Examining a contractor license

Examining a Contractor License

You’ve just confirmed that the contractor does have a license. Now, let’s take a closer look at some of the information the Contractor’s Board has provided and see what else we can dig up on him/her.

Here’s the real basic information that’s posted on the Board’s website for that contractor:

License Number

Confirm that it is the same number on any and all paperwork between you and the contractor. A very popular scam has been to ‘use’ someone else’s number for their business.  A couple of years ago, I found that a local painting contractor used my inactive license (a contractor should only have one active license at a time) on all his paperwork because he knew that most consumers don’t take the extra step and match things up.

Business Information

Basic contact information like name, address and phone but just like in the previous example, a cautious consumer will do a quick check to make sure the license number above matches the name in this section and all of that matches everything the contractor provides like business cards, advertising, proposals, contracts, etc. If something doesn’t match – STOP! Get the issue cleared up so you know who you’re doing business with.

Entity

This is the contractor’s business legal status. Everyone chooses a business form that works best for them so don’t read too much into it. But it could be important later to know just who (or what) you’ve contracted with should a problem come up.

Issue Date

True or False: Because license numbers are issued sequentially, the smaller the number, the longer the contractor has been in business. Answer – FALSE (maybe). Under California’s contractor laws, every entity must have a license. Using myself as an example, when I first qualified for a general contractor’s license back in 1981, I was assigned license number 404777 as a sole proprietor. When I decided to incorporate my company I was essentially forming a new entity and under the law, it had to have a new number issued – 975906. Same qualifying person; same experience, etc. Just a quirk of how the State does things. Quick Note: A qualifying licensee can only have one active license at a time so 404777 didn’t vanish – it’s listed as inactive and I can activate it at any time should I decide to inactivate the corporate license.

Expire Date and Current Status

Just like a Driver’s License, a contractor’s license must be renewed on a regular basis. This helps you make sure they’re up to date at that specific time and whether or not the license is active. Remember that unscrupulous painting contractor? Anybody who had checked the license number would have seen that its status was “Inactive” and warning bells should have gone off.

At first glance, everything seems to look pretty good. But let’s peel away another layer and see what we find.

How to Check a Contractor License

Checking whether a contractor is properly licensed is very easy. Go to the Board’s web site: www.cslb.ca.gov and on the left side, you’ll see this box:

Instant License Check

Click on this link even if you don’t know the license number. What will appear next will be a page with five buttons in the middle that gives you options where you can find out if the contractor is properly licensed to provide the work he or she is proposing. The options below are listed in the sequence best able to get you that information with “Search Tips” on the bottom of the page to help you:

  • License Number – Licensed contractors must include their license number on any advertising so if you already have something from them, this is an easy way to find them in the database
  • Business Name – If you don’t have the number, but you do have the name of the business, click on this link
  • Personnel Name – You may be talking to someone who claims to be or to represent a licensed contractor. This option can help when you don’t have a license number or perhaps you’re unsure of the company name
  • His Number – sales people who are authorized to represent a licensed contractor are assigned a number that ties them back to the company they represent.
  • His Name – when all else fails, try accessing the records through the person’s last name. A bit harder search, but a check here can help determine credibility

If you don’t find what you’re looking for, do not jump to the assumption that the contractor lied to you and isn’t really properly licensed. Remember that computers and their databases are only as smart as the people who enter the data. Let’s use my company as an example. If you didn’t have my license number, you’d probably start searching with the second button – ‘Business Name’. Try typing in ‘HB Contracting’. Click on the button and you find . . . . nothing; no HB Contracting!

Someone in the Contractors Board office decided to add a space between the ‘H’ and the ‘B’ so unless you typed in ‘H B Contracting’, you might assume I don’t exist. This error may be corrected by the time you read this, but the lesson here is don’t assume – just contact the contractor and ask for help in finding him or her in the Board’s database (don’t take their word for it either – check it out).

