Category Archives: Tips

Understanding the Contractor’s License Bond

In California, anyone who contracts to perform work that is valued at $500 or more for labor and materials must hold a current, valid license from the Contractors State License Board (hereinafter “CSLB”) and must carry a Contractor’s License Bond. Surety bonds are commonly used for this purpose, but cash or certificates of deposit may also be posted. All Contractor License Bonds must be implemented by an authorized surety company, in a manner up to the required standard of the CSLB and suitable to the State of California. Currently the CSLB requires that contractor’s bonds be in the sum of twelve thousand five hundred dollars ($12,500). At their discretion, the Board may require an applicant to carry a higher bond amount or separate bonds for contractors who have been disciplined, and the amounts of these bonds vary. The bond amount is not per job. It is the amount available for all jobs a contractor takes on during the life of the bond.

A surety bond is a contract in which a surety company promises the State of California that the contractor will comply with the Contractors’ State License Law. Generally speaking, a licensed contractor is obligated not to commit any violations of the Contractors’ State License Law. The law describes and identifies specific violations that the bond will cover and violations can result in disciplinary action against the licensed contractor. California Business and Professions Code § 7071.15 provides that failure to maintain a sufficient bond can result in a minimum penalty of suspension ranging from 60 days up to 1 year probation, and a maximum penalty of revocation. Additionally, if warranted the CSLB can impose an actual suspension of the license for 5 days or more, require contractors to retake the CSLB law and business examination if not taken within the past 5 years, impose educational course requirements, or require payment of CSLB investigation and enforcements costs.

If the contractor does not comply with the conditions of the bond, a consumer, supplier or an employee can file a claim against the bond. California Business and Professions Code § 7071.5 provides that the contractor’s bond shall be for the benefit of the following:
(a) A homeowner contracting for home improvement upon the homeowner’s personal family residence damaged as a result of a violation of this chapter by the licensee.
(b) A property owner contracting for the construction of a single-family dwelling who is damaged as a result of a violation of this chapter by the licensee. That property owner shall only recover under this subdivision if the single-family dwelling is not intended for sale or offered for sale at the time the damages were incurred.
(c) A person damaged as a result of a willful and deliberate violation of this chapter by the licensee, or by the fraud of the licensee in the execution or performance of a construction contract.
(d) An employee of the licensee damaged by the licensee’s failure to pay wages.
(e) A person or entity, including an express trust fund described in Section 3111 of the Civil Code, to whom a portion of the compensation of an employee of a licensee is paid by agreement with that employee or the collective bargaining agent of that employee, damaged as the result of the licensee’s failure to pay fringe benefits for its employees, including, but not limited to, employer payments described in Section 1773.1 of the Labor Code and regulations thereunder (without regard to whether the work was performed on a private or public work). Damage to an express trust fund is limited to actual employer payments required to be made on behalf of employees of the licensee, as part of the overall compensation of those employees, which the licensee fails to pay.

General requirements for bonds include the following:
•Bonds are NOT transferable – do not attempt to transfer a bond from
one license to another or from one qualifying individual to another;
•The business name and license number on the bond must correspond EXACTLY to the information in the records of the CSLB
•The license number on the bond of a qualifying individual must match that of the firm for whom the individual is to serve as the qualifying individual;
•Contractors bonds must be in the correct amount of $12,500;
•A bond of a qualifying individual must be in the correct amount of $12,500;
•The bond must have the signature of the attorney-in-fact ; and
•Bonds must be filed with the CSLB within 90 days of the effective date of the bond.

To avoid problems with the bonds filed for your license and to maintain your bonds, the following guidelines are helpful:
•Keep your required bonds, cash deposits, or bond exemptions current at all times;
•Renew your bonds promptly. Make sure that the effective date of a new bond is the same as the cancellation date of the old bond and allow for processing time;
•Only one bond is effective at any time. A second bond filed for the same period will cancel out the first bond;
•CSLB does not return any bond that has been accepted or processed for an active license; and
•Keep accurate records on your agent, surety company, bond numbers, effective dates, and terms of the bonds.

