7065-7077
BUSINESS AND PROFESSIONS CODE
SECTION 7065-7077
7065. (a) Under rules and regulations adopted by the board and
approved by the director, the registrar shall investigate, classify,
and qualify applicants for contractors' licenses by written
examination. This examination shall include questions designed to
show that the applicant has the necessary degree of knowledge
required by Section 7068 and shall include pertinent questions
relating to the laws of this state, and the contracting business and
trade.
(b) Contractors' licenses are to be issued to individual owners,
partnerships, corporations, and limited liability companies in
accordance with the provisions of this chapter.
(1) 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.
(2) Every person who is a member of a partnership seeking
licensure under this chapter shall be listed on the application as a
member of the personnel record.
(c) An applicant shall qualify for licensure in accordance with
the provisions of this subdivision as follows:
(1) An individual owner may qualify by examination for a
contractor's license upon the appearance of the owner or a qualifying
individual appearing as a responsible managing employee on behalf of
the owner.
(2) A partnership may qualify by examination for a contractor's
license upon the appearance of a partner or a qualifying individual
appearing as a responsible managing employee on behalf of the
copartnership.
(3) A corporation may qualify by examination for a contractor's
license upon the appearance of a qualifying individual appearing
either as a responsible managing officer or a responsible managing
employee on behalf of the corporation.
(4) A limited liability company may qualify by examination for a
contractor's license upon the appearance of a qualifying individual
appearing as a responsible managing officer, a responsible managing
manager, a responsible managing member, or a responsible managing
employee on behalf of the company.
(d) No examination shall be required of a qualifying individual
if, within the five-year period immediately preceding the application
for licensure, the qualifying individual has either personally
passed the written examination for the same classification being
applied for, or has served as the qualifying individual for a
licensee whose license was in good standing at any time during the
five-year period immediately preceding the application for licensure
and in the same classification being applied for.
7065.01. Notwithstanding Section 7065, no trade examination shall
be required of an applicant for the limited specialty license
classification.
7065.05. The board shall periodically review and, if needed, revise
the contents of qualifying examinations to insure that the
examination questions are timely and relevant to the business of
contracting. The board shall, in addition, construct and conduct
examinations in such a manner as to preclude the possibility of any
applicant having prior knowledge of any specific examination
question.
7065.1. Notwithstanding Section 7065, the registrar may waive the
examination for a contractor's license under any of the following
circumstances:
(a) The qualifying individual has, for five of the seven years
immediately preceding the application for licensure, been listed on
the official records of the board as a member of the personnel of any
licensee who held a license, which was active and in good standing,
in the same classification being applied for, and who during the
period listed on the license has been actively engaged in a licensee'
s construction activities in the same classification within which the
applicant applies for a license.
(b) The qualifying individual is an immediate member of the family
of a licensee whose individual license was active and in good
standing for five of the seven years immediately preceding the
application for licensure, and the qualifying individual is able to
show all of the following:
(1) The qualifying individual has been actively engaged in the
licensee's business for five of the seven years immediately preceding
the application for licensure.
(2) The license is required to continue the existing family
business in the event of the absence or death of the licensee.
(3) An application is made for a new license in the same
classifications in which the licensee is or was licensed.
(c) The qualifying individual is an employee of a corporation or a
limited liability company seeking to replace its former qualifying
individual and has been employed by that corporation or limited
liability company under the following conditions:
(1) For five of the seven years immediately preceding the
application for licensure, the qualifying individual has been
continually employed by the corporation or limited liability company
in a supervisory capacity in the same classifications being applied
for.
(2) For five of the seven years immediately preceding the
application for licensure, the corporation or limited liability
company has held an active license in good standing in the same
classifications being applied for.
(3) The corporation or limited liability company has not requested
a waiver under this subdivision within the past five years.
For purposes of this section, employees of a corporation or
limited liability company shall include, but not be limited to, the
officers of a corporation and the officers and managers of a limited
liability company.
7065.2. Notwithstanding Section 7065, the registrar may waive the
examination for a contractor's license if the applicant has
previously held a valid contractor's license in this state and has
been acting in the capacity of a contractor for the United States
government in a position exempt from licensure under this chapter.
7065.3. Notwithstanding Section 7065, upon a conclusive showing by
a licensee that he or she possesses experience satisfactory to the
registrar in the classification applied for, an additional
classification may be added, without further examination, under all
of the following conditions:
(a) For five of the seven years immediately preceding the
application, the qualifying individual of the licensee has been
listed as a member of the personnel of any licensee whose license was
active and in good standing, and who during the period listed on a
license was actively engaged in the licensee's construction
activities.
