Quickstart Guide To California Construction Project Deposits

As a contractor in California, knowing the ins and outs of how to handle deposits for your construction projects is an utterly crucial skill.

First of all, a deposit is a legal obligation on most projects, but beyond that, deposits serve as an essential mechanism of the construction process that functions as a shield for both the contractor and the client.

But how do deposits work? Do you need a deposit on your construction project? How do you go about determining and handling deposits? Let’s find out.

What is a Deposit?

A deposit in any industry is a guarantee of work. It’s a legal mechanism that is designed to encourage good faith agreements between both parties.

In practice, a deposit functions by a client and the service provider agreeing on a small percentage of the total project cost that is paid upfront. Usually this is a small amount – like 10-15% of the total project cost.

This amount protects the homeowner by ensuring they don’t spend a huge amount of money on a service provider that doesn’t provide the service they agreed upon. It also protects the service provider by ensuring that they are monetarily rewarded for taking on a project – even if the client ultimately backs out of seeing the project to completion.

In this way, deposits benefit both parties. Clients feel safe that they’re not losing a big chunk of money on an unscrupulous provider, while service providers know they are going to be paid at least a small amount for the work done on the project.

Deposits encourage good faith bargaining between both parties, creating a safety net to protect both parties’ interests.

How Deposits Work in Construction Projects

When it comes to construction, deposits are relatively straightforward. These are assurances guaranteed ahead of time, usually with a percentage of the entire project being paid to the contractor even before the first trench is dug or the first nail is hammered.

The size, scope, and payment terms of a deposit are influenced by the scale and nature of the project. Smaller projects have more flexibility with a deposit, while larger projects involving multiple contractors or firms may have multiple layers of deposits overlapping at the same time.

A deposit not only protects contractors against nonpayment by clients but it also ensures that initial startup costs – like materials and labor – can be paid for to get the ball rolling. Deposits, then, also function as early funding on a project to make sure it can get completed on time.

In construction, a deposit is a preliminary payment made by the client to the contractor, or by the general contractor to the subcontractor.

Legal Requirements for Deposits in California

When it comes to the legal requirements in the state of California, there’s a number of different frameworks for deposits, spanning the various areas of construction, various levels of complexity, and the various stages of a project.

The General Legal Framework For Construction Deposits In California

Home Improvement Projects: Home improvement projects are one of the few areas of construction that have stringent contractual obligations set forth by the CSLB. California limits deposits for home improvement contracts to $1,000 or 10% of the project cost, whichever is less. This is a hard-and-fast rule that cannot be circumvented.
Commercial Projects: Unlike home improvement projects, there is no specific legal cap on deposits for commercial construction projects in California. It’s up to the individuals and businesses involved in commercial construction to determine their own deposits.
Other Projects: Like commercial projects, there are no deposit requirements for other types of construction projects, like municipal or large-scale infrastructure projects, which are often defined by specific contract terms, government regulations, or funding agreements.

Contractual Requirements

Progress Payments: California law mandates that contracts must detail the schedule of progress payments, clearly outlining each phase of work, services provided, and associated payment amounts – including deposits! Contractors cannot legally collect payment for work not completed or materials not delivered. However, they can require a downpayment, which is just another term for a deposit!
Change Orders: The law requires that any extra work or change orders be documented in writing and signed by both parties before commencement. This documentation should include the scope, cost changes, and impact on the payment schedule.

Mechanics Lien Warning

A crucial aspect of the contract is the mechanic’s lien warning, which works hand in hand with a deposit to ensure that a project is completed according to the contract.

A Mechanics Lien warning informs clients about the potential for liens against their property by unpaid subcontractors or suppliers, despite full payment to the prime contractor. It emphasizes the importance of preliminary notices from subcontractors and material suppliers.

Check out our article on contractor’s liens, and mechanic’s liens for California contractors for a deeper dive into these legal mechanisms.

Responsibilities and Consequences

Compliance with Deposit Limits

Contractors must comply with the deposit limits and progress payment regulations. Failure to adhere to these rules can lead to legal consequences, including disputes and potential litigation.

There’s only one legally enforceable deposit limitation in California – home improvement contractors cannot demand more than $1000 or 10% of the project cost, whichever is less. In this case, the State of California can hold the contractor legally liable for overstepping this law.

All other instances of deposits in the construction industry are not a civil, not criminal liability – which means it’s up to the individual or business to take the issue to court to receive compensation.

What Happens If You Don’t Have A Deposit?

If you don’t have a deposit on your construction project, you may or may not be in big trouble.

If you don’t have a deposit, you’re not legally in trouble, but you put yourself at significant risk of eating some serious costs without one. Without a deposit, the client can simply cancel the project at any time and you have basically no way to get your money back for things like materials and labor.

The reality is that you should not take on any construction project, no matter how big or small, without a deposit. It exists to protect you and the client, so there’s really no reason not to include one.

So…Do I Need A Deposit To Do Construction?

Do you need a deposit?

Yeah, you do. We can say that any contractor working in any industry, niche, or area of expertise in California should have a deposit in every single contract they sign with a client.

At the end of the day, there’s absolutely zero reason not to. It provides clarity to both the client and the contractor, while also protecting both parties financially in the case of non-fulfillment of a contract for a construction project.

It’s simply a no-brainer – get some money upfront and protect your business from losses!

Is a Subcontractor Liable for Damages?

Construction liability in general can be a difficult and confusing thing to nail down – it’s dictated by miles of paperwork and mountains of bureaucratic language that makes it impossible for the average Joes like us to understand.

Even worse, as construction projects become more complex, more subcontractors are required to take on the specialized work required in today’s world of hyper-complicated, highly bespoke construction. And the more people you bring on a job site, the higher the probability that something will go wrong.

When something does go wrong, you need to know how to fix it, and that first means establishing liability – which makes sense, as you need to establish liability before you can recover damages.