Once you’re found the contractor in the database, you’ll get a page that provides some basic information on the licensee.  So is the contractor in the clear? Many consumers stop at this point but there’s much, much more to this page of information so while you’re there, why not take the next step? How we analyze this information is the subject of our next posting.

Risks of Hiring Unlicensed Contractors

Risks of Hiring Unlicensed Contractors

The facts and the resulting risk we just introduced may be sufficient to discourage most consumers from using an unlicensed contractor. But I’ve pledged to be as open and honest as possible in reviewing these issues and we don’t want to ignore the sole underlying reason as to why a consumer would even consider using unlicensed workers – the question of price.

Many consumers still hire unlicensed people on the theory that they will charge less than a licensed contractor.  That theory is based upon a number of both valid and not-so-valid assumptions. Examples of these assumptions include:

  • Government regulations result in additional costs to licensed contractors that are passed on to consumers
  • Everyone else who has a license (doctors, lawyers, architects, engineers, etc) have high rates; partly in order to recoup their investment in education and experience
  • As an advanced college degree is not required to be a licensed contractor, the work is really very simple so there’s no real difference between the licensed and the unlicensed contractor.

There is an element of truth to each of these assumptions.  For example, a license must be renewed on a regular basis to remain valid at a current cost of $360 ($30 per month). The government also requires that licensed contractors carry a license bond in the amount of $12,500 – easily obtainable for under $600 ($50 per month). Other government fees like a city requiring a business to buy a business license or pay for job permits have nothing to do with whether or not the contractor is licensed. Bottom line – there is a cost for the license but it’s pretty minimal.

Here’s a Rule-of-Thumb backed up by over 30 years of contracting experience. For low-cost jobs that require a minimum of expertise, unlicensed contractors can usually do the job cheaper. But for anything that requires any reasonable level of complexity (like remodeling or adding a room) or a special skill set (like air conditioning, plumbing or electrical work) there is very, very little difference in price between qualified experienced contractors. Check it out and you’ll find that the real difference in price is based upon factors completely unrelated to their license status like whether or not they’re carrying acceptable insurance policies and how much they spend on marketing and lead generation. We’ll explore those factors extensively in future articles but let’s close this post regarding licensed vs. unlicensed contractors with the following Alert direct from the California Contractors State License Board website:

Alert

Be advised that unlicensed individuals pose a risk to you and your family’s financial security. They expose you to significant financial harm in the event that a worker is injured while on your property, if your property is damaged, if the work is incomplete and/or faulty. Few, if any, unlicensed individual has bonding or workers’ compensation insurance. The quality of their work usually doesn’t compare to that of a licensed contractor. Don’t take the chance in order to save a few dollars. You’ll probably end up paying more in the long run.

Next, we’ll investigate how to investigate – a license that is.

Licensed vs Unlicensed Contractors

Here’s what the California State License Board (CSLB) has to say about licensed vs unlicensed contractors:

“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.” 

While the law’s pretty clear on the subject, the fact remains that the CSLB and law enforcement stay pretty busy setting up stings and other actions designed to catch unlicensed contractors and the courts are full of claims by consumers trying to recover damages from these individuals.

The argument in support of a consumer knowingly undertaking the risk associated with hiring the unlicensed will be the subject of our next article. But before we get into the risk/reward debate, we need to get a better handle on some of the risk issues as they relate to the consumer’s objectives. For the consumer, the real issue comes down to their desire to get the work they want done with the least amount of headaches and at the best price for the value. So let’s look at a few additional truths that should enter into the decision process:

