Sale of Contractor Business & Son in Law Family Waiver

Time to relax? With the Boomers reaching the age when many including contractors want to retire, keeping the business in the family or selling become priorities. Whether it’s a legacy for family or a sale to others there are rules to know ahead of time! 

Our landscape business, which had been very slow the past two years, is picking up now. We are thinking of re-tooling for a final push to sell it before I retire…  that is the nature of my inquiry.  

Can I change the name of a Corporate license? I think having my name as the business name may limit our possibilities to expand and ultimately sell the whole business to a non-family member.  My boys are in completely different fields and really don’t want to carry on with this business.   Or perhaps we do a DBA with a different name?  Got any ideas?  Thanks.

A:  Nice to hear that things are going well.  Have you decided how you’re going to sell the business — asset or stock sale?  If an asset sale, the buyer will likely set up their own corporation; purchase the assets and continue operating as you have been doing for years. The buyer may want to keep your existing name or change it.  Either way, it should not matter what official name you’re using at the time of sale.   

With a stock sale, again, the buyer can continue using your existing business name or amend it.  You certainly could add a dba, however, I’m not sure it would make a big difference since the buyer will be looking at your profitability and other financial considerations.  They may even want to maintain the existing name because it is known in the community.

We recommend that you contact a professional business broker or your legal counsel.  Discuss these questions with him/ her, including the issue of the business name.  We can give you a few referrals in your area if you like.  Again, thank you for your email.  Good luck as you move forward with the sale.

Q:  I’ve heard of family businesses where a son inherits his father’s contractor’s license when the father retires.  Would this apply for a son-in-law as well?  I wasn’t sure if the different last name would raise a red flag.  Would he be required to take the exams?

A:  Yes, in the eyes of the Contractors State License Board, a son-in-law is considered an immediate family member.  If your son-in-law has been an employee and actively engaged in your business for at least five years out of the previous seven, then he can request to take over your Sole Owner license and Waive the exams.

“C-54”, Merging Licenses, CA “C-10” and NV “C-2d”

Here’s the distinction, an expert can tell immediately when something looks similar but really isn’t the same. In contractor licensing that is crucial in getting it right the first time. Because, contractors know ‘time is money’ is exactly right…

Q:  I need to obtain a “C-54” (Tile) and a “C-61”/”D-34” (Prefabricated Equipment) contractor’s license in California.  I am a Florida contractor and I will be moving out there at the end of the year, but I want to be ahead of the game.  Will this require that I come out to California twice to take the exams, or will I be able to do it all at the same time?

A:  The rule is, when you are not considered “qualified”, you have to do one Classification at a time, which would normally require that you come out to California twice to test.  However, there is no Trade testing for the “C-61” classifications.  So, while you’ll have to apply for them one at a time, as long as you apply for the “C-54” classification first, it will notrequire two trips to California.

Q:  My fellow contractor buddy and I want to start a new corporation and “merge” our licenses together.  I have a “B” (General Building) and a “C-39” (Roofing) license.  He has a “B” and a “C-8” (Concrete) license.  Can we apply for this all at the same time, or do we need to do one Classification at a time?  I’ve heard conflicting information.  

A:  Since you both hold your qualifications, you can apply for these all at the same time.  If there was testing involved in each, it would require you apply for each one at a time. Just remember that you can only have one Qualifier per classification, so you will have to decide beforehand who will Qualify the “B” on the license.

Q: You are helping our company with obtaining a “C-10” (Electrical) license and you provided us with all the study material for the law and trade exams. Our Qualifier just informed me that he recently took the test to be a certified electrician in California. Someone told himthat he won’t have to take the CSLB test if he recently took an electrical certification test. He sent me a copy of his electrical license issued by DIR. Can you find out if this qualifies him to obtain the “C-10” license without taking the exam?

A:  No, that does not qualify him to waive the CSLB exam.  There are only a few instances where the CSLB will waive the testing requirement.

Q:  We have our Qualifier taking the NV “C-2d” (Low Voltage) exam next week.  If he fails the exam, how long does he have to wait to re-take the exam? 

A: He has three attempts to pass the Nevada exam. A candidate who tests unsuccessfully must wait 2 weeks before retaking the examination. If he/she fails the third examination, the application becomes void. You can then apply again 30 days after the last attempted exam.

Outside CA Fingerprinting, NV Financials, RME and Disassociation Requirement

Process. It seems life is about learning the process. For contractors dealing with complex rules and interpretations of regulations that’s a high-level learning curve! That’s why expert assistance is always helpful when it’s your turn to learn. Process this…

Q:  As you know, you very recently submitted an application for our company to obtain a CA Contractor’s License.  We are trying to be proactive…can we send our Officers out to California to get fingerprinted right away?