So, are subcontractors liable for damages on a construction job? The answer is…well, it depends. Let’s take a deeper look.

The Subcontractor-Contractor Relationship

In California, the relationship between subcontractors and contractors is complex and governed by specific laws and contractual agreements, but in general, contractors hire subcontractors to do specific, specialized construction work on their job sites.

The contractor – usually a general contractor in California, but possibly a foreman or a project manager – is responsible for finding the right person for their specialized task.

The subcontractor and contractor work hand-in-hand to get the work done. The general contractor establishes the scope, the process, and the schedule to get the work done – then the subcontractor is responsible for delivering as per the contract.

The subcontractor may work independently, but ultimately, they report to the general contractor, who is responsible for verifying and approving the work. When the job is completed, usually the general contractor is responsible for making sure the subcontractor is paid.

In some instances, a subcontractor may subcontract certain jobs out to other subs. While it’s not a general contractor hiring, the chain of command and liability is still the same.

Construction Liability in California

Who is liable for construction issues in California? What legislation defines construction liability?
There’s a series of frameworks that stipulate the entirety of construction liability law in California.

Key Aspects

Contractual Agreements: Govern the scope of work, payment terms, and other conditions.
Worker Classification: The California ABC test, established by Assembly Bill (AB) 5, is used to differentiate between employees and independent contractors on a state level, but in construction in particular, whoever is hiring is classified as a contractor, while anyone being hired is a subcontractor.
Legal Penalties: Refusal or inability to cover the damages from construction defects can lead to even bigger penalties as clients seek to recover losses.

Key Legislation

Assembly Bill 1701: Makes general contractors responsible for unpaid wages and benefits of subcontractors’ employees. Contractors have the right to inspect subcontractors’ payroll records to ensure compliance.
Liability Limitations: In cases of defective construction, damages are strictly limited by law. The measure of damages is typically either the cost of repair or the diminution in value of the property, whichever is less. Basically, contractors have to cover the cost of poor delivery.

Legal Responsibilities For General Contractors

Regular financial reviews of subcontractors.
Ensuring subcontractors comply with wage and benefit obligations.
Potential changes in contracting practices to mitigate risks.

General Contractors’ Liability for Subcontractor Damages

When it comes to subcontractors’ construction defects, whether or not they’re liable for subcontractors’ construction defects really depends on the situation. In general, these are the things that dictate liability:

Contractual Liability: The general contractor and subcontractor relationship is typically defined by a contract. This contract often includes clauses related to indemnification, where the subcontractor may agree to indemnify the general contractor against certain types of liabilities. However, the effectiveness of these clauses can depend on the specific language used and the legal interpretations of such agreements.
Vicarious Liability: In some cases, general contractors can be held vicariously liable for the acts of their subcontractors. This can occur when the subcontractor is deemed to be an agent of the general contractor, which often depends on the degree of control the general contractor has over the subcontractor’s work. However, because subcontractors are usually independent entities, this type of liability is less common in construction.
Direct Liability: General contractors can also be directly liable for damages caused by their subcontractors if it is found that the general contractor was negligent in some way. This could include situations where the general contractor failed to properly supervise the subcontractor, did not hire a competent subcontractor, or if the general contractor was involved in the activity that caused the damage.

While they are not directly liable for penalties or liquidated damages against the subcontractor, they are responsible for the unpaid wages, benefits, and interest. This responsibility necessitates a change in how general contractors manage and audit their subcontractors.

What Are Subcontractors Liable For?

Subcontractors are liable for their own taxes, liability insurance, and workers’ compensation coverage. They are responsible for the quality of their work and may be liable for damages caused by their negligence or contractual breaches.

In cases of defective construction, subcontractors can be held liable to the owner, with damages limited to repair costs or property value diminution. However, it’s dictated by the three types of liability we covered in the previous section.

Pursuing Damages from a Subcontractor

If a general contractor needs to pursue damages from a subcontractor, they must:

Review the contractual agreement for breach clauses.
Gather evidence of the subcontractor’s failure to comply with the agreement.
Take legal action based on contract law and specific construction laws in California.

Protecting Against Unscrupulous Subcontractors

To protect against hiring unscrupulous subcontractors, general contractors should:

Conduct thorough background checks.
Review the subcontractor’s financial stability and past project history.
Ensure clarity in contracts regarding responsibilities and liabilities.
Regularly monitor the subcontractor’s compliance with laws and contract terms.

Situations Where Subcontractors Are And Are Not Liable

Here are some of the main areas when it comes to general contractor liability when dealing with subcontractors.

Defective Construction Work
- Subcontractor Liable: If a subcontractor performs a specific construction task (like plumbing or electrical work) and the work is faulty or doesn’t meet the contract’s specifications, the subcontractor is typically liable for the damages caused by this defective work.
- Subcontractor Not Liable: If the defect is due to design errors provided by the general contractor or another party, the subcontractor may not be liable, provided they followed the design specifications accurately.
Injury on the Job Site
- Subcontractor Liable: If an employee of the subcontractor or a third party is injured due to the subcontractor’s negligence or failure to adhere to safety standards, the subcontractor can be held liable for these injuries.
- Subcontractor Not Liable: If the injury is caused by the general contractor’s negligence or by hazards outside the subcontractor’s control or work area, the subcontractor may not be held liable.
Non-Payment of Subcontractor’s Employees
- Subcontractor Liable: Under California law, specifically Assembly Bill 1701, subcontractors are directly liable for paying their employees. If they fail to do so, they can be held responsible for the unpaid wages and benefits.
- Subcontractor Not Liable: If the general contractor fails to pay the subcontractor, which in turn affects the subcontractor’s ability to pay their employees, the liability may shift to the general contractor, especially if there’s a breach of contract.
Environmental Damage
- Subcontractor Liable: If a subcontractor’s actions lead to environmental damage, such as improper disposal of hazardous materials, they can be held liable for the cleanup costs and any related damages.
- Subcontractor Not Liable: If the environmental damage is due to factors beyond the subcontractor’s control or due to adherence to the general contractor’s specific instructions, the subcontractor might not be held liable.
Project Delays
- Subcontractor Liable: If a subcontractor fails to complete their portion of the project on time, and this delay is solely due to their mismanagement or lack of resources, they can be held liable for any damages resulting from the delay.
- Subcontractor Not Liable: If the delay is caused by factors such as change orders from the general contractor, unforeseen site conditions, or delays in other parts of the project not related to the subcontractor’s scope of work, the subcontractor may not be liable for these delays.

