2 types of qualifying individuals for each type of license
Individual - Responsible Managing Employee (RME) or Owner
Partnership - Qualifying Partner or
... [Show More] RME
Corporation - Responsible managing officer (RMO) or RME
LLC - RME, RMO, Responsible Managing member/manager
What must be filed w/CSLB if RME/RMO leaves? Within how long? If not, what happens?
"Notice of disassociation" and "application for replacing qualifying individual".
Within 20 days
Or license automatically suspended
Responsible Managing Employee (RME)
Full time employee works at least 32 hours or 80% of operating time of biz, whichever is less.
May be used to qualify for individual, partnership, or corp license.
Never more than 3 licensees at one time.
Can only act as qualifier for 1 license at a time unless either: 1) other licensee is subsidiary 2) he/she owns at least 20% of licensee 3) majority of officers/partners of other one also are those of 1st
Responsible Managing Officer (RMO)
Officer of Corp
Journeyman
A person who has completed an apprecnticeship program or is an experienced worker, not a trainee, and is fully qualified to perform the trade without supervision.
Foreman/Supervisor
A person who has the knowledge/skill of a journeyman and directly supervises physical construction
What are penalties for contracting w/out a license
- Misdemeanor offense
- 1st offense may receive citation from registrar, potential sentence of up to 6 months in jail and/or $500 fine, which is accompanied by civil penalty of no less than $200 and no more than $15,000. May lessen or waive if contractor obtains license within prescribed period of time.
- Felony charges for contracting w/out a license in emergency projects.
- 2nd offense found guilty of criminal offense which is punishable by civil penalty of 20% contract price or $4,500, whichever is greater, and county jail min 90 days.
Penalty for advertising for work outside of your license
fine of $700-$1000
Penalty for hiring unlicensed sub or allowing use of license
Citation from registrar and civil penalty up to $15,000
Penalty for deliberate fraudulent use of contractor's license
Up to $10,000 and/or one year jail
Bond must be filed with _ within _ days of effective date of bond.
CSLB ; 90
Contractor's Bond amount
$15,000
Performance Bond
guarantees job will be completed according to building plans and specs. If work is unacceptable or project is abandoned, bonding company can hire another contractor to complete the work or settle for damages.
Payment Bond
Guarantee to the owner that no liens for materials or labor will be filed against the property.
Contract Bond
Guarantees both job completion and payment of all labor and materials.
Bid Shopping
When prime contractor discloses sub's bid to other subs to get them to lower their price.
Bid Peddling
When a sub whose bid wasn't chosen lowers bid in attempt to induce contractor to pick them instead.
The Listing Law
Applies to state and local public works projects.
Requires contractor to include in their bid name, place of business, and license # of each sub whose bid is .5% or more of total bid or $10,000 or more, whichever is greater, and the portion of work performed by each sub.
If contractor violates, public entity may cancel contract or assess penalty of not more than 10% of amount of subcontract involved. May also be subjected to discipline by CSLB.
If material change is made by public entity to its invitation to bid w/in 72 hours of bid closing, what has to happen?
Must extend deadline by no less than 72 hours.
Reasons public entity can give consent for contractor to substitute a sub.
Failure to execute contract
Insolvency
Failure to perform subcontract
Failure to furnish bonds
Clerical error
Unlicensed
Failure to perform work
Failure to pay prevailing wages
Not qualified
Public emergency or necessity (only after written finding)
If contractor requests substitution of sub on public job, public entity is required to___?
Give written notice to sub of request and reason for it by certified mail. Sub has 5 working days to submit appeal. Then a hearing will be held. Public entity must give written notice to sub at least 5 working days before hearing.
If contractor requests substitution of sub on public job due to clerical error, what must he/she do?
Give written notice to public entity, listed sub, and intended sub, within 2 working days after bid opening. Listed sub has 6 working days from bid opening to submit to public entity written objections. Contractor, listed sub, and intended sub then have 8 working days from bid opening to submit affidavits to public entity. Then a hearing is held.
For a contract to be formed:
Offer
Acceptance
Consideration
Legality
Contractors License Law
Must give owner a notice (on property with 4 or fewer units) informing them of contractor's license requirements and give info on how to check with board to determine status of license. Notice must be in capital letters in 10pt Roman bold font or in contrasting red in at least 8pt Roman bold font.
