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Unlicensed?

Thanks Pcp.. I guess working unlicensed has worked for you? Tell me what are the pitfalls or cons of working licensed. I think you've mentioned that you can end up paying more fees that way? How so?
I have California contractor licenses for 8 specialty trades including plumbing, hvac, roofing, ornamental iron, B general building contractor, A General Engineering, painting and decorating, and ASB asbestos abatement. So, I am not exactly unlicensed.

There are some pros and cons for being licensed. If you want to remain a one-horse operation and have no ambitions to charge more than $500 for a single job then getting licensed may be the wrong choice. Without a license it is very easy to stay under the radar and nobody is checking to see if you carry insurance, you don't have to pay licensing fees, and you don't have a license that can be revoked, etc.

Obviously, with a license you can do jobs for unlimited contract amounts, but you have to run your business like a real business which means you need to keep better records, pay for liability insurance, and it become more expensive to run your business. Now, with a license you have to start charging your customers more for the added overhead. Most people who fail don't have the business maturity to run a business and they end up hating what they do because things don't work as planned because there never was a good plan.
 

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Are you really missing the difference?

This is just not true. The total cost of the job cost 900.00 so he would need to be licensed. It says in plain English the job can't be broken up into materials and labor separately. Period. Can't be broken up into two separate jobs. It can't be broken up at all. What's so hard to understand about this? Doesn't matter what is in his contract. It's about the whole PROJECT. project being the key word here. Here's the excerpt: Anyone who contracts for or bids on a job that totals $500 or more (labor and materials) must hold a contractor's license from the CSLB. There are exceptions, including working as an employee of a licensed contractor or taking jobs that are valued at less than $500.

You can't write a contract with wording that changes the cost of the job. Just because your contract is for labor, the cost of the job includes material, rather its in your contract or not.
You are not 'changing' the wording just because your contract is for labor. If the contract is just for labor then that is how the contract is written and there is no change. If I'm doing a $9,500 job and I want to contract with an unlicensed contractor to haul the dirt away for $500 then the contractor's board is not going to ask what the entire project cost was to determine whether or not a law was violated.

If I'm installing a roof for $15,000 and I want to hire an unlicensed contractor to paint the wood trim for $500 I don't have to tell the contractor the contract price for the roof and the painter is not violating any law.

It does not say, "any contractor who bids on a job that totals more than $500."

There are two references in the law manual for unlicensed contractors that state:

Reference 1: You are 100% right. An unlicensed contractor cannot break up a large job into smaller jobs to skirt the law and it states that an unlicensed contractor cannot enter into a contract where the materials and labor combined for the project cannot exceed $500. This is saying that an unlicensed contractor cannot take something like a $1500 job and break it into 3 jobs for $500 and give portion 1 to his buddy Bob, portion 2 to his buddy George, and portion 3 do for himself. This is what, where, and when the words, 'ENTIRE PROJECT' refer to.

Reference 2: An unlicensed contractor cannot enter into a contract where the materials and labor combined exceed $500. Now, we can forget about the entire project statement in Reference 1 because the unlicensed contractor is not breaking up a $1500 job into three parts. This is a legitimate job where the customer paid for the materials and wants the unlicensed contractor to install the materials.

Reference 2 does not state , "THE ENTIRE JOB". Reference 2 is referring the unlicensed contractor's portion of the job only and not the entire project.

I did a sewer job in the street last week. The project was $9,500. I hired an unlicensed contractor to patch the asphalt for $400 and if what you say is true then I must have violated a contractor law by hiring him and could have my license revoked and the unlicensed contractor could face some penalties, fines, jail time, etc.

We will resolve this when I call my attorney and the license board in the morning. I am not mad, sad, nor glad about this so don't take my arguing personal. If I'm wrong the only way to learn is by arguing and doing research. I think this is going to be a good learning lesson for everyone because it is important to understand the laws, know the laws. and we have the realization that many contractors don't completely understand the laws and constantly studying the laws is important.

I love a good argument!
 

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Every agreement with a customer is a contract

I'm finding that a lot of guys who are applying for licenses using "self employed" experience are not using contracts. The law doesn't require that a "handyman" have a contract. So I'm curious, how many unlicensed people actually use contracts for jobs that are under $500?
Every agreement made with a customer is a contract. It doesn't matter whether or not an unlicensed contractors uses a written contract. Every time any contractor and customer enter into an agreement for any amount, verbally or written, they have entered into a contract.

It states in the law book that making an agreement with your gardener to mow your lawn is a contract and gardeners don't usually charge $500.
 

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I showed you where I am correct about they will see if the whole project is worth more then 500.00 show me the proof that they wont. This isn't even a good argument, because you keep saying the same thing. I keep showing you the proof.
 

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My results are in!

I showed you where I am correct about they will see if the whole project is worth more then 500.00 show me the proof that they wont. This isn't even a good argument, because you keep saying the same thing. I keep showing you the proof.
I did not see where you showed any proof. All I see is two paragraphs in the law books that are being translated by some as a 'no, and some as a 'yes.'