Conclusion

In California, both general contractors and subcontractors have specific responsibilities and potential liabilities. Keeping strict track of these liabilities and responsibilities for operating within the legal framework and ensuring a smooth construction process.

As a general contractor or a homeowner signing on with a subcontractor – the best thing you can possibly do for yourself is to outline liability specifically and comprehensively in the contractor. That way, you have it in writing – so you have a legal leg to stand on if something goes wrong.

The 10 Most Common Permits for Construction Work in California

You could be just getting started with your career in construction or you could be a seasoned pro – but your knowledge of building permits, codes, and regulations should always continue to grow.

As you do more work, you’ll naturally become familiar with your local laws, but it’s also critical that you know some of the basics in a general sense.

Today, we’ll start with permits! Yeah, we’re excited, too.

These permits will no doubt come up again and again as you work. It may be a good idea to bookmark this page as a reference to make sure all your construction projects are safe and in accordance with local regulations.

Building Permits

Do I need a building permit for my project? A quick review of the California Building Standards Code will remind you that you cannot erect, construct, enlarge, alter, repair, move, improve, remove, convert, or demolish any building without a building permit.
The California Department of Housing and Community Development website could come in handy if you ever need to apply for a building permit online.

Electrical Permit

You’ll need an electrical permit anytime you install, alter, repair, replace, or remodel an electrical system. There are a few cases that are exempted by the California Electric Code or by a County Ordinance, but it is safe to assume you’ll need this permit in most cases.
When in doubt, check local guidelines for electrical service upgrades and related contractor work.

Plumbing Permit

While there are so many different kinds of plumbing services for general contractors to be aware of, any sizable plumbing project or plumbing repair will require a plumbing permit.
The Uniform Plumbing Code and local regulations will help you install, repair, and replace plumbing fixtures and piping safely and legally, but make sure you are familiar with your local regulations.

Mechanical Permit

This permit works hand-in-hand with other permits for certain construction projects. You’ll need a mechanical permit before doing any ductwork or heating or cooling work.
Permit advisors – like Permit Advisors – can help you plan your project according to local building and safety standards.

Grading Permit

If any of your construction work involves changing the topography of a property, perhaps cutting or filling space in the earth, you’ll need a grading permit.
Class C-27 license-covered landscaping work will often require grading permits. Think about all the hillside construction, flood zone mitigation, and seismic hazard zone mitigation you see happening in California. That’s all grading.

Demolition Permit

While it’s true that different jurisdictions have supplemental regulations for the demolition category of construction work, overall you can be sure that you’ll need special permission before tearing down a structure or performing any kind of deep excavation.
According to the Department of Industrial Relations, you’ll also need to notify utility companies before demolition so they can accommodate the work by either shutting off or rearranging utility services to protect them from damage.

Environmental Permit

The state of California is sincerely invested in environmental conservation efforts, so wherever your construction projects risk affecting water quality, air quality, protected species, and their habitats, your work will involve environmental permits.
The California Department of Fish and Wildlife is a great resource for keeping up with the latest environmental reviews and permitting, and this Environmental Permitting Guide might also help you out as well.

Zoning Permit

Local zoning regulations dictate how land can be used and which kinds of structures can exist where. It sounds simple, but it can get pretty complicated, especially when you look back at our post about mixed-use construction and the zoning problems involved.
Check with your local planning department and review the standards laid out by the California Department of Housing and Community Development to stay informed about land-use rules you might need to know.

Special Use Permit

If a construction project involves a temporary structure, a special event, or some kind of unusual land use, that’s where special use permits may come up.
These permits exist for the sake of flexibility when certain plans come up within certain zoning districts. You can apply for a special use permit in California right here.

Fire Department Permit

Depending on a construction project’s size or scope, permits and clearances from your local fire marshal might be necessary. If you’re a C-16 licensed Fire Protection Contractor you know these permits well.
Local fire safety measures will keep you, your team, and your clients safe throughout construction. If you do not obtain the necessary permits, you could be looking at some big fines, major delays, or even a full work stoppage.

In Summary

Of course, there are many more permits you’ll come across throughout your contractor days, but the permits listed above are the ones that will come up repeatedly.

The Contractors State License Board will have all of the information you need when it comes to construction permits in California. Check there and also check with the local governing bodies responsible for the area where you work as regulations and permit requirements will vary depending on your location.

Can I Build My Own Home in California?

Many ask the question. But are you ready to go the distance?

Frankly, we don’t recommend most people build their own homes, but if you have the skills, the savvy, and the dogged determination required, maybe you can pull it off and build your own home in California.

We’re here to help – we see the vision! But it’s only fair to tell you to expect a long road with lots of (possibly costly) bureaucratic red tape along the way.

Here’s how you build your own home in California.

Learn About Contractor Licensing (And Learn If You Need A License)

The first items you probably already have on your mind are the necessary licenses and permits you’ll need to get the job done. Before you do another online search about the matter, do yourself a favor and browse the California State License Board website – that’s the place to go for any and all state-level licensing requirements and legal information.

Whatever kind of construction work your home-building process requires, the licensing and permitting information that you need will be available for you on the CSLB site.

If you’ve already started getting a construction crew together, you can look up their licenses on the CSLB site as well and learn more about their qualifications and work history. In general, you will find that your contractors are all Class B license holders.

Do you need a license to build your own home? Check out our article on that very topic.

