Capitol Connection 10/01/2020
Becoming Qualifier, DBA Licensing & Down Payment Rule
There is no ‘blanket’ answer to cover all the rules as some contractors are ‘exceptional’ as we learn from our first inquiry. I will also dig deep into a question on ‘splitting off’ a special class in ‘general’ terms and I have a happy surprise for a stressed-out question involving a list of license classes that sounds like a quarterback’s line call, hike! …
Q: I am a newly established General Building Contractor and I just signed on a restoration job. I asked that the homeowners put more than the down payment typically required because they wanted special order products. I’ve always understood this to be acceptable, but the homeowners are telling me they won’t pay more than $1,000 for a down payment. Who is correct in this situation?
A: The down payment cannot be more than $1,000 or 10 percent of the contract price, whichever is less, for a home improvement job or swimming pool, excluding finance charges. There are no exceptions for special-order materials. There is a down payment exception for about two dozen licensees who carry special bonds to protect consumers, known as blanket performance and payment bonds. These exceptions are noted on CSLB’s website.
Q: I have a current license for my corporation and hold the “A” (General Engineering) and the “C-57” (Well Drilling) classifications. I want to separate out my well drilling classification, so I want to obtain a separate license with a dba attached. When I do that, do the liabilities and taxes of the new dba go to the main entity, or are they separate? Will I be required to obtain new bonds and a separate Worker’s Comp policy?
A: While I’m not a CPA or attorney, since the business entity is not changing, I would assume the liabilities and taxes will all remain with the main entity, and the ‘dba’ business would not be taxed separately. The ‘dba’ is going to be issued a separate/different license number, so I can for sure tell you that a new Contractor’s Bond will be required. As far as Worker’s Comp, you’ll want to check with your insurance company, however it should be the same policy. The CSLB will however, need a Certificate of Worker’s Comp with the full business name, including the ‘dba’, on file. Let me know if you’d like our assistance with obtaining the new license.
Q: I am currently the Vice President of my ‘S’-corp and the President and I are discussing a transition plan for the company. While that hasn’t firmed up as to whether we do and “oldco”/”newco” scenario or transition the existing company we do need to understand my options for becoming the “Qualifier”. We currently hold “B”, “C-4”, “C-20”, “C-36”, “C-42”, “C-60” and the “C-43” with the President as the Qualifier, but I have been listed on the license for over ten years. What will I need to do to become the Qualifier on the existing license or qualify for the new license if that is required? I’m hoping with my experience I will only need to take the law portion but please advise.
A: Actually, if you have been listed as an Officer for over 10 years, you can apply to replace the President on the license and request a Waiver of both the law and trade exams. It’s not guaranteed, but B&P Code Section 7065.1 allows for this scenario. Let me know if I can help.