Capitol Connection #1045
Now you need it, now you don’t! Moving from one state to another contractor law changes as our first couple questions illustrate. However, our last inquiry offers the ‘exception’ to the rule in CA…
Q: I am a registered HIS (Home Improvement Salesperson) in California. I sell Solar products to Homeowners. I am moving to Nevada and was wondering how I would go about registering as a HIS there?
A: I am not aware of any HIS registration for the State of Nevada.
Q: We have a Delaware LLC that we need to get licensed in California. We are negotiating with a Contractor who is already licensed under his own corporation. He is not currently doing any work and he has agreed to let us use his license. How does that work? Is there a way to transfer the license from his corporation to our LLC? Do we have to give him a certain amount of ownership in our company?
A: First, you cannot “use” someone else’s contractor’s license. If the LLC will be doing contracting work in California, they are required to have their own license issued in the name of the LLC. Licenses are also not transferable from one entity to another. You can however use the individual as your Qualifying Individual. It is not required that you give him any ownership. If he will not have any ownership in your LLC, he will either need to Disassociate from his corporate license, or he can Inactivate it. If he will have at least 20% ownership in both your LLC and the corporation, he can Qualify both Active licenses at the same time.
Q: My company’s RMO (Responsible Managing Officer) is leaving the company for a better opportunity. Apparently, companies in CA seeking to get a contractor’s license are paying individuals who already have licenses a large fee to act as their RMO. I happen to know the individual leaving our company will have no involvement in the new company operations. They are strictly paying him for his qualification. Is this legal? By the way, we are going to need your help with adding a new RME/RMO to our license.
A: The short answer is no, that is not legal. Contractors who serve as Qualifier’s must exercise direct control and supervision of the company’s construction operations. The CSLB has a task force which specifically investigates cases where Responsible Managing Officers (RMO’s) are suspected of acting as paid figureheads for a company, but exercise little to no control over operations.
B&P Code Section 7068.1 authorizes the CSLB to discipline a Qualifier, and the licensed entity they are qualifying, when the Qualifier is not actively involved in the contract activities of the license. In addition to the administrative penalties, the individual can be charged with a misdemeanor and be sentenced to serve up to 6 months in jail, and required to pay a fine, or both, if convicted.
Q: I am an out of State Contractor. Does California have Reciprocity with any other States?
A: Yes, California has Reciprocity with Nevada, Arizona, and Utah. The reciprocal agreement allows you to Waive the trade exam in CA if you have been actively licensed in NV, AZ, or UT for five out of the last seven years.
While knowledge is power, knowing where to go for the answers is half the battle. Get expert assistance immediately when you call866-443-0657, email email@example.com, or write us at Capitol Services, Inc., 1225 8th St. Ste. 500, Sacramento, CA 95814. Research past columns at www.cutredtape.com.