Studying Up on California Building Standards

California’s Building Standards Commission is your BFF if you want to build a safe and compliant house. You can join their mailing list to keep up with all the new building codes and standards throughout the construction of your new residence.

Remember – knowing the building codes on both a state and local level is your job as the builder. Do your diligence upfront and make sure you stay compliant throughout the process.

Gain Purchase in Your Process

You’ll want to learn quite a bit about the California Department of Real Estate and what it takes to buy land and sell a self-built home eventually. Sure, your plan is to build your own home today and live in that self-built home tomorrow, but later down the line, this residence ought to be fit for the California real estate market as well and the DRE can help with that.

Another reason to learn the real estate regulations and licensing details now is that you often need that information to buy the land your home will be built on in the first place. The California Department of Housing and Community Development can help you sort out which land ordinances and zoning laws pertain to you and your process. This department can also help you find out which permit applications you need in your county, city, and neighborhood.

Expect Inspections

As you build your strategy for building your own home, take the considerations of the California Environmental Protection Agency (CalEPA) into account.

The state of California is serious about environmental conservation so check to be sure that your construction project isn’t a hindrance to any protected species or elements. If your project requires special permits or approvals, keep all the paperwork squared away so that later down the line all building inspections go smoothly.

Even if you don’t have any special permits or anything like that, you can expect, especially in the case of a builder-owner, for the state to make sure that you’re staying compliant with environmental standards.

Build an Airtight Strategy

Keep everything mentioned above in mind as you design your home. Create detailed blueprints and if you can, hire an architect or a professional drafter to help you. A project manager or construction manager can also help lighten the administrative load.

Make a realistic budget for yourself. If you qualify for a construction loan, that is a common route that many others have taken before you. Then secure a suitable plot of land for your dream home in California and be sure that your build complies with local zoning regulations.

Before you break ground on construction, you’ll need all those permits we talked about earlier. Building permits, grading permits, electrical permits, plumbing permits, mechanical permits — the whole nine.

When you’re ready to begin construction, consider hiring a team of contractors. Because you’ll need licensed experts to take care of tasks like excavation, framing, plumbing, and electrical work. These aren’t things you can DIY — you need special licenses for all this work.

Throughout construction, you and your team need to make sure that all of your work holds up to California’s building codes and regulations. There will be multiple inspections throughout the process and more once the project is complete.

Home Sweet Home!

If you follow all the necessary guidelines throughout construction, you will be ready to move into your new home once the structure is complete! From there you can get a Certificate of Occupancy from your city that proves you can live in your new home legally! Alright!

There you have it! Building your own home in California is a significant undertaking, and complying with all legal requirements is a full-time job all on its own. Always consult with professionals and the local governing bodies in charge of the regulations in your area to ensure a smooth and legal construction process.

Our word of advice: staying ahead of problems before they become bigger problems is the biggest thing you can do for yourself to maintain your sanity. Always keep an eye peeled for upcoming bumps in the road so you can take evasive maneuvers. Happy building!

Clients Will Look Up Your Contractor License – Be Prepared!

Maybe you just realized your contractor license is past expiration, but you’re still completing a job. Maybe you’re taking on odd jobs here or there and the classification of your contractor license doesn’t actually cover that category of work. Maybe you’re just curious — Will the people who hire you check up on the validity of your license? Can they even check?

Yes. Clients can and will check to ensure that their contractors and their licenses are in good standing – and why wouldn’t they? Wouldn’t you do your due diligence if you were spending thousands on a new home or millions on an office?

Your clients will 100% check your license, so you need to be prepared to keep your license up-to-date…or failing that, do what you can to fix it. Here’s how.

Keep Your Contractor License Current…Or Else!

One of the first things your clients will do while hiring you is to check the validity and current status of your contractor’s license.

The client is looking for certainty and safety. They want to know that the significant money they are investing into their construction project is going to be put to good use by someone who knows what they’re doing.

In their minds, the outcome of their construction project depends on you and the entire contractor team being fit to work and in good legal standing with the state of California. Not only are they looking to make sure that you’ll deliver a good product, but they also want to know that they’ll be safe living and working in the house you built – two things that are verified by a license.

Not having a valid license will not only scare away potential clients who would much rather go with someone legitimate and licensed, but it will also lead to severe criminal penalties should you take on jobs over $500 without a license.

The state of California does not mess around when it comes to unlicensed contracting. Get a license, or don’t even think about doing construction. It’s that simple.

Anyone Can Check Your Contractor License On The CSLB Website

You can always count on clients visiting the Contractors State License Board (CSLB) website to check the status of your license. And it makes sense too, doesn’t it?

With the CSLB being the governing body responsible for issuing and regulating whatever contractor licenses you hold, they’re likely the first and only place someone might think to search for and verify the documents you hold indicating that you’re eligible for contractor work.

Since anyone can and will check your license at any time, thanks to the magnificence of the internet, it’s more important than ever to maintain your license and make sure you’re in good standing with the CSLB.

What Do Clients Check to Decide if You’re a Safe Choice?

Clients will always do their diligence when it comes to construction projects. If that’s surprising to you, you might consider another field of work.

People will naturally want to make sure the hundreds, thousands, hundreds of thousands, or hundreds of millions of dollars they’re investing in their construction project are being invested wisely and carefully.

Here’s the 5 main things they’ll look for.

Your Contractor License Number
Your business card, website, wherever you advertise your services, or even your licensing documents themselves are a few places from where a person hiring you will grab your license number. Once they have that info, they will run a check on the CSLB website to see if you’re legit.
Previous Work
One of the most obvious things that clients will look at when validating your qualifications is your previous work – especially previous work that is similar to their current project.
References
Contractors – and people in general – first look to references from people they know and trust. As you grow your career, your network and references will grow, creating more opportunities and building your reputation in your niche.
Website
A professional website is essential to creating a positive, professional impression on your potential client. There’s no excuse to not have a simple, beautiful website in 2024. Sure, it’s easier to not set up a website, but you’re just leaving money on the table.
Social Media
The folks hiring you want to know that you have valid worker’s compensation insurance coverage. They’ll want to be sure that they are not liable in case of injuries to you or your employees while you complete their construction projects.
Reviews
Of course, they’ll want to check reviews and the personal testimony of previous clients. How did you do? How was your rapport? Clients work to gather insights and impressions to get a sense of what it might be like to work with you.

