California State License Board
BUSINESS AND PROFESSIONS CODE – BPC
An owner-builder is exempt from licensure, but there are limitations. A license is not required if:
- The owner-builder does the work himself or herself or through his or her own employees with wages as their sole compensation and the structure(s) is/are not intended for sale; or
- The owner-builder contracts with properly licensed subcontractor(s). (This exemption applies to the construction of a single-family residential structure and limits the number of structures intended or offered for sale to four or fewer in a calendar year.)
The number of structures is unlimited if the owner-builder contracts with a “B” General Building contractor.
A homeowner improving his or her principal place of residence is exempt from licensure if all of the following exist:
- The work is performed prior to sale;
- The homeowner resides in the residence for the 12 months prior to completion of the work; and,
- The homeowner has not taken advantage of this exemption on more than two structures during any three-year period.
The owner-builder exemption would apply to an individual who builds homes for resale under any of the following conditions:
- Licensed tradesmen are hired to perform all work on the project (provided no more than four structures per calendar year are intended for resale).
- A licensed “B” General Builder contractor is hired to perform and/or subcontract the completion of all work on the project. (No restriction on the number of structures completed per calendar year.)
- The owner-builder performs the work, all or in part, and resides in the completed structure for one year prior to resale. (This applies to not more than two structures in a three-year period.)
Is it against the law for an unlicensed individual to advertise construction services?
No, as long as the advertisement includes a statement that the individual does not hold a state contractor license (B&P Code §7027.2).
The following projects or individuals may be exempt from licensing:
- A project for which the combined value of labor, materials, and all other costs on one or more contracts is less than $500. Work on a larger project, may not be broken down to smaller amounts of less than $500 in an attempt to meet the $500 exemption;
- An employee who is paid wages, who does not usually work in an independently established business, and who does not have direction or control over the performance of work or who does not determine the final results of the work or project;
- Public personnel working on public projects;
- Officers of a court acting within the scope of their office;
- Public utilities working under specified conditions;
- Oil and gas operations performed by an owner or lessee;
- Owner-builders who build or improve existing structures on their own property if they either do the work themselves or use their own employees (paid in wages) to do the work;
- Sale or installation of finished products that do not become a fixed part of the structure;
- A seller of installed carpets who holds a retail furniture dealer’s license but who contracts for installation of the carpet with a licensed carpet installer;
- Security alarm company operators (licensed by the Bureau of Security and Investigative Services) who install, maintain, monitor, sell, alter, or service alarm systems (fire alarm company operators must be licensed by CSLB); and
Persons whose activities consist only of installing satellite antenna systems on residential structures or property. These persons must be registered with the Bureau of Electronic and Appliance Repair
LICENSE ISSUANCE 46. To whom is a license issued? A license may be issued to an individual, a partnership, a corporation, a joint venture, or a limited liability company (LLC).
The license belongs to the owner of an individual license, to the partnership, to the corporation as it is registered with the California Secretary of State, or to the combination of licensees who are party to the joint venture or LLC.
CHAPTER 1. BECOMING A CALIFORNIA LICENSED CONTRACTOR 23 47. If the ownership of a business changes, is the contractor license considered to be part of the purchase? No. With the possible exception of a corporation, the license is not considered to be part of the business.
If the corporation’s registration number assigned by the California Secretary of State remains the same, the same license can be used if the license is current and active. The officers and the qualifying individual do not necessarily have to remain the same, although a qualifying individual must be in place for the license to be valid. 48.
What is the difference between an active and an inactive license? The holder of an active license can contract for work in the classifications that appear on the license. While the license is active, the licensee must maintain a current contractor license bond, a bond of qualifying individual (if required), and workers’ compensation insurance coverage if employees are hired or if the licensee holds the C-39 Roofing classification.
If a license is inactive (currently renewed but on inactive status) the holder may not bid or contract for work. Neither the contractor bond nor the bond of qualifying individual is required for an inactive license. Also, a licensee does not need to have the proof of exemption from workers’ compensation insurance coverage on file with CSLB while the license is inactive (see Question 59). 49.
To whom does the term “qualifying individual” refer? A qualifying individual, or simply “qualifier,” is the person listed in the CSLB records who meets the experience and examination requirements for the license. A qualifying individual is required for every classification on each license issued by CSLB. 50. What is the qualifying individual required to do?
The qualifying individual for a license is responsible for exercising the direct supervision and control of the employer’s (or principal’s) construction operations. 51. Can the same person serve as the qualifier for more than one license?
A person may act as a qualifying individual for more than one active license only if one of the following conditions exists:
● There is a common ownership of at least 20 percent of the equity of each firm for which the person acts as a qualifier;
● The additional firm is a subsidiary of or a joint venture with the first; or 24 SECTION I. THE CALIFORNIA CONTRACTOR LICENSE
● The majority of the partners or officers are the same.
Even if he or she meets the above conditions, A PERSON MAY SERVE AS THE QUALIFYING INDIVIDUAL FOR NO MORE THAN THREE (3) FIRMS IN ANY ONE-YEAR PERIOD.
If a qualifier disassociates from the third firm, he or she must wait one year before associating with a new third firm. In most cases, a responsible managing employee (RME) can only act as a qualifying individual for one active license at a time. 52.
Who can be a qualifying individual? If you have a sole ownership license, your qualifier may be either a Responsible Managing Employee (RME) or you, the owner.
If you have a partnership license, your qualifier may either be one of the general partners (who shall be designated as the qualifying partner) or an RME.
If you have a corporate license, your qualifier may be either one of the officers listed in CSLB records for your license (who shall be designated as the responsible managing officer, or RMO) or an RME.
If you have a limited liability company license, your qualifier may be a responsible managing member, responsible managing manager, RMO, or RME. If your qualifying individual is an RME, he or she must be a bona fide employee of the firm and may not be the qualifier on any other active license.
This means that the RME must be regularly employed by the firm and actively involved in the operation of the business at least 32 hours per week or 80 percent of the total business operating hours per week, whichever is less.