the name change you must first register the change with the CA Secretary of State.  As long as your registration number with the Secretary of State remains the same, you do not need to apply for a new license number.

Q:  When a contractor has the ASB (Asbestos) Certification, doesn’t that also require them to have the Division of Occupational Safety and Health, or DOSH, registration in order to perform asbestos abatement?  Is there any restriction if they don’t also have the DOSH?

A:  Yes, if a contractor has the Asbestos Certification they are required to register with DOSH.  They cannot perform asbestos abatement without it.

 

Q:  My Sole Proprietor license was revoked last year and I was wondering if I may form a corporation with an Responsible Managing Officer (RMO) in order to do business?  I would be the owner and Vice President but he would be President/Secretary/Treasurer/RMO so he would be the only one on the contractor’s license.

A: According to B&P Code 7121.5 an individual who was the Qualifying individual on a revoked license “shall be prohibited from serving as an officer, director, associate, partner, manager, or qualifying individual of a licensee”.  In order to act in any other capacity other than a bona fide non-supervising employee for a contractor, is with the CSLB’s approval and most likely a disciplinary bond.

 

Q:  We are a Nevada corporation and you helped us get licensed years ago in California.  We did a couple jobs but haven’t worked out there in several years and we let our contractor’s license expire.  I was just made aware that we were still being taxed and I want to cancel our corporate status in CA so that we don’t incur any further taxes.  Are we required to pay back taxes prior to closing the CA corporation?

A:  Yes.  In order to surrender the corporation you must file any delinquent tax returns and file a final/current year tax return.  You should contact your CPA or tax professional for more information or assistance with this process.

NASCLA Licensing, Obtaining Work Experience Information & Criminal History for RME

There is one problem with not telling the truth on your license application that is almost self-explanatory. Don’t let this happen to you. Does passing one national evaluation exam open doors to state licensing?  As you will learn, it’s yes and no!..

Q:  I have had an Inactive Sole Proprietor “C-36” Plumbing license since 2002.  I never got my business off the ground but I’ve kept paying the fees to keep it Inactive.  I work for a General Building contractor and they want me to add my “C-36” qualification to their license.  I have several convictions from back in the 90’s and now that the CSLB requires fingerprinting, I need to know, first, whether that will prevent me from being a Responsible Managing Employee (RME) on his license, and second, if the fact that I lied on my application back in 2002 and marked “no” to the conviction question will affect my Inactive Sole proprietor license.

A:  To answer your first question, the fact that you have convictions will not alone prevent you from acting as the RME on your company’s license.  Each conviction is evaluated on a case-by-case basis to determine whether it’s related to the duties or qualification of a contractor and whether it presents any potential conflict with the public’s health, safety, or welfare.

Although it depends on things such as the severity of the crime, the length of time that has passed since the crime, and rehabilitation efforts, a very small percentage of applications are denied due to criminal background.

With regards to your Sole Owner license, while the CSLB most likely has authority to go back and say that your 2002 application was falsified, they do not play the “gotcha” game.  Still possible, but it is highly unlikely that your Sole Owner license would be affected.

Q:  We are forming a new Limited Liability Company and are interested in obtaining Contractor Licenses in numerous States across the country.  I saw on your website that you specialize in CA, NV, and AZ, all of which we are interested in.  One of our new employees has passed the NASCLA (National Association of State Contractors Licensing Agencies) General Building exam.  Will that work for us to be licensed in the States that you handle?

A:  Nevada accepts the General Building NASCLA exam in place of their ‘B’ or ‘B-2’ trade exam.  You will need to submit your transcripts from NASCLA along with your application.  Your company will still need to apply for a Nevada license and meet all the other licensing requirements such as passing the Business/Management exam, references, providing a financial statement, fingerprinting, etc.

California and Arizona do not recognize the NASCLA General Building exam.  Your Qualifier will need to take and pass the trade and law exams in order to become licensed.

