The Legislature creates the rules that comprise the laws contractors must follow to do business in California. However, that's the easy part. When it comes to actual use — Board policy, staff interpretation and legal decisions can change or modify how that law applies. Such is the case with a serious new turn of events for every contractor in the state relating to the 'monster' which is sometimes known as B&P 7031 ...

After a series of legal decisions during the past few years, I didn't think the courts could make it any more difficult for contractors. I was wrong! It now appears that a recent case decided by the Court of Appeal will likely make it necessary for most contractors that are involved in litigation to produce a Verified Certificate from the CSLB proving they were duly licensed at all times during the performance of the contract.

For the most part, if you are a contractor suing for work YOU performed, and the opposing party claims that you were improperly licensed, the only way you can prove proper licensure is to produce a Verified Certificate. If you are unable to produce this document in time, you'll likely lose the case — even if you had the proper license and were in good standing throughout the contract. The opposing attorney may even know this but can still challenge and force you to produce said document.

It is no wonder that my office has been receiving double the requests for assistance during the past six months in obtaining these Certificates. The CSLB is obligated to complete these documents, and this case will certainly add to their burden in producing these Certificates in a timely manner. To date, the Board has done an excellent job at keeping on top of these requests, but I fear this case may cause a paperwork landslide putting legitimate contractors — with legitimate claims — in a real bind. Either way, it's not likely to speed things up for individual contractors.

Q: Can someone who is a licensed sole owner also be a RMO of another company that they hold stock in? Thank you for the help.

A: Yes, it is common for someone with a sole owner license to also be the RMO on a corporate license. However, in order to be the Responsible Managing Officer (RMO) and keep your existing license active, you will need to own at least 20 percent of the stock.

Q: I just received a letter from the CSLB stating my license will be suspended due to a bond cancellation. I called my bonding company and they are willing to re-issue a new bond. What is the best way to handle this to make sure my license remains in good standing?

A: Since the bond cancellation is not due to take effect for a few more weeks, it is best to have your insurance company file a renewal of your existing bond rather than a new bond with the Board. By filing a renewal, there should be no break in the bond, meaning no suspension on your record. For your information, had the cancellation taken place and you filed a renewal — or new bond — after 90-days, a lapse in your license would appear. The CSLB is able to accept a "back-dated" bond within 90 days of expiration or cancellation.

Q: On our Application For Original Contractor's License we marked the RMO box for each qualifier. Aren't BQI bonds only required if the qualifier is an RME? Should the Application be changed to RME for these two? Is there an ownership percentage where these bonds would not be required?

A: Thank you for the call. Since all personnel on your application have corporate titles, both qualifiers are, by definition, Responsible Managing OFFICERS (RMO). The need for a "bond of qualifying individual" (BQI) is based on percentage of ownership, not whether the qualifier is a RMO or RME (Responsible Managing Employee). Since neither qualifier actually owns any stock in this company, both are required to post these bonds. If one or both owned more than 10 percent of the equity in this corporation, a BQI would not be necessary.

Knowledge is power. Knowing where to go for the answers is half the battle.

Get expert assistance immediately when you call 916-443-0657 or e-mail info@cutredtape.com, fax 916-443-1908, or write me at Capitol Services, Inc., 1225 8th St. Ste. 580, Sacramento, CA 95814.