Business and Professions Code Essentials — Business Law

Section 7068: qualifying individual

Every licensed contractor entity must have a qualifying individual. For sole owners, that is usually the owner. For corporations, partnerships, and LLCs, it is a Responsible Managing Employee (RME) or Responsible Managing Officer (RMO) who has at least four years of journey-level experience in the classification. The qualifier must exercise direct supervision and control over the construction operations of the business.

Section 7071.6: contractor bond

All active license holders must post a fifteen thousand dollar contractor bond. LLCs must post an additional one hundred thousand dollar LLC employee/worker bond. Qualifiers who are not also the owner must post a twenty-five thousand dollar bond of qualifying individual. The bond protects consumers, employees, and the state, in that order of priority.

Section 7159: home improvement contracts

Home improvement contracts must be in writing if the price exceeds five hundred dollars. The contract must include the contractor's name, address, license number, a description of the work, the total contract price, a notice of cancellation, and the schedule of payments. The down payment cannot exceed one thousand dollars or ten percent of the contract price, whichever is less.

Section 7110 and discipline

Section 7110 lets the CSLB discipline a licensee for willful or deliberate disregard of building laws, safety laws, or labor laws. Discipline can include citations, fines up to thirty thousand dollars, license suspension, and license revocation. Three citations in a five-year window can lead to automatic suspension.