(b) The qualifying individual for the applicant has had within the
last 10 years immediately preceding the filing of the application,
not less than four years experience as a journeyman, foreman,
supervising employee or contractor in the classification within which
the licensee intends to engage in the additional classification as a
contractor.
(c) The application is, as determined by the registrar, for a
classification which is closely related to the classification or
classifications in which the licensee is licensed, or the qualifying
individual is associated with a licensed general engineering
contractor or licensed general building contractor and is applying
for a classification which is a significant component of the licensed
contractor's construction business as determined by the registrar.
This section shall not apply to an applicant who is licensed solely
within the limited-specialty classifications.
Pursuant to Section 7065, the registrar shall conduct a
comprehensive field investigation of no less than 3 percent of
applications filed under this section to ensure that the applicants
met the experience requirements of this section and shall make
public, at quarterly meetings of the Contractors' State License
Board, a listing of all applications approved under this section
during the previous 12 months, including, but not limited to, the
name of the applicant, license number, classification applied for,
and existing classifications.
7065.4. The registrar may accept the qualifications of an applicant
who is licensed as a contractor in a similar classification in
another state if that state accepts the qualifications of a
contractor licensed in this state for purposes of licensure in that
other state, and if the board ascertains, on a case-by-case basis,
that the professional qualifications and conditions of good standing
for licensure and continued licensure are at least the same or
greater in that state as in California. The registrar may waive the
trade examination for that applicant if the applicant provides
written certification from that other state in which he or she is
licensed, that the applicant's license has been in good standing for
the previous five years.
7065.5. No license shall be issued to a minor, nor to any
partnership a partner of which is a minor, nor to any corporation any
officer, director or responsible managing employee of which is a
minor, nor to any limited liability company any officer, manager, or
responsible managing employee of which is a minor, nor to any other
kind of business organization in which a minor holds a responsible
official position, unless the minor shall first have had a guardian
appointed by a court of competent jurisdiction.
7066. To obtain an original license, an applicant shall submit to
the registrar an application in writing containing the statement that
the applicant desires the issuance of a license under the terms of
this chapter.
The application shall be made on a form prescribed by the
registrar in accordance with the rules and regulations adopted by the
board and shall be accompanied by the fee fixed by this chapter.
7066.5. Any person may obtain blank license application, renewal,
or reinstatement forms from the Department of Consumer Affairs, or
may cause to be printed forms used by or approved by the Registrar of
Contractors.
7067.5. Every applicant for an original license, or for the
reactivation of an inactive license, or for the reissuance or
reinstatement of a revoked license shall possess and every such
applicant, other than one applying under Section 7029 unless required
by the registrar, shall evidence financial solvency. The registrar
shall deny the application of any applicant who fails to comply with
this section. For purposes of this section financial solvency shall
mean that the applicant's operating capital shall exceed two thousand
five hundred dollars ($2500).
The applicant shall provide answers to questions contained in a
standard form of questionnaire as required by the registrar relative
to his financial ability and condition and signed by the applicant
under penalty of perjury.
In any case in which further financial information would assist
the registrar in an investigation, the registrar may obtain such
information or may require any licensee or applicant under
investigation pursuant to this chapter to provide such additional
financial information as the registrar may deem necessary.
The financial information required by the registrar shall be
confidential and not a public record, but, where relevant, shall be
admissible as evidence in any administrative hearing or judicial
action or proceeding.
The registrar may destroy any financial information which has been
on file for a period of at least three years.
7067.6. Every application form for an original license, for renewal
thereof, for reinstatement or for reissuance, including both active
and inactive licenses, shall be signed by both the applicant and by
the person qualifying on behalf of an individual or firm as referred
to in Section 7068.1.
7068. (a) The board shall require an applicant to show the degree
of knowledge and experience in the classification applied for, and
the general knowledge of the building, safety, health, and lien laws
of the state and of the administrative principles of the contracting
business that the board deems necessary for the safety and protection
of the public.
(b) An applicant shall qualify in regard to his or her experience
and knowledge in one of the following ways:
(1) If an individual, he or she shall qualify by personal
appearance or by the appearance of his or her responsible managing
employee who is qualified for the same license classification as the
classification being applied for.
(2) If a partnership or a limited partnership, it shall qualify by
the appearance of a general partner or by the appearance of a
responsible managing employee who is qualified for the same license
classification as the classification being applied for.
(3) If a corporation, or any other combination or organization, it
shall qualify by the appearance of a responsible managing officer or
responsible managing employee who is qualified for the same license
classification as the classification being applied for.
