By Shauna Krause, President, Capitol Services, Inc.
You can’t buy forgiveness or ‘rent’ some things either, despite what rumors may have you believe. Just don’t do it…
Q: I am looking to purchase a contracting business but I only have experience working on my own houses and family member’s homes. I understand it is difficult to qualify based on experience gained as an “owner builder”, or handyman tasks that I have done for family. I’ve heard that it’s possible to “rent” an RMO (Responsible Managing Officer). How does that process work?
A: It depends on what exactly you mean by “rent” an RMO. We hear that term frequently and it means different things to different people. The proper way to go about the process of obtaining a Contractor’s License when you don’t have the requisite experience is to hire someone who either a) has a current contractor’s license and is willing to act as your Qualifier, or b) has the required amount of experience (4 years of full time within the last ten in the trade you are applying for) and is willing to sit for the exams. Either way, the individual should exercise direct supervision and control of the contracting business. Remember too, if you choose option ‘a’, if the individual does not have at least 20% ownership in your company, he/she would be required to Inactivate their own license.
Sometimes when people refer to “renting” an RMO, they are referring to paying a licensed contractor a fee to Qualify their license, with no intention of that individual being involved in the day-to-day operations of the company. This is a definite no- No! The CSLB is always on the lookout for this offense, and if discovered, will take disciplinary action on the Qualifier and the Licensee.
Q: We applied for a Contractor’s License for our Delaware corporation. On the license application instructions, it stated that “foreign” Corporations are required to list their President and the Qualifying Individual on the application, which we did. We just received a letter stating that Corporations are required to list their President, Secretary, and Treasurer as reflected with the Secretary of State, and that all individuals listed must be fingerprinted. Can you please clarify if this is actually required?
A: The CSLB used to require foreign corporations to only list their President and Qualifying Individual, however just recently they started following the provisions of B&P Code 7065b(1) with states “Every person who is an Officer, Member, responsible Manager, or Director of a Corporation or Limited Liability Company seeking licensure under this chapter shall be listed on the application as a member of the personnel of record”. You are correct about the instructions on the license application stating otherwise, but they are in the process of updating the forms to reflect this information. At least, that’s the rumor!
While knowledge is power, knowing where to go for the answers is half the battle. Get expert assistance immediately when you call 866-443-0657, email firstname.lastname@example.org, or write us at Capitol Services, Inc., 1225 8th St. Ste. 500, Sacramento, CA 95814. Research past columns at www.cutredtape.com.