BROKER RISK MANAGEMENT
WEEKLY PRACTICE TIP
When is a Licensed Contractor Required?
Q: I am a listing agent and my seller needs some work done prior to putting the home on the market. I have a handyman who does work for me but, of course, he is not licensed. My question is when is a contractor’s license required for work in California?
A: The general rule is that all work done by contractors in California totaling $500.00 or more (materials and labor) must be done by licensed contractors. But, also be aware of the following:
A. Exclusions: There are several exclusions in Business and Professions Code Section 7044 to this general rule, including:
1. Owner-builders who build or improve existing structures on their own property if they either do the work themselves or use their own employees (paid in wages) to do the work. This exemption is only valid if the structure is not intended or offered for sale within one year of completion.
2. Owner-builders who build or improve existing structures on their own property if they contract for the construction with a licensed contractor or contractors. This exemption is applicable only if no more than four of such structures are offered for sale in any one calendar year.
3. Owner-builders who improve their main place of residence, have actually resided there for one year prior to completion of the work, and who complete the work prior to sale. This exemption is limited to two structures within a three-year period.
B. Unlicensed Contractors: But, regardless of the amount of the work to be done, it is dangerous to recommend an unlicensed person to do the work.
For more information on this, see Weekly Practice Tip entitled “Recommending
Licensed and Unlicensed Contractors”
C. EPA Paint Regulations: Also, remember that the Lead-Based Paint Renovation Rule, effective October 1, 2010, is an EPA rule affecting construction contractors, residential landlords, property managers and others who perform “renovations” for compensation in housing that may contain lead-based paint – that is, built before 1978. The term “renovation” includes most repair, remodeling and maintenance activities that disturb painted surfaces.
If any such renovation disturbs more than 6 square feet of paint in one room, or more than 20 square feet of exterior paint, then the contractor or painter who performs the work must be EPA certified, having taken training and received the certificate; and must perform the work in conformance with EPA rules.
For more information on this, see Weekly Practice Tips entitled:
“EPA Regulations – Required Certification is Delayed”
“EPA Regulations – Disclosure Issues”
PRACTICE TIPS
1. Recommend only licensed contractors.
2. To check if a contractor has a license check the CSLB website at www.cslb.ca.gov, or call (800) 321-CSLB, to find out if the contractor holds a valid license.
3. Be aware of the rules related to when a license is required – even with work which may be done by an owner in contemplation of a sale.
4. All contractors and painters on your “preferred vendor” list should be EPA certified to comply with the EPA lead paint regulations. Tell all contractors and painters on your list that you will delete from the list any who are not so certified. They will quickly get the requisite certification.
DO NOT FORWARD TO CLIENTS. This Weekly Practice Tip is for the exclusive use of clients of Broker Risk Management and their agents. It may not be reproduced or distributed without the express written consent of Broker Risk Management. The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry, but rather are intended to suggest good risk management practices.
Copyright© Broker Risk Management 2011 02/25/11