By Shauna Krause, President, Capitol Services, Inc.
One change in a licensed business can lead to many more, one, or none. Contractor licensing law is complex and knowing which option fits your situation best might require an expert opinion. Another question involves a change few expect or plan for…
Q: I have a client hoping to complete an F-reorganization to acquire a plumbing Company (Corporation) that needs a “C-36” (Plumbing) license to operate. We are unsure whether or not we will need to re-apply for a new license if we do this. We know that we wouldn't need to if it were a straightforward stock sale, but we are unsure how the conversion involved in an F-reorg would impact licensing requirements.
A: Thank you for contacting me. It depends on what is involved in the F-reorg. If for example, the reorganization involves a change in the corporation’s jurisdiction, which would result in a new California Secretary of State registration number, the corporation would be required to obtain a new contractor’s license. If the reorganization involves a change in entity type in the form of a conversion from a Corporation to an LLC, or even a new LLC, there is an option for transferring the existing contractor’s license from the corporation to the LLC if they meet the requirement to do so. In order to transfer the license number from a corporation to an LLC, they must meet the following requirements:
- The corporation license is good standing upon the transfer request;
- The LLC was created in order to continue the business of the corporation; and
- The personnel listed on the LLC must remain exactly the same as is listed on the corporation license upon the transfer request.
Both of these would require “reapplying” for a license and requesting the same license number.
If the reorg is neither of the above and instead just a change in ownership, the existing license can simply be updated with the new Officers/ownership.
Q: My Dad has a contractor’s license and he passed away in December. I have worked for him for the past ten years. Our intention was for me to take over the business someday but we didn’t get the paperwork done prior to him passing. Is there anything I can do now to continue his business and get the license put the license in my name?
A: I am very sorry for your loss. In order to continue operating under your Dad’s license number, you should apply for a continuance with the CSLB. In order for the continuance to be approved, you must submit the request within 90 days of his passing. Upon review, the CSLB will have you put the license bond in your name. Assuming the continuance is granted, it will allow you to continue work in progress and take on new work for the allotted amount of time they give you. Separately, you can apply for your own license in your name and as long as you have five years of W-2’s (within the last ten years) working for your Dad’s license, you can request a Waiver of the exams and also request that his license number be re-issued to you. Let us know if you would like our assistance with this whole process.
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While knowledge is power, knowing where to go for the answers is half he battle. Get expert assistance immediately when you call 866-443-0657, email info@cutredtape.com, or write us at Capitol Services, Inc., 3609 Bradshaw Rd, Ste H, #343, Sacramento, CA 95827. Search past columns at www.cutredtape.com