A:  No, you cannot.  The Officers will need to wait to receive the paperwork from the CSLB (Live Scan request forms) to bring with them to get fingerprinted.

Q:  I am in the process of obtaining my NV Contractor’s license.  Regarding the financial statement required, do I provide my personal financial statement or a corporate financial statement, since that is the company obtaining the license and the entity performing contracts?

A:  The financial statement must be for the applying entity, so yes, you would provide your corporatefinancials.

Q:  I own a small window and door manufacturing business. I currently sub-contract out all of our installations but would eventually like to get a license to do installations myself.  I know I can study and pass the exams. My main hurdle is getting signed off on qualifying experience.  I don’t have a General Contractor who can certify my experience.  Do you have any advice on that?

A:  Anyone who has first-hand knowledge of your work experience can sign to certify your work experience.  While it’s best to have your employer sign, it’s not necessary for your employer or a General Contractor to complete your Certification of Work Experience page.

Q:  My firm has worked with you over the years and I have a client who is going to be doing a large project in CA.  They are a Delaware corporation, and they have a Responsible Managing Employee (RME) who currently has his license on Inactive status.  Based on that, about how long will it take for them to obtain a Contractor’s License?

A: It will depend on fingerprinting, but assuming there are no issues with that, it will take approximately 6-8 weeks.  We’d be happy to assist you with the process.

Q:  We have a pending application in the works.  Our CSLB technician sent us a letter stating the only item she needs to issue the license is a Disassociation Notice from our RME, removing himself from the company he formally worked for.  He is out of the country for several weeks and we don’t have access to his signature.  Do they absolutely need that signed notice, or would it be enough for us (or you) to just notify the CSLB verbally that he is no longer with that company?

A:  The CSLB will absolutely need that signed Disassociation Notice in order to remove him from that license and issue your company license. It’s a process! 

NV “C-3B”, AZ Qualifier, CA “C-15” and “C-22” Asbestos

Some things may sound the same in contractor’s licensing, but the reality depends on your ‘state’ of mind. Another contractor working over a border gets a choice in ‘one from column A, or one from column B’ in order to be legally licensed, and oh yeah, there’s one more thing for assisting this last contractor…

Q:  I have a customer who wants me to do some work over in Nevada so I am going to be applying to get my Contractor’s License.  I’ve been licensed in California with a General Building (“B”) license for a little over a year.   The work my customer is wanting me to do is finish carpentry work (cabinets and shelving), which I understand is a “C-3B” in Nevada.  Can you confirm that is best classification for me to apply for?  Or would you recommend I apply for the “B” so that I cover other trades as well if the opportunity arises?  

A:  Nevada’s law is similar to California’s with slight differences, in that a General Building contractor must be performing more than two unrelated building trades crafts, upon which they are the prime contractor and the construction or remodeling of a building is the primary purpose.  So for this particular job you are anticipating, the “C-3B” would be the most appropriate license.  You can always apply and obtain the full “B” license in the future if the opportunity for more work arises.  

Q:  You are helping our sister company with obtaining an Arizona Contractors License and we need to do the same thing.  Are we able to use the same Qualifying party for our license, or will we need to hire a new person?

A:  In order for an individual to Qualify more than one Active license at the same time in Arizona, one of the following must be true: A) The Qualifying party owns at least 25% of each entity they are qualifying, or B) There is common ownership of at least 25% between each entity.  Let me know if you would also like our assistance with the process.

Q:  Can a “C-15” (Flooring) contractor do concrete flooring and epoxy sealing on flooring also, or would they need a concrete license in addition?  

A:  It is appropriate for a “C-15” (Flooring) contractor to perform concrete flooring and related work such as staining, acid washing and epoxy coatings. It is also permitted for “C-8”(Concrete), “C-33”(Painting), or “D-06”(Concrete Related Services)  contractors to perform the sealing, staining, and epoxy coatings.

Q:  You just recently helped us with obtaining our “A” (General Engineering) and “C-22” (Asbestos) license, so first of all, thank you for your assistance.  Now that we have the license, we were able to finalize our DOSH registration.  Is there anything else we need to do at this point?  We are going to be signing contracts to assist with the fire damage in California.

A:  Yes!  The “C-22” license is granted on a “contingent” basis, so at this point it is your obligation to notify the CSLB that you have received your “Asbestos Contractor Certificate to Perform Asbestos-related Work”.  You can either ‘snail-mail’ to the CSLB orsend it to my office and I can hand-deliver and get a stamped copy right away.  