If a contractor receives notice from their surety company that a claim has been filed against his/her bond, the contractor should immediately contact the surety company to respond to the claim and explain his/her position. The contractor should also submit all documentation relevant to the claim. If a complaint is filed with the CSLB, the contractor should also respond immediately and provide the CSLB all of the requested information and documentation throughout the course of the investigation. Complaints filed with the CSLB and with surety companies are taken very seriously and a contractor’s cooperation is critical to a successful resolution.
——————————————————————————
1. See California Business and Professions Code § 7071.6.
2. The term attorney-in-fact is commonly used in the United States, to make a distinction from the term Attorney at law. An attorney-at-law in the United States is a lawyer—someone licensed to practice law in a particular jurisdiction. As an agent, an attorney-in-fact is a fiduciary for the principal, so the law requires an attorney-in-fact to be completely honest with and loyal to the principal in their dealings with each other. See Wikipedia @ http://en.wikipedia.org/wiki/Power_of_attorney .

STEPS TO BECOMING A LICENSED CONTRACTOR IN CALIFORNIA:What You Need To Know

What You Need To Know About Becoming A Licensed Contractor

Wondering how to become a Licensed Contractor or if you need to be Licensed? The following are the top questions we hear and answer guiding you and our students through becoming a Licensed Contractor successfully.

Who can become a licensed contractor?
A licensed contractor must be 18 years of age or older and have the experience and skills necessary to manage daily activities of a construction business, including field supervision, or be represented by a qualifying individual with the necessary experience and skills.

Who must be licensed as a contractor?
All businesses or individuals, who construct or alter any building, highway, road, parking facility, railroad, excavation, or other structure in California, must be licensed by the California Contractors State License Board if the total cost (labor and materials) of one or more contracts on the project is $500 or more. Contractors must be licensed before submitting bids.

How much does a license cost?
In addition to the financial requirements that must be met, it costs $250 for an original application fee (nonrefundable) and $150 for the initial license fee for one classification. The license must be renewed every two years. Currently, the renewal fee is $300.

How can you apply?
The Application for Original Contractor’s License is available at any office of the Contractors State License Board. It is also possible to order or download an application form from our Website, www.cslb.ca.gov, call the CSLB’s 24-hour automated information line, (800) 321-CSLB (2752), or write to the CSLB, at: P.O. Box 26000, Sacramento, CA 95826, to request an application.

What kind of experience is required?
At least four years of journey-level experience is required to qualify for the exam. Credit is given for experience as a journeyman, foreman, supervising employee, contractor, or owner-builder.

What are the other requirements?
All applicants must be fingerprinted and undergo a criminal background check before a license is issued at an additional cost to the applicant.

Is there an examination requirement for a contractor’s license?
Yes, the qualifying individual for a contractor’s license is required to pass law and trade examinations, unless he or she meets the requirements for a waiver. An examination notice will be sent at least three weeks prior to the examination date.

Is school necessary?
Although there are no educational requirements to qualify for a contractor’s license, it is highly encouraged to seek assistance from a school that specializes in helping students pass the Contractor State License Board Exam.

For more detailed information on becoming a California licensed contractor, see the CSLB publication, Blueprint
for Becoming a California Licensed Contractor or visit our Website, www.cslb.ca.gov or visit MakeMeAContractor.com for more information today.

CSLS iPad Contest Winner Awarded New iPad

CSLS iPad Contest Winner Karl Menjivar Awarded New iPad

Helping to build futures, today CSLS awarded student Karl Menjivar a New iPad. CSLS iPad contest ran throughout the month of October resulting in one very lucky winner. “I am so excited”, said Karl. “I didn’t expect to win.” Karl is pursuing his C-10 Electrical Contractors License. We wish Karl the best and congratulate him on his win!

Looking for how you too can leverage an iPad for your Construction business? Take a look at the top 5 ways an Apple iPad can help your Construction business save time, earn more clients, and simply make your professional life easier.

Top 5 Ways an Ipad can Help Your Contractor Business

1. In the field sketching / note-taking: Sketching out plans, dimensions and equations on the fly is an integral part of the construction process. For this, the iPad opens up a whole new world of possibilities for accuracy, convenience and organization. This tablet can make sketching a plan out as easy as touching the screen and drawing with your finger. Need a calculator? Flip on over to the calculator application. Need to jot a few notes? Flip on over to the notepad application. Then, when you are done – just click save, and move on with your day. There will most likely be tons of applications that you can download that might make the process even easier.