Conclusion

Verifying the validity and current status of your California contractor’s license is often a client’s first step toward building trust in you and your work.

While it can be tough to keep renewing licenses and applying for additional licenses depending on the nature of your construction projects, it’s worth it if it means retaining clients and maintaining your reputation as a reliable and capable contractor.

As a contractor, your reputation is everything, and like it or not, a valid contractor license in good standing with the CSLB can make or break your reputation immediately.

C-10 Electrical Contracting License Guide for General Contractors

Ever hired a subcontractor as a general contractor only for the sub not to show up when it’s time to do the job? Of course, you have – this is the construction industry we’re talking about, where no-call no-shows are commonplace, even among seasoned contractors.

How many times have you, as a general contractor, looked at a faucet install and thought: “I should just do this”?

More commonly, how many times have you had to wait around for an electrician to show up just to do a simple wire-up?

Instead of delaying progress on a project until you can bring in an available sparky to do your electrical work, you might think about getting a C-10 license yourself.

If you want the option to perform electrical work all on your own, you must obtain a Special Class C-10 license. With this new classification in your arsenal, you’d be legally cleared to work on…

Electrical Wiring
Your everyday residential, commercial, and industrial installs, such as wiring for lighting systems, power distribution, and electrical panels.
Electrical Repairs
You’d be legally allowed to assess, diagnose, and fix electrical issues on a deeper level than as a general contractor alone.
Installation of Electrical Fixtures
The installation of electrical fixtures like outlets, switches, light fixtures, ceiling fans, and circuit breakers would be in your hands. This is huge for a general contractor.
Low Voltage Systems
You’d be legally cleared to handle low-voltage electrical systems, including security systems, intercoms, data cabling, and telecommunications infrastructure.
Electrical Upgrades
You could upgrade existing electrical systems, including capacity upgrades, electrical panel replacements, and the installation of energy-efficient electrical components.
Electrical Maintenance
You could carry out routine electrical maintenance services. And you wouldn’t have to wait for subcontracted specialists to come in to inspect electrical systems to confirm that everything is functioning safely and optimally.
Electrical Design
You could provide electrical design services, including creating electrical plans and layouts for new construction or renovation projects.
Safety and Code Compliance
Monitoring electrical work and regulating safety also comes with the C-10 territory. You’d be qualified to evaluate and confirm that electrical systems are compliant with state and local building codes and industry standards.
Electrical Inspections
You’d also be authorized to inspect electrical systems by yourself to verify compliance. You could assess risk and examine the functionality of the electrical installation.

Maintaining Your C-10 License

Picture yourself with your C-10 license in hand and you’re (literally) keeping the lights on with all your new electrical jobs. Now that you’re juggling two license classifications, it’s critical that you stay plugged in with the latest California Contractors State License Board (CSLB) regulations on top of all the various codes and laws around electrical work.

Electrical codes evolve. So do industry-wide practices. To make sure all your work is safe and meets current standards, the CSLB requires periodic exams and continuing education for licensed contractors.

Pass Your Exams: Your requirements for C-10 licensing exams can be found on the CSLB website. We recommend taking a CSLB exam course to ace your exams. At the very least, this study guide is specifically designed for electrical exam takers.
Meet The Experience Requirements: You need a certain amount of on-the-job experience before securing a class C-10 contractor license. The amount of that experience varies depending on whether you want to be a general electrician or a fire/life/safety technician or if the work you’re performing is residential vs. nonresidential – but you need at least 2,000 hours of electrical experience to be qualified for even the lowest tier.
Get and Stay Insured: General contractors like you already know that having a contractor bond and – in many cases, workers’ comp – are required for your overall operations. The terms of your bond and insurance coverage plans may change when you take on electrical work, but your responsibility to maintain this coverage remains the same. Learn more about the bonds you need as a contractor in 2024.
Stay Continually Educated! A big part of maintaining a C-10 Electrical Contractor license is continuing education. You’re required to keep yourself updated on the latest electrical codes, regulations, and industry best practices and that means enrolling in the right courses to keep you covered. Check out the full list of Department of Industrial Relations-approved continuing education providers.

Is the C-10 License worth it for general contractors?

There’s a lot of responsibility that comes with the C-10 License. So take a look at all your work across a calendar year and think about how much electrical work you actually plan to do.

Is the cost of insurance worth it? Are the fees associated with the C-10 License worth it? Run a cost-benefit analysis and decide for yourself!

It’s possible that securing a C-10 license would save you time and money because you wouldn’t have to wait and schedule with subcontractors. But it’s also possible that you’d save time and money because you hired subcontractors.

No matter what you choose, play it safe. Always follow the guidelines set by the CSLB. Remember, you must accumulate the required amount of experience and pass your exam before you even apply for a class C-10 license.

If you can keep your bonds and insurance agreements in good standing and remain up to date on continuing education for this specific classification of work, maybe you really are that contractor who can keep the electrical part of their career switched on.

For more on general contractors holding C-10 licenses, check out our comprehensive article on Class B and C-10 Licenses.

The California CSLB Reminds Licensees of New Laws Beginning January 1, 2024

We say Happy New Year to all acting and hopeful California contractors! It’s important – as always – to take a closer look at changes to the law for California contractors in the coming year.

The Contractor State License Board (CSLB) just released a press release outlining the most important pieces of legislation for contractors. There are some big ones this year – so let’s make sure you’re prepared to stay compliant in 2024.