If license has be suspended or revoked 2 or more times w/in 8 year period, any disciplinary license suspension or revocation must be disclosed. Same font requirements.
Contract Notice must be included in at least 10pt letting owner know of requirements to become licensed by the board and address if further questions.
Swimming pool and home improvement contracts must include a Mechanic's Lien Warning. Informs owner of his/her and contractor's rights and responsibilities with respect to Mechanic's Lien Warning.
Must include general liability disclosure. Heading must be 14pt type with questions in at least 12pt, with comments in italics of at least 11pt.
20-day Preliminary Notice
Not a lien. Preserves right of subs/materials provider to record a lien on your property if not paid. Can be sent up to 20 days after the sub starts work or supplier provides materials.
Not used by prime contractor as already obvious they are working on owner's property.
Requirements for written contract
- Must be signed by all parties involved.
- Estimated start and finish of work.
- Name, address, license number, description of license classification of contractor.
- Name and registration number of home improvement sales person if applicable.
- Description of materials to be used, work to be done, equipment to be installed, and contract price.
- Statement of what constitutes substantial commencement of work to be performed.
- Whether you charge down payment. Must be $1000 or 10% of contract amount, whichever is less.
- In addition to down payment, if other payments made prior to completion of work, must provide schedule of payments to be made in dollars and cents. Contractor cannot accept payments that exceed the value of work or materials delivered up to that point.
- Notice to Owner that describes Mechanic's Lien Law and how it applies to owner/contractor.
- Statement that when payments are made for any portion of the work performed, contractor shall furnish a full and unconditional release from any claim or mechanic's lien for that portion of the work.
- General Liability disclosure statement.
- Workers Comp Insurance Notice
- Statement that owner may require contractor to post a performance and payment bond.
- Notice that it's a violation of Contractors License Law if work doesn't start within 20 days from approx start date of contract.
Salesperson must be registered as a home improvement specialist if ______________________?
Solicitation is done outside contractor's normal place of biz.
Salesperson registration exemptions:
- Individual licensed contractor
- Qualifying individuals
- Partners
- Officers of the Corp
- RME
- Salesperson who sells goods or negotiates contracts at fixed business establishment.
Penalty for acting as home improvement salesperson
Misdemeanor.
Penalty for violation of home improvement contract laws
Both misdemeanor and cause for disciplinary action. May result in fine of $100-$5000 and/or up to 1 year in jail.
If a false representation is made in a home improvement contract...
The owner may recover up to $500 plus attorney's fees plus damages.
Specific penalty for receiving a false completion certificate?
500-$5000
What info should change order include?
Description of work to be done; total price of change; total price of contract including change.
When should contractor collect for change order?
As soon as the change order is complete.
Home Solicitation Contract/Offer
Any contract/offer subject to approval for sale, lease, or rental of goods or services or both made OUTSIDE of the contractor's normal place of business in the amount of $25 or more.
Buyer may cancel home solicitation contract w/in how many days?
3 (any time prior to midnight of 3rd business day)
Notice of Cancellation
Must be included in Home Solicitation Contract with statement that is super long, but includes the fact that they can cancel w/in 3 business days and that the contractor then has 10 days to return any amount paid. Contractor has 20 days to pick up any materials delivered after which point owner can keep it.
When does Notice of Cancellation's 3-day window not apply?
Emergency repair work situations in which owner provides written and dates statements both waiving their right to cancel w/in 3 days AND describing the emergency situation.
In state of emergency declared by gov't, how many days does customer have to cancel contract?
7
In state of emergency declared by gov't, how much can contractor increase prices without it being considered price gouging? What is the penalty for price gouging?
10% (for a period of 180 days following declaration).
Misdemeanor punishable by county jail time NTE 1 year, or a fine of not more than $10k or both.
Service and Repair Contract
Must include all 4 following criteria: $750 or less; buyer initiated contract; Contractor doesn't sell buyer goods/services beyond those necessary to take care of the particular problem; no payment due until work is completed.
Once signed, owner has no right to cancel [Show Less]