2. Contract reference: The iPad allows you to store and view your most important documents where you can reference contracts, accounts payable, receivables, as well as popular books. Need a on the job reference guide check out the ibooks option.

3. Portable credentials: How many times have you been bidding on a job and been asked to show some credentials? The iPad could easily turn into your on-the-road filing cabinet. Keep important documents like your certificate of liability, Contractors bond, Contractors license(s), worker’s comp – basically anything that you might need when out in the field or bidding on a project, all in one spot.

4. Mobile Professional Portfolio: Nowadays, people want proof of how good you are. They want to see photos, videos, maybe even testimonials of past customers. What better way to showcase yourself than with your iPad? Show customers slideshows of your work, your website, videos … get creative! Apple is renowned for it’s products’ abilities to create cool looking presentations, so take advantage of it and get some more jobs!

5. Digital blueprints: Many contractors have gotten into the habit of bringing their laptops on the job to reference digital blueprints and plans. Well laptops, the iPad has just one-upped you. Already with Apple’s smaller touch interfaces, you can zoom in to minute details, rotate images, even edit on the spot – all with your fingers. And it’s fast! We can only imagine the cool new ways that a larger screen will allow you to interact with and share your plans on the job site. Paper is indeed a thing of the past.

View more on our website at http://www.contractorslicensingschools.com/contractor-industry-news.cfm(List adapted from Center Networks, by Johnnie Munger)

11 Best Construction Books to Read in 2010 and 2011

Top 10 Construction Books to Read in 2010 & 2011

Here at CSLS our Instructors are often times asked for helpful tips on how to run a successful Construction business once a Contractor has earned his/her Contractors License. We love this question and typically will point our students in several directions to obtain the best tips. What we also do is suggest that our students follow best practices in developing a successful construction business. In doing so we found that many successful entrepreneurs maintain ongoing training and development to continuously sharpen the saw (no pun intended). In fact, an old quote says “Books are the quietest and most constant of friends; they are the most accessible and wisest of counselors, and the most patient of teachers.” With that said we have found most of our best book sellers are those that provide current Construction industry news, best practices, and tips. The construction profession is fortunate to have a multitude of counselors who are willing to share their insights with their peers. Above is Contractors State License Services/CSLS’ selection of the best books to read for any construction professional or for those that aspire to enter the construction profession. We have diligently outlined books to help you improve your construction business, skill-set, understanding, and increase your customer’s value in your construction business. The top 10 books plus the bonus book aims to provide valuable ideas and tips if applied correctly will help you increase your construction business effectiveness.

Take a look at great books such as Blue Print Reading, Code Check Complete, Contractor’s Survival Guide, Construction Forms & Contracts, and Construction Estimating Reference Data.

Find out more at our Bookstore!
http://www.contractorslicensingschools.com/online-store-books.cfm

Looking for A Marketing Slam Dunk: Advertising 101…Learn The Basics About Advertising

Learn the Marketing Slam Dunks for Every Contractor Business

Advertising is a form of communication intended to persuade an audience (viewers, readers or listeners) to purchase or take some action upon products, ideals, or services. It includes the name of a product or service and how that product or service could benefit the consumer, to persuade a target market to purchase or to consume that particular brand. Commercial advertisers often seek to generate increased consumption of their products or services through branding, which involves the repetition of an image or product name in an effort to associate related qualities with the brand in the minds of consumers.

Most contractors know that they must include their license number on all advertising. But do you know what that really means and what the laws really say? Business and Professions (B&P) Code Section 7030.5 states that all licensed contractors are required to include their license number in “(a) all construction contracts; (b) subcontracts and calls for bid; and (c) all forms of advertising, as prescribed by the registrar of contractors.” The Code further provides that failure to comply with this requirement can result in a fine between $100 and $1,000 for a first offense.
The following tips for advertising will not only help you comply with the law, but will also help you plan your marketing strategies for success as a licensed contractor.

1. Include your Contractors license number in anything that might be considered as advertising.
Examples include: newspapers, radio, television ads, your business card, any contract proposal, lettering on every one of your commercially registered vehicles (See B&P Sections 7029.5 and 7029.6), signs or billboards identifying your company as a contractor, your company’s website, any soliciting brochures or pamphlets, any clothing or promotional items that include your company name and logo; and any directory listing that states or implies you are looking for work or services which would require a contractor’s license.