(4) If a limited liability company, it shall qualify by the
appearance of a responsible managing officer, a responsible managing
manager, responsible managing member, or a responsible managing
employee who is qualified for the same license classification as the
classification being applied for.
(c) A responsible managing employee for the purpose of this
chapter shall mean an individual who is a bona fide employee of the
applicant and is actively engaged in the classification of work for
which that responsible managing employee is the qualifying person on
behalf of the applicant.
(d) The board shall, in addition, require an applicant who
qualifies by means of a responsible managing employee under either
paragraph (1) or (2) of subdivision (b) to show his or her general
knowledge of the building, safety, health, and lien laws of the state
and of the administrative principles of the contracting business as
the board deems necessary for the safety and protection of the
public.
(e) Except in accordance with Section 7068.1, no person qualifying
on behalf of an individual or firm under paragraph (1), (2), (3), or
(4) of subdivision (b) shall hold any other active contractor's
license while acting in the capacity of a qualifying individual
pursuant to this section.
(f) At the time of application for renewal of a license, the
current qualifying individual shall file a statement with the
registrar, on a form prescribed by the registrar, verifying his or
her capacity as a qualifying individual to the licensee.
(g) Statements made by or on behalf of an applicant as to the
applicant's experience in the classification applied for shall be
verified by a qualified and responsible person. In addition, the
registrar shall, as specified by board regulation, randomly review a
percentage of such statements for their veracity.
(h) The registrar shall review experience gained by applicants
from other states to determine whether all of that experience was
gained in a lawful manner in that state.
7068.1. The person qualifying on behalf of an individual or firm
under paragraph (1), (2), (3), or (4) of subdivision (b) of Section
7068 shall be responsible for exercising that direct supervision and
control of his or her employer's or principal's construction
operations as is necessary to secure full compliance with the
provisions of this chapter and the rules and regulations of the board
relating to the construction operations. This person shall not act
in the capacity of the qualifying person for an additional individual
or firm unless one of the following conditions exists:
(a) There is a common ownership of at least 20 percent of the
equity of each individual or firm for which the person acts in a
qualifying capacity.
(b) The additional firm is a subsidiary of or a joint venture with
the first. "Subsidiary," as used in this subdivision, means any firm
at least 20 percent of the equity of which is owned by the other
firm.
(c) With respect to a firm under paragraph (2), (3), or (4) of
subdivision (b) of Section 7068, the majority of the partners,
officers, or managers are the same.
(d) Notwithstanding subdivisions (a), (b), and (c), a qualifying
individual may act as the qualifier for no more than three firms in
any one-year period.
"Firm," as used in this section, means a copartnership, a limited
partnership, a corporation, a limited liability company, or any other
combination or organization described in Section 7068.
"Person," as used in this section, is limited to natural persons,
notwithstanding the definition of "person" in Section 7025.
The board shall require every applicant or licensee qualifying by
the appearance of a qualifying individual to submit detailed
information on the qualifying individual's duties and
responsibilities for supervision and control of the applicant's
construction operations.
7068.2. If the responsible managing officer, responsible managing
employee, responsible managing member, or responsible managing
manager, disassociates from the licensed entity, the licensee, or the
qualifier shall notify the registrar in writing, and the licensee
shall replace the qualifier, within 90 days from the date of
disassociation.
To replace a responsible managing officer, responsible managing
employee, responsible managing member, or responsible managing
manager, the licensee shall file an application as prescribed by the
registrar, accompanied by the fee fixed by this chapter, designating
an individual to qualify as required by this chapter.
Upon failure to replace the qualifier within 90 days of the
disassociation the license shall be automatically suspended or the
classification removed at the end of the 90 days.
The registrar may review and accept the petition of a licensee who
disputes the date of disassociation or who has failed to notify and
replace the qualifier within the prescribed time, upon a showing of
good cause by the contractor. This petition shall be received within
90 days from the date of the board's notice that the license will be
suspended if the qualifier is not replaced. The registrar may grant
only one 90-day extension to replace the qualifier.
Upon failure of the licensee or the qualifier to notify the
registrar of the disassociation within 90 days from the date of
disassociation, the license shall be automatically suspended or the
classification removed and the qualifier removed from the license
effective the date the written notification is received at the board'
s headquarters office.
The person qualifying on behalf of a licensee under Section 7068
shall be responsible for the licensee's construction operations until
the board receives the written notification of disassociation.
Failure of the licensee or the qualifier to notify the registrar
of the qualifier's disassociation within 90 days of the
disassociation is grounds for disciplinary action.
