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Contractor Licensing

     Many States require that a contractor or subcontractor be licensed in order to preform services within that State. Contractor and subcontractor licensing is typically seen as a means by which the State can protect the public and consumers from the acts of unscrupulous or unqualified contractors. State licensing statues are an extremely important thing to consider before bidding a project in the United States. The failure to be licensed can have very serious consequences.

     In many States that require contractor licensing, the failure to be licensed can interfere with the contractor or subcontractor’s ability to recover payment on a project. In some States, such as California for example, a failure to have a State license can be a complete bar to payment.

This website may include sample portions of state law sections from the handbook. These are included to demonstrate the content of the handbook. These sections may not be current and should not be relied upon for information or advice.

STATE OF CALIFORNIA

Who Must Be Licensed: With few exceptions, all contractors must be licensed both to bid on and to preform work worth over $500. Contractors must be licensed by the California Contractors State License Board (CLSB). Cal. Bus. & Prof. Code § 7025 et seq.
Procedural Requirements: Submit written application to registrar. Cal. Bus. & Prof. Code § 7066. The applicant must also provide evidence of financial solvency. Cal. Bus. & Prof. Code § 7067.5. For an Application form, consult this web site: http://www.cslb.ca.gov/GeneralInformation/Library/FormsAndApplications.asp.
Fees: There is a $2500 non–refundable application fee. Applicant must file a contractor’s bond in the amount of $12,500. The aggregate liability of a surety on claims against this bond may not exceed $7,500. If the applicant has been convicted of or cited for a violation, the board can double the bond amount. Cal. Bus. & Prof. Code § 707.6.
Expiration: Licenses expire 2 years from the last day of the month in which the license is issued, or 2 years from the date on which the renewed license last expired. Cal. Bus. & Prof. Code § 7140.
Exam: Required. Cal. Bus. & Prof. Code § 7065.
Reciprocity: California has reciprocity agreements with Arizona, Nevada, and Utah.
Penalties: It is a misdemeanor for an unlicensed contractor to work in California. For contracting without a license, fine in amount of 20% of the price or $5,000, whichever is greater, and jail sentence of not less than 90 days. For a 3rd or subsequent conviction, the fine is to be not less then $5,000 and not more then the greater amount of $10,000 or 20% of the contract price; jail sentence is to be not less than 90 days and not greater than 1 year. Cal. Bus. & Prof. Code § 7028.