Q:  I am an attorney and you have obtained license histories and copies of license files for us before.  What I need for an upcoming case is the work experience page that a contractor originally submitted when they filed their application.  Is that something you can get for us?

A:  No, the only way to obtain a copy of that document is to Subpoena it.  Be aware too that it will be a redacted version.  The CSLB typically leaves out third party information or personal information if mentioned on the form.

Sole Owner Inc., LLC Business Names & Concrete Waivers for Generals

A Sole Owner shares a lesson on changing company structure that requires a sacrifice. Another interesting question from a General making entry into CA construction while another helps us remember when to ask for a waiver…

Q:  We have been licensed for many years in California as a corporation.  Now that California is licensing Limited Liability Companies (LLC) we recently applied for a license for our LLC, which is how we conduct business in many other States.  We are General Engineering contractors and our business name is our owner’s name, followed by “Construction LLC”.  Our application was rejected because the CSLB is stating that we cannot use the word “Construction” in our name.  They are requiring that we adopt a ‘doing business as’ name (dba).  For obvious reasons we don’t want a different name in California than we have in other States and the President is arguing that there must be some way around this.  Is there a law that you can point me to that I can provide to our President with regards to contracting company companies using “Construction” in their business name?

 

A:  There is no code section that specifically addresses the use of the word “Construction”.  B & P Code Section 7059.1 states that a business name needs to be compatible with the classification that is being performed.  The CSLB has determined that General Building (“B”) contractors are the ONLY license holders that can use “Construction” in a business name without giving descriptive or limiting words.  Therefore, you can still use the word “Construction” in your name, but it needs to be prefaced with a descriptive word.  As an example, “John Smith Engineering Construction LLC” would likely be acceptable.

Q:  I am a General Building contractor and I want to add the “C-8” Concrete classification to my license.  Is there any way that I can get a Waiver of the exam based on the fact that I’ve been doing concrete work with my General license for many years?

A:  There are certain circumstances where you can ask for a Waiver of a Specialty Classification based on the current classification that you hold.  The CSLB may consider a waiver if you meet the following requirements: a) The Qualifier has been listed as a member of the personnel for five of the last seven years immediately preceding the application; b) The Qualifier has at least four years of experience within the last 10 (Journeyman level or above) in the classification being applied for; and c) The classification being applied for, as determined by the Registrar, is closely related and is a significant component of the classification currently on the license.

Be aware that when requesting a Waiver of an additional classification you will likely be required to provide additional documentation, such as detailed project forms showing that your additional classification has been a significant part of your work.

Q:  I have a Sole Owner license and I recently incorporated.  Do I just need to submit a name change application to the CSLB?

A:  No, since you formed a new corporate entity you are required to submit a new license (waiver) application.  As long as you own at least 51% of the corporation you can transfer your Sole Owner license number to the corporation, however be aware that if you do that you can never get it back as a Sole Owner in the future.

TPT Change in AZ, HIS, Qualifier Disassociation & Banner Advertising rules

If you think the same thing as our Arizona solar contractor about new TPT rules, you could also be stuck between a ‘ROC and a hard place.’ Sometimes vague statutes written into law can be subject to misinterpretation or implications never intended. Time has run out for another contractor, so don’t let this happen to you…

Q:  We have several Home Improvement Salespeople (HIS) registered on our license.  I am the Responsible Managing Employee (RME) on the license and my boss recently suggested that I should register as a Home Improvement Salesperson since I sell and negotiate products as well.  Is this required even though I’m the RME on the license?

A:  No, you are not required to register as a Home Improvement Salesperson.  The official personnel listed in the CSLB’s records for the contractor’s license are exempt from the requirement to be registered. This includes individual contractors, Qualifying individuals, Partners, Officers of a corporation, and Responsible Managing Employees (RME’s).