2. Don’t use false or misleading advertising, or advertise a price that you don’t intend to honor.
B&P Section 7161 makes it a misdemeanor “for any person to ….[use] false, misleading, or deceptive advertising as an inducement to enter into any contract for a work of improvement, including, but not limited to, any home improvement contract, whereby any member of the public may be misled or injured.”

3. Don’t advertise to do work that you are not licensed to perform.
Contractors who advertise to do work beyond the scope of their license are subject to a fine of not less than $700 and not more than $1,000, plus any other punishment established by the Registrar of Contractors or a court. Such offenses are deemed misdemeanors according to B&P Section 7027.1.

4. When advertising about asbestos removal services, be sure to include your asbestos certification and registration numbers along with your business name.
Contractors must list their asbestos certification number issued by the Board and the registration number required under Labor Code Section 65015.5. The Registrar will issue a notice to comply if either of these numbers are omitted. If a contractor fails to comply after receiving notice, a citation will be issued as well as potential fines ranging from $100 to $1,500.

5. Don’t advertise about bonding.
Contractors are prohibited from including any reference to the contractor being “bonded” in any advertisement, or on any company “paperwork” that could reasonably be considered “advertising”, if the bond being referred to is the standard license bond that all California Licensed Contractors must have. B&P Section 7071.13 provides that any such references or presentments are grounds for discipline and/or suspension of the contractor’s license.

6. Be VERY careful when advertising as “insured”.
CA licensed contractors cannot advertise that they are “insured” unless they state what type of insurance it is. Any reference to “insured” in your company‘s advertising must specifically state the type of insurance you are referencing. Failure to properly identify the type of insurance in the advertisement is cause for discipline pursuant to B & P Section 7027.4. If for example you want to advertise that you carry both commercial general liability insurance and worker’s compensation insurance, then it should be stated as such, “We carry Commercial General Liability and Worker’s Compensation Insurance.”

Knowing the law can help keep you out of trouble with the CA State Contractors Licensing Board and prevent legal problems that can arise from mistakes.

1 See Wikipedia @ http://en.wikipedia.org/wiki/Advertising .
A misdemeanor is a crime punishable by imprisonment in a county or city jail or detention facility not to exceed one year. Except where the law specifies a different punishment, a misdemeanor is punishable by imprisonment in a county jail not exceeding six months and/or a fine not exceeding one thousand dollars. See California Penal Code Section 19.

CSLB Takes the Cake for Sting Targeting Illegal Operators + Ten Reasons to get your License

CSLB Web Release www.CSLB.ca.gov shares the latest news regarding the legal necessity for Contractors to operate with a California Contractors License. Here at Contractors State License Services our mantra is to share the news and events that effect our prospective students and students. Just this month alone we continue to see more and more news of targets on illegal operators. In this case the CSLB stings another ten for violating California contracting laws. These news bites further illustrate the need for a valid Contractors License.

CSLB Takes the Cake for Sting Targeting Illegal Operators
Ten headed to court for violations of California contracting laws

SACRAMENTO – Members of the Contractors State License Board (CSLB)’s Statewide Investigative Fraud Team (SWIFT) received a torte and a hearty thank you from a licensed contractor for a sting operation conducted in Monterey last week. One of the ten arrested suspects said he worked for the grateful licensee, which was not the case. The sting operation, on September 30, 2010, was conducted with assistance from the Monterey Police Department and Monterey County District Attorney’s Office.

During the operation, SWIFT investigators posed as homeowners who were looking for a contractor to do fencing work on their home. Those who bid more than $500 were arrested and issued an issued a Notice to Appear (NTA) in court for contracting without a license. California law requires all home improvement jobs valued at greater than $500 for labor and materials be undertaken by a state-licensed contractor. Those without licenses may advertise their services and work on jobs valued at less than $500, but their ads must state that they are not licensed. Licensees are required to put their license number in all ads. Some of those who will be going to court will also face charges of soliciting an excessive down payment. State law prohibits asking for down payments greater than $1,000 or ten percent of the contract price, whichever is less. There is an exception for about two dozen contractors who purchase special consumer protection bonds that are noted on CSLB’s website.

