Disciplinary Bond, Previous Revocation and NV Corporate Owner List

A ‘civil’ answer on discipline! Another contractor seeks out expert assistance to avoid any possible mistakes in applying for his California number. Finally, an interesting question from a Nevada contractor who can’t quite ‘put a finger’ on the answer…

Q:  My company’s license was suspended due to a civil judgement.  The CSLB informed me that we would be required to comply with the judgement and we would also need to obtain a ‘disciplinary’ bond.  Does the Disciplinary Bond take the place of our $15,000 Contractor’s Bond or is it in addition to our Contractor’s bond?  How long do we need to keep the extra bond in place?

A:  A disciplinary bond is filed in addition to, and does not replace any of the other bonds required for the license.  It is my understanding that Disciplinary Bonds are to be in place for two years, however in certain instances the Registrar may require a longer period.

Q:  I am applying for a new Contractor’s license (California).  One of the questions on the application asks if I have ever had a contractor license or other profession or vocational license or registration denied, suspended, or “revoked” by this state or elsewhere.  I have a corporation set up in Nevada that I registered with the Secretary of State several years ago.  I received a notice recently that the corporation is revoked with the Secretary of State because I never filed a List of Officers.  Should I answer the CSLB’s question on the application “yes” because of my Nevada corporation?  Secondly, does the question regarding misdemeanors apply to traffic offenses? As you can tell, I want to try and prevent any possible rejections.

A:  The question on the application regarding revocations is referring to contractor licenses or other professional licenses.  It does not apply to an entity’s corporate status with the Secretary of State.

The question regarding misdemeanors typically doesn’t apply to traffic offenses but it depends on the severity of the traffic offense.  Certainly, offenses such as a DUI should be but minor traffic tickets do not need to be disclosed.  In the interest of preventing any possible rejections, always err on the side of caution.

Q:  We are going to apply for a Nevada Contractor’s License.  We have three owners; one who is President and Secretary, one who is Treasurer, and the third, who happens to be the majority owner, is a Director.  The majority owner would prefer not to be listed on the Contractor license because she doesn’t want to go through the fingerprinting like she had to do in California.  Are we required to list all owners?

A:  The Nevada Contractor’s Board requires that you list your President, Secretary, and Treasurer on the application as personnel, and those are the individuals who will be listed on the license and need to be fingerprinted.  As far as Directors, you have the option to list them or not list them on the application.  The Nevada application has a section to disclose any individuals or entities who are not listed as personnel but own 25% or more of the company.  Individuals listed in this section are not required to get fingerprinted and their name will not show on the license.

Generic Business Names, General Building Rule and Solar in CA

‘Services’ is what we provide from our offices in the CA capital, although that same word can become a ‘disservice’ when included in a contractor’s business name. I am ‘floored’ by your compliments and appreciate the question! Finally, a solution for a contractor spanning the country ‘coast to coast’…

Q:  We have a pending application with the CSLB and we are in a huge hurry to get the license (as I’m sure every applicant is).  Our business name has the word “Services” in it and we received a rejection letter from the CSLB requiring that we add a “doing business as, or dba”.  After doing some searching, I came across several of your articles about how the CSLB is no longer allowing the generic word “Services” unless it is preceded by a descriptive word in relation to the trade you are applying for.  Is the CSLB going to further request proof that our “dba” name is registered with the County?  Since we want to expedite this, I just want to think ahead and prevent any more rejections.

A:  While I would recommend registering your “dba” with the County as soon as you can, in all the years we have been dealing with the CSLB, we have never seen them ask for proof of “dba” registration with the County.

Q:  I work for a local Builders Exchange and, first of all we appreciate your weekly articles about contractor licensing. Thank you for passing your knowledge along. One of my member companies told me today that they think their “B” (General Building) license covers the “C-15” (Flooring) specialty. Is that true?

A:  Thank you for contacting us, I’m glad you enjoy the articles.  The “B” covers everything it takes to build a structure from the ground up, however the key is “B” Contractors must be performing at least two unrelated trades on any one job.  This being said, a “B” contractor can do flooring as long as he/she is doing at least one other trade on the same job unrelated to flooring.  “B” contractors are not permitted to do a strictly flooring job.  They do have the option of signing a flooring contract and then sub-contracting the job out to a properly licensed “C-15” contractor.