 

Q:  You helped us get our Arizona license last year and I received a renewal form from the AZ Department of Revenue for our Transaction Privilege Tax (TPT) number and noticed that there is a new rule for contractors effective 1/1/15. It states:

 

“If you are a contractor whose only business is to enter into contracts with the owner of real property for the maintenance, repair, replacement or alteration of existing property, beginning January 1, 2015, you do not need to have a TPT license.”

We only do solar sales and installation, so does that mean that we do not need to renew?

A:  While the notice certainly implies that you do not need to renew your TPT license, that notice is misleading.  The Arizona Registrar of Contractors (ROC) still has a statute in place that requires all applicants and licensees to provide them with a TPT to obtain or renew a contractor’s license.  According to the ROC’s website “the ROC has asked the legislature to make these laws more consistent by removing this TPT requirement.  Until this change is made, contractors should maintain their state TPT license.”

 

Q:  Our Qualifier left the company some time ago and just recently notified the CSLB by disassociating from the license.  Because he left over 90 days ago, our license was automatically suspended.

We have an application in progress with a new Qualifier but he hasn’t even been scheduled for an exam yet. Is there any way to get an extension?  If yes, how do we go about requesting that?

 

A:  In many cases the CSLB will grant you a one-time 90-day extension to replace your Qualifier.  However, it is unlikely that you will be approved for this request due to the fact that your license is already suspended.  If, for instance, you were within your initial 90 days and you submitted your new Qualifier application along with a request for a 90-day extension, the CSLB would likely approve it.

Q:  We are making a company banner and want to know if there is a size violation if the contractor number is too small on the banner?

A: While the CSLB does have regulations about font size when displaying your name and license number on company vehicles, I am not aware of any regulation for font size on banners.

CSLB New Leadership in 2015

The Contractors State License Board has appointed Cindi Christenson as its new Registrar of Contractors.

Although the CSLB conducted a nationwide executive search, they did not have to look far for the most qualified candidate.  Ms. Christenson had served as the Board’s Chief Deputy Registrar for 5 years and, before joining CSLB, was the Executive Officer for the California Board of Professional Engineers and Land Surveyors from 1996 to 2009.  She also was that organization’s Senior Engineering Registrar for 8 years and worked with the state Department of Water Resources as an Associate Mechanical Engineer from 1981 to 1988.

According to CSLB Chairman, David Dias, “We are pleased and confident with our decision to promote Cindi Christenson who, as a 33-year career state executive, has successfully demonstrated her fiscal, policy, regulation, legislative, and operational management abilities.”  Dias went on to say, “She also will have the distinction of serving as CSLB’s first female Registrar of Contractors, among the known 15 executives who have served in this position since 1929.”

 

Ms. Christenson will take over for Steve Sands who retired after serving as Registrar for well over a decade.  “My knowledge and appreciation for our state’s construction industry has grown under Steve Sands’ leadership,” said Christenson. “We will continue to meet our consumer protection mission, and serve as a strong industry partner in our efforts to curb the underground economy and establish more streamlined processes for state licensure.”

 

According to industry expert David Kalb, now an industry expert witness and the prior owner of Capitol Services, “I’ve worked with six Registrar of Contractors during the previous 35 years, and believe Cindi will do an excellent job as the Board’s new Executive Officer.”  He added, “This is the first time in memory, that the Board has selected someone from within to serve as Registrar and this continuity will serve the Board and construction industry well.”

Michael Brown, a former CSLB employee and current licensing expert consultant, who worked under several Registrars as Chief of the Licensing and Legislative Divisions, had the highest of praise for outgoing Registrar Steve Sands and firmly believes that, in his words: “Cindi Christenson is exceedingly qualified to assume the role of Registrar.  Her consummate intellect and the breadth of her management experience will continue to provide the CSLB with solid guidance in the coming years.”

Ms. Christenson earned her Bachelor of Science degree in Mechanical Engineering from California Polytechnic State University, San Luis Obispo and is a licensed Mechanical Engineer.  She began serving as Registrar of the Board on New Year’s Day.