RMO, CSLB Testing Sites, Out-of-State Fingerprinting and Worker’s Compensation

With lots of rebuilding commercial and residential properties in fire-damaged areas across our state contractors from elsewhere are coming West. Others are adding to their opportunities with new classes, new entities and lots of ‘qualified’ help is needed

Q:  We are going to be adding a classification to our license.  We will be using the same Responsible Managing Officer (RMO) we currently have.  Will he need to be fingerprinted again? 

A:  Most likely, no.  The CSLB does purge their fingerprint files, but typically only for individuals who have not been on an Active license for quite some time. If your RMO is currently Active on your license, he should be good to go!

Q:  You are helping our Florida corporation obtain a “B” (General Building) Contractor’s license in CA.  I have a couple of questions.  Does our RME (Responsible Managing Employee) have to come to Sacramento to take the exam or is it available elsewhere?  Is the exam open book?  When our RME and our President get fingerprinted, is it necessary to deliver hard copies of the fingerprints to the CSLB in Sacramento?

A:  The testing sites are in San Diego, San Bernardino, Norwalk, Oxnard, Oakland, Sacramento, San Jose, and Fresno.  They will schedule him based on his Zip Code.  Usually out-of-state qualifiers get scheduled in Norwalk.  The exam is notopen book.  As long as your RME and President are coming to CA, and getting printed via Live Scan, there is no need to deliver any proof to the CSLB.  Live Scan fingerprints get sent electronically.

Q:Does the license holder (RME) have to be employed by the company using it?  Do you know what a typical pay rate is to use someone’s license?

A:  RME stands for “Responsible Managing Employee” so yes, that individual would be required to be employed by the company.  We don’t get involved in the pay structure for Qualifying individuals so I’m not familiar with the typical pay rate.

Q:  My company’s RME recently resigned and they want me to take the exams and replace him on the license.  Can you tell me if a new Worker’s Comp policy would be needed?

A:  The company currently has a Worker’s Compensation insurance policy. From what I understand, that policy covers all of the Company’s employees, so a new policy would not need to be put in place.

Disaster Cleanup, RME/RMO, Duplicate Fingerprints and ‘Shotcrete’ Licensing

Some questions ‘generally’ take longer to ask or explain than others! So, let’s start there. I will also lend a ‘hand’ on a fingerprinting problem and help ‘clean up’ a disaster-related issue on appropriate licensing in Paradise and other fire damaged communities…

Q:  If a company has a Responsible Managing Employee (RME) who holds the “A” and “B” classifications and an Responsible Managing Officer (RMO) who currently qualifies the “C-7”, but also has additional classifications of both Generals, when the RME disassociates, will the RMO automatically become the “A” and “B” qualifier, or are we required to submit a ‘replace qualifier’ form for the RMO to become the active General qualifier on the license?

A:  It is not automatic.  If the “C-7” RMO already holds the “A” and “B” classifications previously, then he/she will not be required to take the exams again, however if/when the RME leaves the company, you will need to file a Replacement of Qualifier application to notify the CSLB that he will also be the Qualifier for the “A” and “B” classifications on the license in question.

Q:  We are going to be adding a classification to our license.  We will be using the same RMO we currently have.  Will he need to be fingerprinted again? 

A:  Most likely, no.  The CSLB does purge their fingerprint files, but typically only for individuals who have not been on an active license for quite some time.  If your RMO is currently active on your license, he should be good to go!

Q:  I have a “C-29” (Masonry), “C-53” (Swimming Pool), and “B” (General Building) license. I previously held a “C-61”/”D-06” (Concrete Related Services) for a different company that exclusively did Shotcrete work.  I would like to add that classification to my existing license, but I just want to make sure that is still the appropriate classification.

A:  Yes, a “D-06” would be the appropriate classification for doing shotcrete work. 

Q:  We are a licensed specialty contractor and we are going to do work in the Paradise area to help with all of the fire damage.  We were told that “C” (specialty) contractors can bid and contract for construction clean up, as long as they sub-contract the work to appropriately licensed contractors.  This was information received at a “Contractor-to-Contractor” meeting we had out there recently.  I just want to make sure what I’m hearing is correct?

A:  The only Contractors who can contract for the debris clean up in the fire disaster areas are the “C-21” (Building Moving/Demolition) or the “A” (General Engineering) license holders.  It would not be appropriate for any other classification to subcontract for disaster debris removal.