Q:  I am a Contractor in New York and we’d like to get licensed in California to do Solar work.  There is not a specific license for Solar in New York so I have a General Contractor’s license here.  I understand Solar is a much bigger industry in California, so is there a different license we would need to obtain or would it still be a General Building license?  I have 15 years of experience doing General Construction, and not as much experience with Solar so the exam worries me a bit.  What do you recommend?

A:  Regardless of what classification you apply for you will need to document at least four years of full time work experience in the trade.  It sounds as if the majority of your work experience is in the General Building field, so I would recommend applying for the “B” CA license.  “B” contractors are required to perform at least two unrelated trades on each job and because the CSLB has determined Solar work entails at least two unrelated trades, “B” Contractors are permitted to perform solar work.

 

Stock, Asset & License Transfers, DOSH Registration and JV Scope of Work Rule

While change can be a pain our first contractor finds some relief in my answer. The possible ‘suspense’ is causing another contractor to watch the clock and worry if he can go to work before his time runs out…

Q:  I am a licensed “C-45” (Electrical Sign) Contractor and I am going to be retiring soon, selling my business, and backing out completely.  I want to make the transition as painless as possible and I’m hoping you can help me with the process.  The prospective buyer does not have the experience to Qualify for the license, however I have an employee who recently obtained his “C-45” Sole Proprietor license and he is willing to be the RME (Responsible Managing Employee) for the license.  What is the process to make the necessary changes to the license?

A:  The process will vary depending on whether you are doing a Stock sale or an Asset sale.  With a Stock sale the buyer can keep the existing license number and make the appropriate changes to the existing license.  He would submit his Application to Replace the Qualifier to add your “C-45” employee to the license as an RME.  Be aware that as an RME, the employee would be required to Inactivate his Sole Proprietor license.  The buyer would also need to file the forms to update the Officers to remove you (and anyone else who is no longer going to be associated with the business) and add himself as an Officer.

With an asset sale, the buyer would be required to form a new entity and file for a new License number.

Q:  I recently obtained my “C-22” (Asbestos Abatement) Contractor’s License.  One of the requirements was that I show proof that I was in process of registering with DOSH, which I did.  I haven’t completed the registration process yet.  Is there a specific time-period I have in completing this process?  Am I able to legally work now that the license is issued?

A:  The CSLB will issue a “C-22” license provided that you show you are in process of registering with DOSH, however you are not permitted to perform any Asbestos abatement work until you submit proof to the CSLB of your completed DOSH registration.  The CSLB allows you 90 days from the time your license is issued to submit proof of registration. If you do not submit proof within 90 days, your license will be Suspended.

Q:  We have a Joint Venture (JV) license made up of three entities that we obtained for a large project which was completed at the end of last year.  We have another opportunity to bid on a large project due to start early next year.  Are we required to get a new Contractor’s License?  We are unclear as to whether Joint Venture licenses are for single project purposes or if you are permitted to perform multiple jobs with the same JV License.

A:  Licensed Joint Ventures are permitted to perform multiple projects in the State of California.

HIS Registration, NV City, State & Contractor Licensing and CA Low Voltage Waiver

First, an answer for ‘HIS’ question on call. Next, a NV contractor is finding a ‘marathon’ course in seeking his application approval before I help ‘line up’ the hurdles to overcome.  Finally, an electrical contractor discovers he’s already ‘wired in’ to a new class…

Q:  I was wondering if you are able help with HIS (Home Improvement Salesperson) registrations.  If our company, a Nevada LLC, has employees selling solar systems over the phone to CA homeowners, do their employees need to have their HIS registrations?

A:  No, if the employees are selling solar systems over the phone, then HIS registration is not required.  A Home Improvement Salesperson is defined as an individual who is employed by a licensed contractor to solicit, sell, negotiate, or execute contracts for home improvements, outside the contractor’s normal place of business.