  • If someone is really qualified to do the work you want done without a lot of stress, than the question to be asked is “Why doesn’t that individual have a license?” There may be a valid reason like a past conviction involving ripping off consumers; or insufficient experience in order to qualify for the license.
  • If anything goes wrong, you’re pretty much on your own. The law cannot help you (after all, you committed an illegal act when you hired that unlicensed guy) and the CSLB’s attitude comes down to something akin to an “I told you so”. They reserve their scant resources to help law-abiding consumers. Even when they go after or set up stings to catch the unlicensed guy in the act, their objective is to stop him or her from taking advantage of new victims and punish him for breaking the law – none of which helps you recover any damages you may have suffered.
  • Insurance companies typically will not insure or bond an unlicensed operator. Imagine what would happen when that worker without workers compensation coverage experiences a slip and fall or other type of accident (whether real or a scam) on your property – you may now be responsible for their medical bills plus anything else their lawyers can pin on you.  Or imagine this nightmare scenario – during the job, your property is damaged (accidentally of course) by one of their workers and you now discover they don’t have liability insurance to take care of the damage.

This introduction to the risks associated with unlicensed activity is probably enough to make anyone wonder why would someone hire an unlicensed contractor. But as any thriving underground economy exists for a reason, we’ll next take a closer look at some of the influencing issues.

contractor licensing overview

Contractor Licensing Overview

It’s time to move forward on that construction project. You need to hire a contractor, but aren’t sure of the best way to proceed. If you have a relative or good friend who’s a contractor (and you like him or her), the decision has probably already been made. It’s also an easy decision if you previously had contracting work done and it was a great experience.

But for many people who have heard news stories reporting scams or tales of construction horror, considering even the smallest of construction projects can produce tremendous trepidation and stress. The intent behind these consumer awareness articles is to help ease that stress by arming you with the information and support you need to make good decisions.

In this new Series on Licensing Due Diligence, we’ll review a series of topics related to contractor licensing.

Subjects include:

Let’s start with the argument for and against licensing.

licensed general contractor writing

Stories from a licensed general contractor

Referring to me as ‘the writer’ might be a bit misleading as most of this information is readily available via the Internet. Perhaps a better description might be that of a compiler and story teller.

My name is Mark Frauman and like several thousand others, I am a licensed general contractor in the state of California. I received my license in 1981 (“B” #404777). In over three decades as a licensed general contractor, I’ve certainly seen, heard or read about most of the pitfalls that plague the relationship between consumer and contractor and which form both the incentive and content of many of the articles.

My qualifications for this undertaking are not unique, but certainly rare. Unlike a number of my compatriots, in over 30 years of licensed contracting experience, I’ve never had a complaint filed against me. That doesn’t mean I haven’t had my share of problems – just that I’ve found less stressful and more constructive means of resolving those issues.

While I have completed a large number of residential projects, I’ve also founded several commercial construction endeavors. My first construction related experience came about soon after my service in the Air Force when I founded what became the largest solar micro-utility company in the state (and yes, I was a bit too far ahead of the game on that one). We specialized in large commercial applications like funding and constructing a solar energy system for the dormitories at UCLA that was used as the Olympic Village during the 1984 LA Olympics. When that industry went into what would become a two-decade hiatus, my investor partners and I purchased and renovated over 1200 rental units until the real estate recession of the early 1990’s made that a non-profit endeavor. During this same period, I also contracted with the then-fledgling cell phone industry to install equipment at cell phone sites throughout the region.

Licensed General Contractor

Hailey BethAfter a stint in land development and new home construction in Arizona, I began HB Contracting in Orange County California which focuses on residential and commercial improvements and remodels and is named for my granddaughter; Haley Beth (affectionately nicknamed ‘Bean’). Bean is also the name of our apprentice who will provide a visual aid or opinion on the subject of our articles.

I do wish to stress that much of what is contained in the articles is simply my personal opinion or analysis of the subject matter. While I can definitely back up anything I write, I am not a lawyer and there is no intention of giving out anything resembling legal advice.

As to content, I currently have over 100 subjects I’ll be posting shortly so the odds are most issues will be covered. But I’m always looking for new ideas and great war stories to write about so please feel free to send me a note.

