Referral Fees, General’s Tree Service and Partner Changes

Does every rule have an exception? Yes, it would seem so. Can a General ‘lumberjack’ project land? Like a stick of gum, this last contractor has ‘two, two problems’ in one and learns they have bitten off more than they can chew…

Q:  I’ve always been told that referral fees are a “no-no” for contractors.  I’m confused on why it’s okay for Referral Service Companies to refer contractors to homeowners and collect a fee from the contractor. 

A:  B&P Code Section 7157(d) states that it is illegal for a contractor to accept or allow any compensation from another contractor for home improvement services, however this law does not apply to non-contractors.  It’s important to remember that a referral service cannot solicit or negotiate contracts on behalf of a contractor, or offer to undertake to, or purport to have the capacity to undertake itself or through others a construction project.  The prospective customer should enter into contracts directly with the licensed contractor and all payments should go directly to the contractor.

Q:  My company has an “A” (General Engineering) and “B” (General Building) license.  We frequently remove trees as part of our land clearing in order to prepare for jobs.  We are being told by a sub-contractor we are required to have a “D-49” (Tree Service) license.  It seems to me that would be covered under our “A” and “B”.  Am I incorrect?

A: You are the correct one!  If a project is awarded to an “A” contractor, it is considered a General Engineering project.  An “A” Prime Contractor is licensed to self-perform or sub-contract out all work required to complete that project.  Therefore, if tree removal is required as part of the project, you are licensed to self-perform that work.

Q: We have both a CA and NV license up for renewal next month.  They are General Partnership licenses where the General Partner actually changed about a year and a half ago because it merged in another corporation.  In receiving the renewal notifications, we discovered that we failed to notify the CSLB and the NV Contractor’s Board.  Along with the CA renewal, we received a letter stating the license would be cancelled upon expiration because they obviously discovered the change with the Secretary of State.  Nevada didn’t send any such letter.  In reading the statutes, once we notify the NV Board of the General Partner change, the license will be cancelled immediately.  Is there any option for an extension?

A:  Unfortunately, there is not.  Once you notify the NV Board of a change of Partnership, they do automatically cancel the license.  I would suggest getting the paperwork for a new license submitted as soon as you can so they can hopefully process it before the license expires.  Be aware that when you submit the application, it’s possible (and quite likely) the technician will look up the existing license and notice the change which will cause the cancellation.