Q:  You are helping us with our Nevada Contractor’s license and we are almost to the finish line of issuance.  I reached out to City of North Las Vegas to get my City Business License started.  However, they say I need to provide my NV State Contractors License number first.  My question is, on the letter I received from NV, called the Contingent Letter of Approval, at the bottom it states I will need my Business License before they will issue me a Contractor’s License number.  So in other words, if I am reading this correctly, I will be running in circles.  Can you explain how this will work?

A:  You are not alone as we are often called to help!  It is easy to feel as though you are running in circles when dealing with the bureaucratic authorities.  Here’s the deal: you are required to have a State business license number (issued by the Nevada Secretary of State) before your Contractor’s License number can be issued.  Similarly, you must have a Contractor’s License number to obtain a City business license number.  So, the order is to first obtain your State business license number (which we have already completed), and second, obtain the Contractor’s License number (which is near completion), and lastly you can start the process of obtaining a City business license in each city that you plan to conduct business in. Easy.

Q:  Our Company is licensed with the “B” (General Building) and the “C-10” (Electrical) classifications.  My brother has Qualified both classifications since the 1990’s. We have had several projects where the project owners are requiring

“C-7” (Low Voltage) licenses.  We have an employee who has worked for a Low Voltage company in the past, and he can have his former employer sign to verify his experience, and he also should have no trouble passing the required exams.  Does he need to get his own license first and then we add him to our license, or how does that work?

A:  No, it is not necessary for him to obtain his own license first before adding the “C-7” to your Company license.  You can avoid that step and apply to add a classification to your Company license.

Just FYI, since your brother has held the “C-10” classification since the 90’s, he can also apply to add the “C-7” classification to your license and request to Waive the exam.  Based on B&P Code section 7065.3, a Qualifying individual can request to Waive the exam if the classification being added is closely related to the classification currently listed on the license (that is the case in your situation).  Your brother will need to show that low voltage work has been a significant part of the work being done with your “C-10”.

 

DOSH Certifications, AZ License Threshold and JV Licenses

Mick Jagger couldn’t get it. However, our first contractor will find ‘satisfaction’ in my answer while our second contractor not so much. While I help find a way, another contractor gets advice just in time to save his ‘venture’…

Q:  My company has a “C-22” (Asbestos Abatement) Contractor’s License in California and we are going to be forming a Joint Venture with a company that has an “A” license.  We plan to have both classifications associated with the new Joint Venture license.  I remember we ran in to issues when we obtained our “C-22” license earlier this year with regards to being registered with DOSH.  Will the Joint Venture need to be registered with DOSH to obtain the license, or is the fact that one entity has a DOSH Registration enough?

A:  The fact that your entity is registered with DOSH satisfies the requirement.  You do not need to register the Joint Venture with DOSH, and in fact, it is our understanding that DOSH will not issue a registration number to a Joint Venture.

Q:  I have an Inactive Contractor’s License in California (Class “A”, “B” General, and “C-10” Electrical).  I recently moved to Arizona and have an opportunity to do a solar project at a single location. Is this possible for me to do without obtaining an Arizona Contractor’s license?  If not, how long does it take to get a license in Arizona and will I qualify for Reciprocity?

A:  Any contracting work done in Arizona over $750, even if it’s just one single project requires a Contractor’s License.  As you stated, your California license is currently Inactive.  To qualify for reciprocity which will grant you a Waiver of the Trade exam, you are required to show you passed the equivalent exam in the State you are licensed, and your license must have been Active within the previous five years.

Q:  We have a General Building (“B”) classification and a Roofing (“C-39”) classification on our company’s license.  We have always run the business with a staff of all Officers of the corporation, so we don’t have any employees.  As you probably know, Roofing contractors are all required to have Worker’s Comp Insurance, regardless of whether they have employees.  We are wanting to Inactivate the license to avoid paying Comp, however we have 20+ active contracts in all phases under a Joint Venture license with another entity, which only holds the “B” classification.  Some of the contracts are signed but work has not started yet.  Will Inactivating our company license preserve the Joint Venture license and at the same time eliminate the need for worker’s comp?