“Many consumers don’t realize the risks they take when they let an unlicensed operator into their home,” said CSLB Registrar Steve Sands. “Those who are violating the state’s license laws are also not complying with important consumer protection requirements, such as purchasing workers’ compensation coverage for their employees.”
State law requires licensed contractors to carry workers’ compensation coverage for all employees. That ensures the homeowner isn’t stuck with medical bills if a worker is injured on their property.

Top ten reasons we hear for getting a Contractors License:
1. To legally operate in California
2. To protect yourself
3. To gain respect from your colleagues and prospective customers
4. To be competitive
5. To be self employed
6. To gain prestige as a professional and avoid the negative connotation that follow unlicensed contractors
7. To enter into larger contracts & advertise without being worried
8. To avoid being arrested and fined by the State
9. To network with other licensed contractors for more business
10. To be able to legally collect for work performed

View A CSLB Sting Operation Video here!
http://www.facebook.com/pages/Contractors-State-License-Services/137797582916767?v=wall

FIX THINGS BEFORE THEY’RE BROKEN?

Helpful Tips from IPSSA

By Ray Arouesty/ IPSSA Aug 2010 Newsletter
Ray Arouesty is an attorney at law and president of Arrow Insurance Service, IPSSA’s insurance provider since 1988.

My client had been servicing commercial pools for more than ten years. On a day much like any other, he received a phone call informing him that water from the pool filter was spraying into one of the apartments. The problem was clear: the filter O-ring had split, allowing a stream of water to be directed toward the building. My client was shocked when the client’s homeowner’s insurance company demanded reimbursement for more than $100,000 in water damage. After all, he was only the service technician. As it turns out, my client never changed the filter O-ring and stated that he never even checked the O-ring for wear or deterioration. Had he done so, the damages probably would have been avoided. A pool service tech will be held responsible for damages caused by his failure to exercise ordinary care. We routinely change the brake pads on our cars before they fail because we know that they will eventually fail if we don’t. The same logic applies to swimming pool equipment. Service techs should have a practice of routinely checking wear on parts and advising their customers before these items break. This includes not only Orings, but plastic hoses and seals as well. It takes little effort and you may be responsible for the resulting damage if you fail to do so.

Page 10 The IPSSAN August 2010
Coverage Corner
Fix things before they’re broken?

For additional information visit www.MakeMeAContractor.com C-53 License, C-61/D-35

CSLB Sting Operations How To Not Get Stung

Daily we see reports of the CSLB’s Statewide Investigative Fraud Team (SWIFT) sending unlicensed operators to jail. Just recently in July 2010 CSLB stings stung 13 illegal operators, including violators of state energy-saving programs. We thought it best to share an overview of what the CSLB -Contractors State License Board, considers an illegal contractor and share what penalties these operators are potentially subject to.

According to the CSLB…

Who is considered an illegal contractor?

It is illegal for an unlicensed person to perform contracting work on any project valued at $500 or more in labor and materials. Besides being illegal, unlicensed contractors lack accountability and have a high rate of involvement in construction scams. They also are unfair competition for licensed contractors who operate with bonds, insurance and other responsible business practices.

What is the CSLB doing to stop illegal activity?

The Statewide Investigative Fraud Team (SWIFT) is set up to monitor and combat illegal activity. SWIFT has teams around the state that conduct stings on a regular basis and sweep construction sites.

SWIFT also conducts joint operations and sweeps with other state agencies dedicated to combating underground activity. The partnerships with other agencies raise the penalties and fines for violators by increasing the scope of violations to include taxes, illegal payrolls, and workers compensation and worker safety.

CSLB :http://www.cslb.ca.gov/Consumers/ReportUnlicensedActivity/WhatIsIllegalContractorActivity.asp

Penalties & Fines

“If you’re caught contracting without a license, you will likely have to go in front of a judge to answer to misdemeanor charges, which carry a potential sentence of up to six months in jail and/or a $500 fine, and a potential administrative fine of $200 to $15,000. If you get caught again, the penalties get stiffer. You could face a mandatory 90 day jail sentence as well as a fine of 20 percent of the contract price of the work performed, or a $4,500 fine.”, according to the CSLB.

