Protect Your License

Any licensed contractor will tell you that the life blood of his/her profession is the license that is issued to them by the California Contractors' State License Board ("CSLB"). It is that license that allows contractors to perform work. If an unlicensed contractor performs work that requires a license, several bad things can happen to the unlicensed contractor. First and foremost, it is a misdemeanor to perform work without a license when the work requires a license. Second, California courts have come down very harshly on the unlicensed contractor. If you are not licensed at all times during the performance of your work, you will be precluded from collecting under your contract and equally important, you will be required to return all monies paid to you. It is because of these harsh realities, that individuals who want to enter into the construction industry but do not have a license will do just about anything they can to qualify their business as a licensed contractor.

 

As a result of the above facts, it is very common for individuals who want to enter the construction field but do not have a license, to find someone who has a license and essentially "rent" that license. As attorneys representing contractors, we see this situation over and over again. A typical scenario is such that a licensed contractor, perhaps retiring from the construction industry, is approached by others who do not have a license. The unlicensed contractors will approach the retiree and will ask if he/she is interested in renting out their license for a fee. Make no mistake about it, renting your license to others is illegal and can subject you to great financial harm.

 

The question often asked of us by licensed contractors is why they can't allow another company to use their license since companies are qualified by licensed contractors. The answer is simple. Yes, licensed contractors can qualify a company to act as a valid contractor if and only if the licensee is involved in the day to day operations of the company. To merely rent your license without having any involvement in the day-to-day operations is illegal. The licensed contractor is subject to any damages caused by the company that has rented his/her license.

 

The "rent a license" scenario is all too common. Because of this, the CSLB will, from time to time, investigate to determine whether or not the qualifier is actually involved in the day-to-day business. If the CSLB determines that the qualifier is not involved in the day to day business, that is when problems will occur, this could be both criminal and/or civil.

 

The moral of this story: You should never allow another person to use your license unless you make sure that you are properly designated as the qualifier of that company and that you are involved in the day to day operations of that company. This is true regardless of which state you have a license in.