A:  Absolutely not.  Joint Venture licenses are made up of two entities, each of which must have a current Active Contractor’s license.  If you were to Inactivate your company’s license, the Joint Venture license would in turn be Suspended.  If you are not using the “C-39” classification, and only require the General Building (“B”) I would suggest you submit an application to remove the Roofing classification from your license.  Once it’s removed, you can submit an Exemption from Worker’s Comp form and cancel your policy.

Loopholes, Asset Protection and Handy, Man!

As noted in October, we’ve offered assistance to contractors with questions for more than a thousand weeks here! Once in a while it’s good to remember history, so contractors don’t repeat those same mistakes over again…

Looking for Loopholes 1/20/14

Q:  For many years I have been doing unlicensed construction, most of the work under $500.  I have a corporation already set up.  I have an opportunity to take a large home improvement contract but it would require me to get my license within two weeks which I know is next to impossible since I will need to take the exams and get fingerprinted.  I have a buddy who has a Sole Owner license that he is not currently using. He said that I could use his license in order to take the job.  Can I do that if I change the name on his license to reflect the name of my corporation? (This is so wrong then and still not legal now!)

 

A:  We frequently talk with contractors who come up with all sorts of different scenarios in order to use someone else’s license. There is no loophole here. No matter how clever you are, there is no way for an unlicensed contractor to “share” a license and still be in compliance with the CSLB’s regulations.  First of all, changing a business from a Sole Owner to a corporation is not as simple as changing the business name on the license; you are required to re-apply for the license.  Secondly, it is still his license and you cannot do any work with that license number unless you are a bona fide employee of his company, in which case the work is still done under his company and not your corporation.

Protecting Your Assets  6/1/04

Q.:   Thank you for your informative articles.  Given your expertise in this field I am submitting the following question: I am a Sole Proprietor.  I Incorporated and would like to work under the corporation; however, I want to keep my CA License as a Sole Proprietor. I am looking for the protection of my personal assets while still working as a Corporation. (While not asked as a question there is an answer to share!)

A.:   Thank you for your kind words.  If you apply for a new corporate license, you have the option of keeping your individual license OR assigning it to the corporation.  There is no problem having two licenses, a Sole Owner and Corporation.  The decision is yours.

I am not an attorney so therefore cannot address your primary reason for applying for a second license (i.e. asset protection). Seek qualified assistance.

Handy, Man!  7/29/13

Q:  I have been doing ‘minor’ repair work for the last several years, but I don’t have a contractor’s license. I would like to know what services a Handyman cannot perform or advertise for.  I plan to get my license once I have the four years of experience under my belt, but until then I want to make sure that I’m not doing anything incorrectly. (We all have to start somewhere and having a good moral compass often the best guide!)

A:  There are no specific trades/services that I am aware of that a Handyman cannot perform and advertise for, as long as the total cost of the project does not go over $500, including materials and labor.  Also, when advertising, individuals who are unlicensed are required to indicate in their ad that they do not have a State Contractor’s license.

Feel free to call us when you ready to obtain your license or if you have any additional questions. We can help navigate the route to a successful conclusion in obtaining a license in California, Nevada or Arizona.

NV Indemnification and Corporate License Transfer

While you can read all about contractor’s license rules on the internet, you can’t download expertise! That’s why we’re here to assist contractors in sorting it all out.  Getting started I confirm the ‘idea’ suggested by our first inquiry. Next, when a family finds itself dealing with the loss of a loved one, especially a licensed contractor, there are some steps that must follow in order to keep the business alive…

Q: Our company needs to get a Nevada Contractor’s license. I downloaded all the forms about six months ago and never completed them because our audited financial statements are not strong enough to get the license. However, now that I’m looking at the forms in more detail, it mentions an Indemnification option. Is it possible for us to be Indemnified by our Parent company if their financials meet the requirements?

A: Yes, your idea is correct, there is an Indemnification option! You can have your Parent company Indemnify in order to qualify for the license. Keep in mind that your company will still need to provide your financial statement and the Nevada Board will use the combined financial statements in order to make a determination. If you choose the Indemnification option, your Parent company needs to complete the appropriate forms as well as a Corporate resolution authorizing this Indemnification.