Don’t get stung! Protect your future:

Get Licensed this is critical and the law
Do not engage in contracting work on any project valued at $500 or more in labor and materials
Advertised accurately

View Video of CSLB Sting in action

[youtube=http://www.youtube.com/watch?v=9-61eZ9EH7U]

Gain The Competitive Edge

As the Construction market landscape continues to be more competitive now more than ever it is important to obtain a Contractor’s License and or additional licenses to obtain a competitive edge. With limited dollars to spend on home improvement and construction consumers are compelled to hire the best Contractor they can find and are looking for the most cost effective opportunities.

Many Consumers are not taking a chance at hiring an unlicensed Contractor for fear of potential additional cost to their projects. Consumer skepticism includes fear of unlicensed operator’s not carrying adequate insurance coverage necessary to protect them from potential claims. Unlicensed operators do not carry workers’ compensation insurance for their employees as required by California Labor Code or the contractor license bonds required by the state’s Business and Professions (B&P) Code. In this case, should a problem arise the homeowner may be liable if a worker is hurt on their property and without financial recourse if something goes wrong with the project. Many consumers want to avoid costly pitfalls such as these by hiring an experienced Licensed Contractor. For example “badly installed heating or air-conditioning units cost California families money, harm the state’s ability to meet important energy and environmental goals, and can even make people sick,” said CSLB Registrar Steve Sands. Additionally, Failure to obtain a building department permit and have proper follow-up by a California Energy Commission-certified inspector could result in additional expense and risk for the homeowner. A deficient HVAC system may affect a property’s resale value, and could harm the state’s air quality and environment. Inspections ensure that a system is safe, will produce lower utility bills, and help the state and consumer meet energy-efficiency goals. [CSLB]

B&P Code also requires licensees to place their license number in all advertisements. Unlicensed contractors can advertise and perform projects valued at less than $500 but must state in their ads that they are not licensed. A Licensed Contractor in this case would be a more competitive candidate.

The Contractors State Licensing Board works diligently to protect California Consumers from costly mistakes. Recently, four unlicensed operators contracting to replace the air-conditioning unit of a Rancho Bernardo condominium were among the 13 snared for violating California home improvement contracting laws during an undercover contractor sting operation on July 28 and 29, 2010. The Contractors State License Board’s (CSLB) Statewide Investigative Fraud Team (SWIFT) was assisted by the San Diego Police and City Attorney, San Diego County District Attorney, and the California Department of Insurance. SWIFT members posed as homeowners seeking bids for the installation of a new air conditioner, and for plumbing, painting, and tile work. “Stings like this help keep California consumers from making an expensive mistake.”

Several industries and occupations also require or prefer licensed contractors which equates to a competitive landscape:

How might you gain a competitive edge?

 Get Licensed

 Network with other contractors for more business

 Continue your education with seminars and certification programs

 Advertise effectively

 Create a Corporation or DBA to protect your company

 Network and get connected via social media outlets such as Facebook, LinkedIn, Twitter

 Price competitively

 Do the best work and build a stellar reputation

 Ask for referrals

Construction Math Made Easy

30 Percent of Students Report Having Math Anxiety

30 percent of students report having math anxiety. We believe those statistics may be even higher considering most that struggle with math avoid it like the plaque. Therefore the percentages likely are a much higher percentage rate.

“When you’re building a house, you would never think of trying to put up the second floor before the first floor. Building is a sequential process. The same is true in math, each concept builds on the ones that came before. In history, you can understand the Depression pretty well even if you didn’t study World War I. But in math it’s different, you need to understand factoring very well or you won’t be able to solve equations.

This means that if you’re strapped for time, the one course that’s most dangerous to let slide is your math course. With other courses, if you don’t understand day 11 you can probably follow the lecture on day 12. With math, you have to understand day 11 or you’ll likely be lost in day 12. Construction Math is no different.

The moral is that you need to stay current. If ever you don’t understand something, get help on it right away. Otherwise you’ve just knocked away the first floor of your house, and you know what that will do when you try to put up the second floor. ” [Stan Brown, Oak Road Systems]

Break the anxiety of Construction Math by:

1. Being prepared

2. Seek qualified instruction

3. Practice Practice Practice

4. Test your skill-set

5. Keep a positive frame of mind

Review the video file and contact us for more tips!

Make Me A Contractor – Blog

Building Your Future Since 1985