Is your company licensed? Did you know that contractors are required to be licensed and bonded in California? Perhaps you do know thatcontractors are required to be licensed, but you may not be aware of who, exactly, is considered a contractor under the law. For example, it might surprise you to learn that in California, not only are general contractors and electrical, plumbing and HVAC subcontractors required to be licensed, but so are commercial tree-pruners, fire protection system installers, carpet installers, painters, masons, excavators, scaffolding installers, and many other construction service providers.
Perhaps you have thought, “Well, I’m just a small business, so no one will really care if I’m not licensed.” Or maybe you’ve lost track of your license expiration date, thinking that you can just renew it if and when you find out it has expired. In reality, there can be serious consequences in you are not licensed when work commences. If you are unlicensed on the first day of work on a project, and the customer later refuses to pay for work performed or materials furnished, then:
A) You will not be allowed to file suit to recover the balance owed;
B) You will not be allowed to file a lien claim to secure the balance owed; and
C) If the property owner or general contractor discovers that you were unlicensed, even if only for part of the time you worked on the project, then he or she can file suit against your company to recover all sums previously paid, even if you did a first-rate, on-time, under-budget job!
The only way to avoid this outcome is to get licensed and make sure your license does not expire. If you have entered into a contract to perform work, GET LICENSED BEFORE YOU START WORK. Keep track of the license expiration date. Remember that if you have already begun working on a project without a license, you likely have no protection or legal remedies in the event of a dispute or failure to pay for services rendered.
If you would like additional information about this topic, or would like to discuss other contracting issues, please use the contact form on our site or call Ted Levy directly at 206-626-5444. Please remember that this information is provided as a courtesy.
CA Bus. & Prof. §§7026, 7026.1, 7026.3, 7026.12.
Banis Restaurant Design, Inc. v. Serrano , 36 Cal.Rptr.3d 532, 134 Cal.App.4th 1035 (App. 3 Dist. 2005); MW Erectors, Inc. v. Niederhauser Ornamental and Metal Works Co., Inc. 30 Cal.Rptr.3d 755, 36 Cal.4th 412, 115 P.3d 41 (2005).
This article should not be construed as legal advice. Contractors are advised to seek legal counsel before relying on any of the information contained in this article. Levy – von Beck does not accept responsibility or liability for any loss that may be incurred as a result of reliance on the above information.