• Thu. Jun 30th, 2022

How to lose your contractor’s license in 90 days (or less)

Did you know that the state licensing law of California contractors, Bus. & Teacher. Code §§ 7000 et seq., Requires licensees to report various information to the State Council for Contractors Licensing (CSLB) “within 90 days” of the effective date or event?

Failure to report the required events or information could result in the automatic suspension of your license and, in some cases, the revocation of your license for 1 to 5 years. Some of these triggers include:

Staff changes (Bus. & Prof. Code § 7076)

California requires that certain individuals be listed on the contractor’s license application and that the licensee otherwise keeps the CSLB informed of certain individuals affiliated with the license. Of course the qualifier for the license, that is to say., the responsible for management (RMO) or responsible employee for management (RME) for each license classification must be identified. In addition, California corporations are required to provide the names of the licensee’s president, secretary, and treasurer. On the other hand, foreign companies are only required to provide the name of the president of the licensee. (Remember that identified officers will need to take their fingerprints and undergo a background check.) When persons listed on the license change, the CSLB requires the licensee to provide notice of those changes. The CSLB provides forms to change the following persons registered on a permit:

New qualification

The classification of each California contractor license requires a qualifier, that is to say, a person who can pass any required professional exam and has the required experience. If a license holder is unable to replace an existing RME or RMO within the required 90 days, a 90 day extension may be requested. A request for an extension will only be considered in certain circumstances, in particular where a request for replacement of the qualifier has been made, and only if it is requested in a timely manner. The CSLB provides forms to dissociate the qualifier and replace it:

Change of company name or address

A licensee may change their name if the new name does not indicate a change in the business entity, that the licensee qualifies for a classification other than that in which they are currently licensed, or a change in personnel. Before changing his name with the CSLB, the holder must change the name as it is registered with the Secretary of State; such a change may not be necessary if the licensee adds a DBA to the existing corporate name. The CSLB provides you with a form to change the name or address of your business.

Changes to the licensed entity

Please note, a “change of business entity” will probably require a New contractor’s license (Bus. & Prof. Code § 7075.1). For example, if a general partner or qualified partner leaves the partnership, the partnership license must be canceled, and if a company dissolves, merges, or relinquishes the right to do business in California through the secretary’s office of State, the contractor’s license should be canceled. With regard to the latter, if the registration number assigned by the Secretary of State to a licensee changes, a new contractor’s license number will be required for the new company. The CSLB provides forms to cancel your license and to continue and reassign your license, if allowed:

Changes to Required Bond (s) / Workers’ Compensation Insurance

If necessary, not having the required bonds and workers’ compensation insurance will likely put your license at risk of suspension until it is cured. Regarding the former, the CSLB can accept a bond from its effective date, even if it has not been received within 90 days retroactively from the effective date of the bond if you file a Request. acceptance of the surety bond.

Proof of payment of a summons, arbitral award and judgment

Failure to pay a timely “construction-related” small claims court judgment or civil court judgment, or citation or arbitration award from the CSLB and, more importantly, provide at the CSLB proof of payment will expose the license holder to the immediate suspension of his license. With regard to the payment of an arbitral award or judgment, we must be careful on this last point. For CSLB arbitration awards, payment may be remitted to the CSLB for final delivery to the consumer. For other payments, make sure you get some sort of proof of payment acceptance – a copy of a check, even a cashier’s check or money order, is not proof that it has been delivered. to the beneficiary.

Miscellaneous requirements

Beware of other miscellaneous notice requirements, including the following:

Other events with a shorter resolution window

Do not assume that you will always have 90 days to report an event to the CSLB. As a general rule, communications from the CSLB will indicate when a response is required and you should ensure that these deadlines are met promptly. If you are unsure, check the CSLB website for advice or call to confirm which rule applies. Events with shorter reporting deadlines include:

  • Payment of a quote ~ Due within 15 days of issuance (except call)
  • Payment of amounts due following a CSLB arbitration decision ~ Due within 30 days
  • Proof of resolution of unpaid liability ~ Due within 60 days

California isn’t the only state that requires licensees to report events like those identified above. Licensees should be aware of these common triggers of reporting obligations and be careful when their business operations undergo changes, including, but not limited to, changes in business operations and key personnel, or undergo unrest, including, by way of example only, a troubled project.


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