First, we’ll provide the Contractor State License Board’s (CSLB) missive to all contractors, and then we’ll provide a little breakdown of what the text actually means for contractors in the coming year. Let’s check it out!

Sacramento, CA – Heading into 2024, the Contractors State License Board wants to remind licensees of new laws taking effect in the new year.

SB 630 (Dodd)
This bill requires CSLB licensees and applicants to provide an email address, if available, when they obtain and renew licenses. The email addresses are not subject to disclosure under the California Public Records Act. This bill also authorizes the Registrar to automatically reimpose license revocation when probationary conditions placed on a license are not met. (Chapter 153, Statutes of 2023)

AB 336 (Cervantes)
This bill requires licensees with a workers’ compensation policy to provide the top three workers’ compensation classification codes on their workers’ compensation policy when they renew their licenses. Those codes will be posted on the CSLB license lookup webpage. Licenses won’t be renewed without the codes. However, the bill allows for retroactive renewal if the licensee provides the codes within 30 days after receiving notice of the denial. (Chapter 323, Statutes of 2023)

AB 1204 (Holden)
This bill prohibits specialty contractors from subcontracting with two or more contractors in the same classification on the same jobsite unless the subcontractor has employees who perform the work in the relevant classification or are party to a collective bargaining agreement. This bill makes violations of this section cause for disciplinary action. (Chapter 568, Statutes of 2023)

SB 601 (McGuire)
This bill increases the statute of limitations to three years for misdemeanor violations by a licensed contractor for allowing an unlicensed person to use their contractor license. This bill also requires courts to assess the maximum civil penalty for specified home improvement contract violations in declared disaster areas. (Chapter 403, Statutes of 2023)”

SB 630: Contractors’ Email Addresses

SB 630 (Dodd) specifically requires that applicants, registrants, or licensees who possess a valid email address must provide this email to the board at the time of application or renewal. In safeguarding the privacy of individuals involved, the bill stipulates that these email addresses are not subject to disclosure under the California Public Records Act or other similar laws, except in specific circumstances mandated by a court order.

Additionally, SB 630 changes probationary conditions for contractors who have violated the law. It allows for a stay of execution of disciplinary decisions, contingent on the completion of specified probation terms and conditions. Crucially, if these terms and conditions are not fully complied with, it can result in the automatic termination of the stay of execution, thus reinforcing the accountability of licensees under disciplinary action.

The bill also includes provisions for the payment of restitution and the costs of investigation, enrollment in specific coursework, and successful completion of relevant examinations as part of the probationary conditions.

AB 336: Workers’ Compensation Requirements

AB 336 (Cervantes) sounds complicated but it isn’t. It requires any contractor who has Workers’ Compensation to provide to the CSLB three classification codes that are on their insurance policy.

Specifically, contractors need to identify the three classification codes for which the highest estimated payroll is reported on the policy. If there are fewer than three classification codes reported, all the reported codes must be provided.

This bill mandates that the Contractors State License Board (CSLB) include these classification codes in the public license detail on its website when updating for an active renewal. However, the CSLB is not required to verify the accuracy of these codes and is not liable for any misreported classification codes by a licensee.

In essence, AB 336 aims to improve transparency and accountability in the realm of workers’ compensation insurance among contractors. It ensures that the relevant classification codes are readily available and accessible, contributing to better regulatory practices in the industry

AB 1204: Multiple Class C Contractors

AB 1204 (Holden) relates to specific Class C specialty contractors who are prohibited from entering into contracts for work on the same project or undertaking with more than one subcontractor in the same license classification.

This restriction is subject to two key exceptions:
The subcontractor employs persons who are classified as employees to perform work in that license classification on the project.
The specialty contractor is a signatory to a bona fide collective bargaining agreement covering the type of work performed on the project and addressing the issue of subcontracting or subletting.

SB 601: A Litany Of Changes

SB 601 (McGuire) makes several important changes to contract law for contractors, specifically aiming at preventing fraud, especially in disaster areas. It covers a few specific areas: home improvement contracts, liens, provisions for bonds, criminal penalties for violations, and restitution for fraud. In greater detail, SB 601 makes changes to:

Home Improvement Contracts Requirements: The bill outlines the specific things that are required to be in home improvement contractors. This includes stipulations about the contract being in writing, the inclusion of the full contract amount, separation of finance charges, limitations on down payments, and specific schedules of payments.
Payment and Lien Release: Except for a down payment, contractors should not request or accept payment exceeding the value of work performed or material delivered. It also requires contractors to furnish a full and unconditional release from any potential lien claimant for any part of the work for which payment has been made – but only if requested by the client.
Provisions for Contractors with Bonds: Contractors furnishing certain types of bonds or joint control approved by the registrar are exempt from some of these requirements and may accept payment before completion of work.
Criminal Penalties: The bill outlines the specific misdemeanor charges for violations of these provisions, with increased fines in areas damaged by natural disasters. Furthermore, it specifies a statute of limitations for bringing actions against licensed and unlicensed contractors.
Restitution for Fraud in Disaster Areas: In cases of fraud related to natural disaster repairs, the bill mandates full restitution to the victim based on the defendant’s ability to pay, along with potential additional fines.
Operative Date: The section concerning home improvement contracts becomes operative on July 1, 2024.

Remember – staying compliant is nobody’s job but yours. Do your diligence and make sure that you’re constantly on top of things, and you’ve got nothing to worry about from Johnny Law!

What Skills Do You Need To Be A Contractor/Builder?

If you’re just starting out in the construction industry, you might wonder what specific skills you’ll need to succeed in your career. Don’t worry – this is a common question that all beginners in any industry have when they’re just starting their careers.

In this guide, we’ll cover the essential skills that any contractor will need to survive as a construction contractor/builder, both now and in the future.

As always, we’ll keep our information specific and relevant to California as that’s our expertise – check in with your local contractor’s licensing board for information in your area.

Let’s begin!