The Relationship Between Consumer and Contractor

When it comes to the relationship between consumer and contractor, there is a ton of information and advice freely available. Unfortunately, many consumers fail to take advantage of all this free material or they find it too confusing and overwhelming to shift through for answers. What I’ve attempted to do is take a large portion of that information and organize it into somewhat logical topic groups I call a “Series”. Within each Series, there’s a further breakdown into individual subjects or articles. While there’s a lot of them, the articles average about 500 words each and take less than 2 minutes to read. As anyone who really knows me will attest, cutting explanations down to under 2 minutes is quite an accomplishment for me.

At the time of time of this writing, the Series include the following:

  • Licensing Due Diligence
  • Finding A Contractor
  • Getting It In Writing
  • Problem Resolution
  • Getting Help
  • Mechanic’s Liens
  • Buyer Beware
  • Tips & Tales

As I get feedback and recommendations from readers, I’ll add articles and new Series.

Anyone who has done any research on these subjects will recognize quite a bit of this material – various consumer protection websites tend to agree on the ‘hot issues’ and focus in on those same points. In many cases, I quoted their message verbatim if I felt they did a great job of getting the point across. Sometimes there is too much emphasis on the same obvious points and not enough on issues that result in the conflicts I see out there on a regular basis so in these articles, we’ll focus on real situations from the first step of the process and what to do when it happens to you.

With over 30 years of experience, I certainly have seen or heard quite a few ‘real situations’ or ‘war stories’ and will include them as either part of an article and other times part of the “Tips & Tales” series.

Please note – for the most part, I’m avoiding the use of individual’s names and/or companies. I don’t want to have to seek legal protection every time I “name names” and likewise, I don’t want these articles to divert from their objective and become a means by which contractors or consumers promote their own interests. If I do include a name, it’s because I either have personal knowledge of them or have followed the same recommendations contained within these articles to check them out.

So what makes me qualified to provide this advice – that’s coming next.

Knowledge is power

Stories, Advice, Recommendations and Suggestions from a General Contractor

When it comes to the age-old conflict between consumer and contractor – knowledge is not only power, but saves money.

It’s been called many things and goes by many names.

Its reputation of inflicting tremendous anxiety and conflict is well earned and documented. And yet, we know there will always be new stories of those who willingly faced their fear in pursuit of making a dream come true or just getting things back to the way they were.

The names we call it include the four “Rs”: Remodel, Renovation, Rehabilitation, and/or Restoration; along with the popular home improvement, room addition, tenant improvement and just plain old maintenance. But by whatever name you call it, if you own or manage residential or commercial property the odds are pretty good that you’re going to be dealing with a contractor at some point. Standing between you and your objective is one of the most nerve-racking experiences known to a property owner – the selection, retention and control of a contractor.

But conflicts and stress are NOT the inevitable result of working with legitimate contractors. By exercising caution, doing your due diligence and finding a contractor that communicates and ‘gets it’, you’ll minimize the aggravation on the way to that dream remodel. It is our hope that this group of articles full of recommendations, stories and insights will help you get there with a minimal amount of side trips for stress reduction therapies.

The articles are designed to provide information on avoiding the pitfalls and possible solutions and resources should a problem arise. As there’s really nothing new when it comes to consumer protection and awareness, the key advantage offered in these articles is the insights and perspective of someone who has been licensed as a General Contractor in California for over 30 years.

My goal is simple – I want to ‘win’ by providing both consumers and contractors an informational resource to help tone down the friction.

  • If I successfully prevent one consumer from being ripped off; I win.
  • If information in these articles helps a consumer select a legitimate, well qualified contractor instead of an unlicensed and unscrupulous operator; I win.
  • If either party avoids a conflict because they recognize other options or the potential downstream effects of their action; I win.
  • If someone overcomes the fear factor and gets the dream project they really want; I win.

You can help me ‘win’. Should something in the articles help you in some way, please let me know I’m on the right track. Also, if you have a story that should be shared – especially one in which you found a rather unique way to work things out rather than get into a nasty fight – please send it to me and it might make one of our ‘Tips & Tales’. You might win too by helping someone else.