Q: I have a situation I hope you can advise me on. My Father died on August 15th and was 100% owner of a small electrical company, a family business employing myself, my brother, a bookkeeper, and one union electrician. The Company is a C-corporation. My father was the Responsible Managing Officer (RMO), however I have recently filed an application to replace him.

I am the Treasurer and only remaining Officer of the company. I have hired an attorney and an independent business appraiser to value the company in order to sell it in a few years when I retire. I am looking for help to ensure that I am meeting all legal and ethical requirements for my duties as Corporate officer and CSLB contractor.

My questions are 1. How long can the company continue to operate under the C-corporation’s Contractors license? 2. What steps should I take at this time to make sure that I comply with the requirements of the Corporation? The Corporate records have not been updated for a while and I need to get them in order, in case the Company must be sold. 3. Should I make my brother an Officer? He hasn’t expressed any interest in the business side of the company, but can I assume the role of all corporate officers?

A: First of all, sorry to hear about the loss of your Father. Please remember I am not a legal advisor and am glad to hear you have hired professional help. It sounds as if you are taking all the right steps in order to continue your family business. You can continue to operate with the Corporation’s license as long as it is Active and in good standing with the Secretary of State. Transfer of ownership only affects a Contractor’s license if it’s an asset sale, in which case a new license number would be needed since it’s a new entity.

In order to update your Officers with the Secretary of State, you will need to file a new Statement of Information. It’s up to you whether you make your brother an Officer, but yes, one person can assume the role of all Corporate Officers. The Replacement of Qualifier application you submitted in order to replace your Dad as the RMO will automatically update the CSLB. Let us know if we can be of further assistance.

Waiver of the Trade Exam, ‘DBA’ & LLC in Business Names and Corporate Surrender

A contractor wants to ‘add’ a concrete change to his business plan. But the numbers won’t compute! To ‘dba’ or not ‘dba’, that is the question. Another important lesson for any contractors who decide to ‘surrender’ the corporation without discovering ‘loose ends’ after walking away…

Q:  I currently have a Sole Proprietor General Building (“B”) license that’s been Inactive for about three years now.  I want to add the “C-8” (Concrete) classification to my license in order to obtain a separate Concrete license for a Partnership that I am starting with my business associate.

My attorney said I may be able to Waive the Trade exam based on my General Building license if I can show that concrete has been a significant portion of my work for five out of the last seven years.  What does the CSLB consider acceptable documentation to prove my concrete experience?

A:   Your attorney is referring to B&P Code Section 7065.3, which allows for a Waiver of the Trade exam when adding a classification to your license if you meet the requirements.  As your attorney stated, one of the requirements is the classification needs to be closely related to your current classification and it must have been a significant portion of the work you performed for five out of the last seven years.  Since your license has been inactive for three years now, there is no way for you to document using your General Building license for performing Concrete work as required.

Q:  We have a Corporate license and we are going to be filing for a Limited Liability Company (LLC) license.  I know when we originally filed for our Corporation, the CSLB would not allow us to have a Corporate ending on our “dba” (doing business as) name, such as “Inc.” or “Incorporated”.  Is that the same for LLC’s?  As in, can we use “ABC Construction LLC dba XYZ Construction LLC?

A:   If there is no “dba” on the name with the Secretary of State (as in your case), you can choose to use “LLC” as part of your “doing business as” name, however the CSLB will require that you provide a filed Fictitious Name Statement.

Q:  Your company helped me set up my Corporation back in 2003.  We haven’t done business in California for years and I need to close up the corporation.  I noticed that it’s suspended by FTB (Franchise Tax Board).  What is the process to shut it down at this point?

A:  Before you can close/surrender your corporation, you will first need to get it back in Good Standing with the Secretary of State.  You will need to contact the Franchise Tax Board to find out the reason for the Suspension, however it is likely that your company needs to either file back tax returns, pay taxes owed, or both.  Contact my office if you need assistance with this.  We are here in Sacramento and can visit the FTB on your behalf to determine what’s needed and file the appropriate items to lift the Suspension.  Once the Suspension is lifted, you can file to surrender the corporation.