Choose Your Contracting Career Path

When defining what skills you’ll need in your career as a construction contractor, it’s essential you understand what area of construction you’ll be working in.

Sure, anyone can start hammering some nails on a job site, but if you really want to succeed as a contractor, you really need to plan your future appropriately.

Do you want to be a specialist who works in air conditioning? What about a plumber? Maybe you want to be an engineer or maybe you want to oversee entire projects as a general contractor.

Contractor Licenses Across America

Whatever it is you want to do, you should be aware of the license, bonding, insurance, and other legal requirements surrounding the work you do. In many states, you may not need any of these to do work as a contractor. In many more states, like California, you need a license to be a contractor.

In California, the Contractors State License Board (CSLB) is the governmental authority that oversees contractors and makes sure that they stay licensed. Anyone who does construction work over $500 in California without a license faces severe penalties.

The CSLB has three different designations for contractors, based on the type of work they do.

The CSLB Class A, B, and C Licenses

Class A (General Engineering Contractor License): This license group is for people who work on specialized engineering projects like overpasses, airports, and highways.
Class B (General Building Contractor License): This classification is for general contractors, whose primary role is constructing structures for support, shelter, and enclosure. It requires involvement in at least two unrelated building trades or crafts.
Class B-2 (Residential Remodeling Contractor License): This contractor’s license is specifically for remodeling contractors. B-2 license holders can only make improvements to existing residential wood frame structures, involving at least three unrelated building trades or crafts.
Class C (Specialty Contractor License): Class C licenses are tradespeople licenses in California – your plumbers, your electricians, your HVAC workers, and so on. The list is long – there are even classifications for tree pruners!

Steps to Obtain a Contractor License in California

Getting a contractor license in California is no easy task – which is why we suggest knowing exactly what contractor area you’d like to work in as your career.

Basic Eligibility Requirements:

Minimum age of 18 years.
Four years of experience at the journey level or equivalent.
Possession of a $25,000 surety bond for consumer and employee protection (updated from $15,000 in January 2023).

Application Process:

Submit a detailed application to the CSLB, including business details, license type, and personal information.
Undergo a criminal background check, including fingerprints.
- See our article on background checks for more information.
Pay all fees.

Licensing Exam:

Pass the mandatory CSLB licensing exam, made up of two sections: the law and business section and a practical test specific to the applicant’s license type. For example, electricians would get electrical-related questions on their trade exam.

Bonding and Insurance:

Provide proof of contractor license bond and workers’ compensation and liability insurance.
Pay the initial licensing fee after passing the exam.

Additional Licensing Considerations

State Business Licenses: Additional statewide business licenses might be required to operate legally in your state. California has locality-specific licensing. For example, San Francisco requires additional licensing for contractors on specific projects.

Do I Need School As A Contractor?

As we’ve covered many, many times before – no, you do not need a four-year degree to get your contractor’s license, like many jobs.

While formal education is not a mandatory requirement for obtaining a contractor’s license in California, we have to recommend it, especially for the dreaded CSLB exam.

This brutal test takes 3 hours and consists of over 120 questions related to law, business, and your chosen area of expertise. Even the most seasoned contractors have failed it – adding time and energy to their budget.

One of the best things about being a contractor is not having to go to college, but the reality is there are some things you just have to learn in a classroom.

General Skills for Success as a Contractor in California

While every classification has its specific requirements, there are some general areas of expertise that ALL contractors should seek to master if they wish to be successful contractors.

Technical Skills: Specific construction skills relevant to your license class. Every license classification has specific tech skills you need to know.
Business Management: Skills in project management, budgeting, and client relations are essential to maintaining a business no matter what industry you’re in.
Legal Compliance: Understanding state and local regulations, building codes, and safety standards is critical. Fees or jail time await noncompliance.
Communication: Effective communication with clients, team members, and other stakeholders – an obvious one, like business management skills. This is so obvious, but many contractors don’t think to develop their communication skills!

Specific Skills For Class A, B, and C License Holders

Skills for Class A License Holders (General Engineering Contractor)

Class A General Engineering Contractors are involved in large-scale and complex projects that require a deep understanding of engineering principles. Here are the key skills they need:

Engineering and Technical Skills: Comprehensive, university-level knowledge of civil engineering, structural design, and understanding of infrastructure development.
Industrial Plant Construction Skills: You may need skills around building hazardous or critical facilities like refineries and chemical plants, which demand adherence to strict industry-specific standards focused on public safety.
Heavy Equipment Operation: Operating heavy machinery for earthmoving, trenching, and other large-scale construction activities. Yes – Class A licenses can do that!
Project Management: Overseeing complex projects, coordinating with various subcontractors, managing budgets, and ensuring compliance with safety standards and building codes.

Skills for Class B License Holders (General Building Contractors)

Class B General Building Contractors work on structures for human occupancy, such as homes and office buildings. Their skill set includes:

Carpentry and Framing: Proficiency in constructing the structural framework of buildings, which is essential as Class B holders are allowed to take on framing contracts.
Basic Electrical and Plumbing Skills: Understanding the basics of electrical and plumbing work for residential and commercial buildings. You don’t perform the work, but you need to know it.
Knowledge of Building Codes and Regulations: Ensuring all construction complies with state and local building codes.
Versatility Across Trades: Ability to handle multiple unrelated building trades or crafts, such as painting, flooring, and tiling.

Skills for Class C License Holders (Specialty Contractors)

Class C Specialty Contractors focus on a specific trade, with over 40 distinct categories. Each category requires specific skills:

Trade-Specific Expertise: Deep knowledge in your chosen specialty, e.g., electrical systems for electricians (C-10) or plumbing systems for plumbers (C-36).
Certifications and Training: Many Class C licenses require trade-specific certifications or formal apprenticeships.
Up-to-Date Industry Knowledge: Staying informed about the latest techniques, materials, and regulations relevant to their trade.

The skills and knowledge you gain as a contractor are what makes you — and all of us contractors — worthwhile.