“B” Inactive, Bonds, Insurance, Class Waivers and Fingerprinting Officers

We make a great team! Your questions and my answers help everyone learn. Another part of our team is the CSLB who helps keep the playing field level for all our licensed contractors. Contractors can also play a significant role in spotting unlicensed, and unfair, competition. Not to drive this nail too deep, but this is especially important over the coming months as so many California residents already victimized by disaster rebuild their lives and rely on us…

Q:  Hi Shauna, I hope all is well with you.  I have a quick question for you.  We are looking to add a “B” license holder to our license.  He is a current employee who just has his “B” license assigned to an Inactive Sole Ownership.  Do we just need to fill out the Application for Additional Classification document, and if so, does he still have to answer all the questions in sections 3 and 4 even though he already has his “B” license?

A:  Quick question, quick answer – yes and yes!

Q:  You are helping us obtain a new license and our Qualifier just passed the exams yesterday in Norwalk.  He was given a list of requirements needed which include bonds and insurance.  Do you have a company that handles this and who can possibly expedite the filing of these?

A:  I do!  We usually refer our clients to California Contractor’s Insurance Services.  You can contact them at 800-432-2641.  Their website is ccisbonds.comwhich allows you to apply online.  Everyone is super helpful there, they are awesome to work with.  They usually file bonds electronically which speeds the process up.

Q:  I used your services about 5 years ago to add 2 Classifications to my current license.  It is my understanding that we can now apply for a Waiver of the exams and acquire the licenses in-house.  I’d like help with that process.

A:  Thanks for contacting us again.  Yes, that is correct.  Under B&P Code Section 7065.1, you can apply to replace your Qualifier for those two classifications based on the fact you’ve been Officer on the license for 5 years.  However, your Qualifier added those classifications in June of 2014, so you won’t actually meet the 5-year requirement until June of this year.

We would be happy to assist with the process so please contact us when you are ready to get started. 

Q:  I recently applied for a Contractor’s License and our Officers (listed on the application) are all in different locations.  I have a few questions with regards to this issue.  First, do they all need to sign the same application on the same form, or can we make copies and have each officer sign their own individual form (essentially creating three “Section 4” pages)?  Second, what address will the fingerprint requests come to?  We are trying to coordinate travel, etc.

A:  They do not need to each sign the same form, so you can have separate Section 4 pages with each individual’s signature.  The fingerprint request forms will be mailed to the company’s mailing address listed on the application

Sole Proprietor, Fictitious Names, Registered Agents and RME

We begin with a little bit of ‘sole’, move on with no place like ‘home’ and help ease the worry about a ‘responsible’ person hitting the highway…

Q:  I recently applied for a Contractor’s license and I used the word “Builders” in my business name.  I checked the status online today and it says, “provide a corrected business name” and then has the word “builders” in parentheses.  Do you know what this means?

A:  I am assuming based on the notification you applied for a Sole Proprietor license.  ASoleProprietorcannot use pluralsin their business name, such as “Builders” or “ABC & Sons” or “HVAC Installers”.  The CSLB considers the plural as a mis-representation of personnel for a Sole Proprietor license.

Q:  We have a fictitious name filed with Kern County.  When filing for a new Contractor’s license, should the company name include our fictitious name or just the out-of-state Corporation’s name?

A:  The company name should be your registered name as reflected in your Home State.  If you are using a ‘dba’ (doing business as) name in CA, that will follow your corporate name (example: ABC Inc. dba XYZ).

Q:  If we are an Oklahoma corporation, are we required to have a California address in order to do business there?  Basically, I’m wondering if we can list an address outside of CA.

A: You can list an address outside of CA, that will not be an issue.  If you are a foreign Corporation, meaning formed in another state, you will be required to have a Registered Agent in CA.  We can act in that capacity if needed, contact our office for that or other licensing needs in CA, AZ and NV! 

Q: We are a brand-new company and we need a CA Contractor’s license ASAP.  We are looking to hire someone who already holds the Qualification.  Our only concern is, what happens when he leaves the company?  What are the ramifications of a Responsible person leaving the license?

A: If your RME (Responsible Managing Employee) leaves the company, the license remains with the Corporation and you are given 90 days to replace him/her. 

Working in Disaster Areas and Penalties for Unlicensed Activity

To paraphrase Dicken’s famous line, ‘it was the worst of times’ and ‘the best’. 

With an economic boom and disasters in north and south in the last year, the need for licensed contractors has never been greater. This new year begins with hope for a better time for all and your opportunity to grow. 

Tremendous need for commercial and residential building for growth or recovery also invites unscrupulous criminals who can victimize all. In a reminder to consumers and contractors, the CSLB has SWIFT ‘secret agents’ at work! 