If I even thought that I might be wrong I would apologize and I have no problem with saying I made a mistake. This is the results of making three calls to the Sacramento license office, one call to the Long Beach office, and one call to my attorney. I would love to have recorded the calls, but I'm sure nobody would agree to be recorded very easily and I don't want to lose my license by posting recorded phone calls without their permission.

My attorney said there is no problem with an unlicensed contractor charging up to $500 for labor to install the customer's materials as long as the materials are not incorporated in the contract. You probably don't believe that, but it doesn't really matter and my attorney could be wrong. At least I made the effort and I know the answer.

This is what the Long Beach branch said and this is the question I asked.

I spoke with a woman and told her my mother is 85 years old and she purchased some plastic walls to install around her bathtub. I told her the walls cost $350 and I wanted to know if it was legal for her to hire an unlicensed contractor to install the walls for $300 and she said, 'definitely, yes," it was not a violation of the contractor law. Then, I asked her if it was still okay because the total for the job was more than the $500 limit and she still said it was okay, and then she started lecturing me about the problems that can result from hiring an unlicensed contractor such as liabilities, etc.

I called the Sacramento office three times had two negative answers and one positive answer. I did not ask the question the same for two of the board members. These were my first to calls and I asked if an unlicensed contractor could install a water heater for $300 if the homeowner purchased the water heater for $450 and before the license board member answered he started lecturing me and said I would be breaking the law due to the fact I could not obtain the necessary plumbing permit and the conversation went into a downward spiral as he continued to lecture me about worker's comp, general liability, etc.

Then, when I told the license board member that I was already a licensed contractor and was asking the questions to resolve a debate he was very polite, but implied that I was a liar and I sounded like an unlicensed contractor trying to get around the law.

I asked the 2nd license board member a similar question and the answer was no.

For the third license board member I used the same approach I used for the Long Beach license office and the answer was a definite yes.

I asked one more question and told the license board member that I did a $9500 sewer job in the street and hired an unlicensed contractor to haul the dirt away for $400. I was told that this was not not a violation of the law and the cost of the entire job has nothing to do with the unlicensed contractor's that was specific to the performance on only his work and material (if he had materials in his contract).

My attorney, Leonard Fruchter in Torrance California is strictly a contractor attorney. He handles no other type of cases. He looked in his law books and said he does not sees where there is a problem and said an unlicensed contractor would (should) win in a court if he does a job for $500 and the customer pays for the separately for the materials, but could find no past case where this has been tested in court.

This is similar to a Los Angeles Metro Rail ordinance. There is a sign on the electric trains that say "No Food Or Drinks Allowed" and this has happened many times when passenger have been given tickets for drinking prescription medications and for getting on the train while chewing gum. One Judge commented that the police are ignorant about the 'No Eating On The Train' law and should know better.

The answer you get for the question depends on how you ask, who is answering, and what the person answering thinks the motive is. If my mother wants to hire a contractor then it doesn't appear someone is trying to skirt the law, my mother's intention is innocent (I Think) and the answer will be positive. If I ask the question and appear to want to skirt the law then the answer will be negative.

I guess we will not settle this until someone gets a citation and goes to court with a good lawyer. So, somebody, get brave and lets put this to the test. I would love to, but I already have a license.
 

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You don't need liability insurance in california and you don't need workmans comp unless you have employees. ( One exception is that roofers must carry workmans comp even if they have no employees). One benefit of being licensed is that you don't have to keep looking over your shoulder and you don't have to worry about being caught up in one of the c.s.l.b stings that are held weekly from southern cali to northern cali. If you get caught you will be going to court. Also, you won't have to walk back to the truck with your tail between your legs because the home owner asked if you are licensed and you had to say "Uh....no I'm not. But they don't make it easy to get Licensed in california. There's a sense of pride when you are a " licensed Contractor", a step above all the unlicensed wannabes.
 

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Sorry PC, but if I read your opinion correctly, you are wrong. It is the value of the project itself, not the value of the contract. Per the CSLB's own website: "It is illegal for an unlicensed person to perform contracting work on any project valued at $500 or more in labor and materials..."

The cost of materials is factored in regardless of who purchases them. So, under your example, if the homeowner buys the granite, yes it would require a license to install it.

Furthermore, while there's some ambiguity, the law is going to err on the side of a homeowner when it comes to an unlicensed contractor trying to split up contracts to stay under the $500.00 project value limit. If a homeowner calls out someone to do a job valued at $499.00 and they discuss another project valued at another $250.00, the contractor could not avoid the licensing requirement by entering into two separate contracts. However, if the homeowner called the unlicensed contractor a few days after the first job was completed and requested the additional work, that would be acceptable as it wasn't contemplated at the time of the first contract.
 

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Discussion Starter #53
I have California contractor licenses for 8 specialty trades
So why do you have these licenses if you could just bill everyone in $500 segments like you were saying I could do? Also, do you actually have to buy a $10 grand per year workers comp package for each employee? This seems outrageous!

Thanks again.
 

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So why do you have these licenses if you could just bill everyone in $500 segments like you were saying I could do? Also, do you actually have to buy a $10 grand per year workers comp package for each employee? This seems outrageous!

Thanks again.
If he had all these licenses he would tell us the name of at least one of them so we can look it up. Ill bet you a million bucks he wont.
 
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