7068.5. It is a misdemeanor for any person other than the examinee
named in the application to take the qualifying examination on behalf
of an applicant for a contractor's license.
7068.7. Any person who obtains and provides for another the
qualifying examination, or any part thereof, when not authorized to
do so, is guilty of a misdemeanor.
7069. (a) An applicant, and each officer, director, partner,
manager, associate, and responsible managing employee thereof, shall
not have committed acts or crimes that are grounds for denial of
licensure under Section 480.
(b) As part of an application for a contractor's license, the
board shall require an applicant to furnish a full set of
fingerprints for purposes of conducting a criminal history record
check. Fingerprints furnished pursuant to this subdivision shall be
submitted in an electronic format if readily available. Requests for
alternative methods of furnishing fingerprints are subject to the
approval of the registrar. The board shall use the fingerprints
furnished by an applicant to obtain criminal history information on
the applicant from the Department of Justice and the United States
Federal Bureau of Investigation, and the board may obtain any
subsequent arrest information that is available.
7069.1. (a) Upon notification of an arrest of a member of the
personnel of a licensee or a home improvement salesperson, the
registrar, by first-class mail to the last official address of
record, may require the arrestee to provide proof of the disposition
of the matter.
(b) The proof required by this section shall be satisfactory for
carrying out the purposes of this chapter, and at the registrar's
discretion may include, but is not limited to, certified court
documents, certified court orders, or sentencing documents. Any proof
required by this section shall be received by the registrar within
90 days of the date of the disposition, or within 90 days of the
registrar's demand for information if that date is later.
(c) Failure to comply with the provisions of this section
constitutes cause for disciplinary action.
7070. An applicant shall show that he or she has never been denied
a license or had a license revoked for reasons that would preclude
the granting of the license applied for. Where the board has denied
an application for license under this chapter or Chapter 2
(commencing with Section 480) of Division 1.5, it shall, in its
decision, or in its notice under subdivision (b) of Section 485,
inform the applicant of the earliest date that the applicant may
reapply for a license, which shall be one year from the effective
date of the decision or service of notice under subdivision (b) of
Section 485, unless the board prescribes an earlier date.
7071. No license shall be issued to a corporation, partnership,
limited liability company, or other combination or organization if a
responsible officer or director of the corporation, or other
combination or organization, or a partner of the copartnership, or a
manager or officer of the limited liability company, or any member of
an organization seeking licensure under this chapter does not meet
the qualifications required of an applicant other than those
qualifications relating to knowledge and experience.
7071.3. Notwithstanding any other provision of this code, the
holder of a current valid license under this chapter who has entered
or enters the armed forces of the United States may designate a
responsible managing person or persons to act for him while in the
armed forces and until one year after his discharge therefrom, after
which time the authority to so act for the licensee shall terminate.
The renewal fee shall be paid for any such licensee so designating
others to act for him.
Any license shall remain in full force and effect for 30 days
after the entrance of the licensee into the armed forces, but he
shall prior to the expiration of such 30-day period provide the
registrar with the name or names of the persons so designated to
conduct his business. The registrar may qualify such persons in any
manner he may adopt. Persons so designated shall not have committed
acts or crimes constituting grounds for denial of licensure under
Section 480.
Persons so designated committing any of the acts or crimes
constituting grounds for denial of licensure under Section 480 shall
be removed from the business of such licensee after a hearing as
provided in this chapter.
7071.5. The contractor's bond required by this article shall be
executed by an admitted surety in favor of the State of California,
in a form acceptable to the registrar and filed with the registrar by
the licensee or applicant. The contractor's bond shall be for the
benefit of the following:
(a) A homeowner contracting for home improvement upon the
homeowner's personal family residence damaged as a result of a
violation of this chapter by the licensee.
(b) A property owner contracting for the construction of a
single-family dwelling who is damaged as a result of a violation of
this chapter by the licensee. That property owner shall only recover
under this subdivision if the single-family dwelling is not intended
for sale or offered for sale at the time the damages were incurred.
(c) A person damaged as a result of a willful and deliberate
violation of this chapter by the licensee, or by the fraud of the
licensee in the execution or performance of a construction contract.
(d) An employee of the licensee damaged by the licensee's failure
to pay wages.
(e) A person or entity, including an express trust fund described
in Section 3111 of the Civil Code, to whom a portion of the
compensation of an employee of a licensee is paid by agreement with
that employee or the collective bargaining agent of that employee,
damaged as the result of the licensee's failure to pay fringe
benefits for its employees, including, but not limited to, employer
payments described in Section 1773.1 of the Labor Code and
regulations thereunder (without regard to whether the work was
performed on a private or public work). Damage to an express trust
fund is limited to actual employer payments required to be made on
behalf of employees of the licensee, as part of the overall
compensation of those employees, which the licensee fails to pay.