Don’t look at gaining skills and expertise as a negative thing, as an obstacle to be overcome. Instead, view contractor-related skills as a chance for you to build your expertise and capabilities…which will ultimately allow you to demand higher fees and make more money!

General Contractors and Landscaping in California

All across the state, Californians get to enjoy extremely beautiful weather. To capitalize on this benefit, California homeowners tend to design their homes with a mix of indoor/outdoor spaces that maximize the exposure to pleasant weather.

This trend has been and will continue to be a fixture in the state, which means that general contractors can always expect their work to include exterior construction and at least some landscaping.

What Kind of License Is Needed For Landscaping?

In California, contractors need a C-27 license to provide specialized landscaping services. We won’t go too deeply into the C-27 license here – you can check out our post about the class C-27 Landscaping License to brush up on the type of work it covers and how to secure this license.

If you do not have a C-27 license, but you realize that your construction projects are going to veer into landscaping territory, alarm bells might be going off in your head. You need to complete your work, but you may also not be legally cleared to perform the work yourself. In this case, your only option is to hire licensed landscaping contractors to perform the work for you.

Where does general contractor work overlap with landscaping?

When it comes down to it, when does a general contractor need to hire a C-27 license holder to perform contracting work? When can a general contractor do the work themselves?

Here’s some of the most common interactions Class B and C-27 contractors have on builds.

Landscape Integration
A lot of times, construction projects rely heavily on landscaping to enhance the overall aesthetic of a property — especially residential ones, where most general contractors operate. You’ve heard about how important “curb appeal” is to home buyers, especially nowadays. Creating a seamless integration of an outdoor space with a building’s design helps to sell the idea that a structure is safe and inviting to the onlooker.
Site Preparation
Before landscaping work can begin, sometimes there are site prep requirements that fall under the purview of a general contractor. This work can include grading, clearing, or creating a foundation for outdoor structures.
Hardscaping
Both general contractors and landscapers are involved with hardscaping. This work includes the construction of patios, pathways, retaining walls, or outdoor kitchens. This is a highly collaborative job, but the general contractor typically is responsible for the overall execution.
Irrigation and Lighting
When it comes to irrigation and lighting, C-27 license holders need to do the actual installation and design while general contractors build whatever infrastructure is needed for irrigation systems or outdoor lighting.
Project Management
On larger construction projects, a general contractor may be on the hook for crewing up and overseeing various subcontractors, including landscaping contractors. Understanding the demands of the landscaping labor and setting expectations for all parties involved would fall on the shoulders of the general contractor even though they’re not actually performing the landscaping duties.

Where Are General Contractor and Landscaping Duties Separate?

Despite the overlap in work responsibilities, it is important for general contractors to remain aware of the clear line between their work and the landscaping work. The licenses covering each serve distinct and unique purposes, each with specific responsibilities and requirements.

General contractors are primarily responsible for overall construction.
The building’s structure, plumbing, electrical, and HVAC systems all fall to the general contractor. Their Class B license allows them to manage and coordinate various subcontractors, including C-27 license holders. The buck ultimately stops with them.
Landscaping contractors specialize in outdoor environments.
Working with the aesthetics and functionality of plants, trees, irrigation, and outdoor structures all fall to the landscaper. They work under the general contractor’s supervision and perform their duties in accordance with their orders.

Conclusion

General contractors and landscapers have overlapping responsibilities and concerns. Certain issues like noise and nuisance regulations, general construction labor and safety laws, and building codes and permits affect both types of workers in more or less the same ways.

However, there are state and federal regulations that shine a light on the areas where generalized contracting ends and where hyper-specialized landscaping begins.

5 Free (Or Almost Free) Marketing Tools For Contractors

Not everyone has huge, disposable income after the overhead costs of running their contractor business, but with a little budgeting and some ingenuity, marketing will become your best friend in the pursuit of your target audience, paying hand-over-fist in relation to its expense.

The wonderful thing about guerilla marketing, or marketing techniques that are not common in your field, is that they capture the attention of your prospective customers by reaching them where they are less likely to have their guard up and often at a lower cost than more traditional platforms.

So, without further ado, here are 5 free (or almost free) marketing tools for contractors!

Networking events. You can find events everywhere, in every town in America, and for contractors, they are essential. You can mingle with the end client, but also you can cross-pollinate and mutually benefit from the services of other businesses and form partnerships that can open unexpected possibilities down the line.

Expert Content. Your skills are valuable and people would like you to share your expertise! A fantastic way to demonstrate your knowledgeable brand is to provide valuable information in the form of content – videos, articles, blogs, podcasts, and so on. Keep the content simple and related to your field of experience, like a how-to video on how to install a faucet, or an article outlining quick fixes for ceiling leaks. Contractors have a lot to share – and people want to learn from them!

Email Blasts. Email blasts are so extremely cheap for the incredible value they can add to your business that you’re losing money by not using email to market your business. Automated email blasts are a great way to nurture relationships with your leads. The good thing about email is it serves different touchpoints, levels of interest, and moments in the sales process. For example, you can remind people of your business with simple DIY guides, or you can convert cold leads into customers with calls to action and enticements like discounts or sales. Best of all, email costs almost nothing and requires very little expertise to set up and get running!

Partner With A Complementary Contractor Or Contracting Business. Partnering with another business owner in a similar classification can pay huge dividends. Not only can you recommend your partner and their services to your existing clients, but you can also leverage each other’s marketing channels – allowing you both to double your reach by using one another’s businesses as a megaphone.

There’s simply no excuse for contractors NOT to be using these free or nearly free marketing tools to grow their business. If you’re a contractor and you’re not marketing, you’re falling behind your competitors in the area – the more you can get your name out there, the more people will come to you looking for help with their construction.

Keep in mind this is the absolute bare minimum you should be doing as a contractor. Investing in marketing is often the best thing you can do to grow your business – because, without customers, you don’t have a business at all!