In Chico, these SWIFT agents put cuffs on over a dozen suspects in a Butte Co. sting (CSLB News 11/1/18). For those not disaster victims, these same unlicensed individuals wreak havoc when poor quality, failure to meet code or other substandard practices push a project back to square one. As Registrar David Fogt says, “There is no telling if someone who is unlicensed has the skills, insurance, or knows the trade well enough to do the work and to do it right.” 

While we share our expert answers, industry news and other contractor concerns all year, in these first few weeks of 2019 Capitol Connection also serves as a call to action. By working together, we can keep our communities safer by emphasizing the need to be vigilant in choosing who does your work as consumers and reporting unlicensed activity as contractors!  Fogt’s reminder points to the best practice, “By using CSLB’s free online tools like Find My Contractor or Check A License, homeowners can find a licensed contractor in their area and avoid the headaches of hiring someone who could potentially take advantage of them.” 

Posing as homeowners SWIFT agents cited more than a dozen for contracting without a license and proposing prices well outside of legal limits. In CA a contractor license is required for projects valued over $500.00 for labor and materials combined.

Suspects were discovered when advertising for work online, and CSLB agents also found five who had been previously caught for illegal contracting. What’s encouraging is after further investigation all five obtained contractor licenses and resolved their cases with Butte Co. 

Licensed, experienced contractors can add new classes, specialty or other enhancements to meet the tremendous demand. For more than 30 years, Capitol Services has assisted contractors ‘grasp’ opportunity by becoming licensed and many others to ‘reach beyond’ that original application.  I look forward to hearing from you here to help whenever licensing is an issue in CA, NV or AZ. 

As I began this with hope, I know that opportunity can knock for many in this next calendar year. If you don’t have a license,nowis the best time to get one as it’s better to profit from ‘the best of times’ rather than find yourself in handcuffs at ‘the worst’ of times.  

“C-61”, License Borrowing and Generals

Whether by fortunate economy or unfortunate disaster contractors are in demand everywhere in CA. So now is the time to ‘build’ on your license and experience or get your contractor license.  Capitol Services has assisted contractor licensing for more than 30 years so as we are about to begin another new year, adding opportunity or becoming licensed may be easier than you know. These contractors discovered some expert ideas! …

Q:  I currently have a “B” contractor’s license under my construction company.  I just purchased another company and would like to get a “C-61” license.  Does having a “B” qualify me to take the Law exam to get the “C-61”? Or do I still need the 4 years?  Have any ideas? 

A: You can add the “C-61” class to your existing “B” license to handle this Specialty work or you can apply for a new license if you want this separated from your General Building work.  There is no need to retake the Law exam and the “C-61”(Limited Specialty) has no trade test; however, you will need to show4 years of experience in this field to qualify for the license.  Unless you have been handling this type of work under your “B” or have — within the past 10 years — handled this work aside from your licensed contracting, I do not know how you will qualify.  Maybe the person you purchased the company from will agree to become your Qualifier until you have the requisite experience? That’s at least one option.

Q:  I have some work opportunities coming up but need a California contractor’s license.  Is it legal to work under my father’s contractor license using my own business name?  Since he is the Sole Owner of his business, would he need to get Worker’s Comp Insurance if I use his license? And would I need to buy my own liability insurance or would the work fall under his? Any direction and advice in this regard would be greatly appreciated.  Thank you.

A:  Sorry, but you cannot use your father’s license number.  State law prohibits an individual to loan or give their license to another person.   There are generally three options if you want to pursue these “work opportunities”:  a) you and your father can apply for a partnership license; b) your father can hire you as an employee (but he would need to sign any contracts and obtain Worker’s Compensation coverage) or c) your father can form a corporation and you could be appointed as an Officer.  

Q: I currently have a “C-36” (Plumbing) and “C-20” (HVAC) license.  For the past 7-8 years I have also been doing smaller remodels/renovations and energy upgrades to residential homes and commercial buildings.  I recently applied to add the General Building (“B”) classification to my license in order to be covered for this type of work.  The CSLB rejected my application and requested that I provide proof in the form of permits or contracts that I have done Structural Framing.  

I handle nearly every other aspect of the “B” classification such as finish carpentry, electrical, plumbing, drywall, painting, HVAC, etc. Is there somewhere in the ‘contractor law’ where it states that you specifically need Structural Framing experience in order to become a General Contractor?

A: There is no California Contractor License Law that specifies the need for Structural Framing experience in order to qualify for a General Building license.  The “requirement” for framing experience is strictly a CSLB internal policy.  Framing is certainly one of the trades covered under the General Building category, in the same way that building bridges is a component of the General Engineering classification.  However, the CSLB does not require that all “A” contractors provide proof that they’ve built a bridge.