7071.5. The contractor's bond required by this article shall be
executed by an admitted surety in favor of the State of California,
in a form acceptable to the registrar and filed with the registrar by
the licensee or applicant. The contractor's bond shall be for the
benefit of the following:
(a) A homeowner contracting for home improvement upon the
homeowner's personal family residence damaged as a result of a
violation of this chapter by the licensee.
(b) A property owner contracting for the construction of a
single-family dwelling who is damaged as a result of a violation of
this chapter by the licensee. That property owner shall only recover
under this subdivision if the single-family dwelling is not intended
for sale or offered for sale at the time the damages were incurred.
(c) A person damaged as a result of a willful and deliberate
violation of this chapter by the licensee, or by the fraud of the
licensee in the execution or performance of a construction contract.
(d) An employee of the licensee damaged by the licensee's failure
to pay wages.
(e) A person or entity, including a laborer described in
subdivision (b) of Section 8024 of the Civil Code, to which a portion
of the compensation of an employee of a licensee is paid by
agreement with that employee or the collective bargaining agent of
that employee, damaged as the result of the licensee's failure to pay
fringe benefits for its employees, including, but not limited to,
employer payments described in Section 1773.1 of the Labor Code and
regulations thereunder (without regard to whether the work was
performed on a private or public work). Damage to a person or entity
under this subdivision is limited to actual employer payments
required to be made on behalf of employees of the licensee, as part
of the overall compensation of those employees, which the licensee
fails to pay.
7071.6. (a) The board shall require as a condition precedent to the
issuance, reinstatement, reactivation, renewal, or continued
maintenance of a license, that the applicant or licensee file or have
on file a contractor's bond in the sum of twelve thousand five
hundred dollars ($12,500).
(b) Excluding the claims brought by the beneficiaries specified in
subdivision (a) of Section 7071.5, the aggregate liability of a
surety on claims brought against a bond required by this section
shall not exceed the sum of seven thousand five hundred dollars
($7,500). The bond proceeds in excess of seven thousand five hundred
dollars ($7,500) shall be reserved exclusively for the claims of the
beneficiaries specified in subdivision (a) of Section 7071.5.
However, nothing in this section shall be construed so as to prevent
any beneficiary specified in subdivision (a) of Section 7071.5 from
claiming or recovering the full measure of the bond required by this
section.
(c) No bond shall be required of a holder of a license that has
been inactivated on the official records of the board during the
period the license is inactive.
(d) Notwithstanding any other provision of law, as a condition
precedent to licensure, the board may require an applicant to post a
contractor's bond in twice the amount required pursuant to
subdivision (a) until the time that the license is renewed, under the
following conditions:
(1) The applicant has either been convicted of a violation of
Section 7028 or has been cited pursuant to Section 7028.7.
(2) If the applicant has been cited pursuant to Section 7028.7,
the citation has been reduced to a final order of the registrar.
(3) The violation of Section 7028, or the basis for the citation
issued pursuant to Section 7028.7, constituted a substantial injury
to the public.
7071.7. (a) Except as provided in subdivision (b), the registrar
shall accept a bond required by Section 7071.6, 7071.6.5, 7071.8, or
7071.9 as of the effective date shown on the bond, if the bond is
received by the registrar within 90 days after that date, and shall
reinstate the license to which the bond pertains, if otherwise
eligible, retroactive to the effective date of the bond.
(b) Notwithstanding subdivision (a), the registrar shall accept a
bond as of the effective date shown on the bond, even if the bond is
not received by the registrar within 90 days after that date, upon a
showing by the licensee, on a form acceptable to the registrar, that
the failure to have a bond on file was due to circumstances beyond
the control of the licensee. The registrar shall reinstate the
license to which the bond pertains, if otherwise eligible,
retroactive to the effective date of the bond.
7071.8. (a) This section applies to an application for a license,
for renewal or restoration of a license, an application to change
officers or members of a corporation or a limited liability company,
or for continued valid use of a license which has been disciplined,
whether or not the disciplinary action has been stayed, made by any
of the following persons or firms:
(1) A person whose license has been suspended or revoked as a
result of disciplinary action, or a person who was a qualifying
individual for a licensee at any time during which cause for
disciplinary action occurred resulting in suspension or revocation of
the licensee's license, whether or not the qualifying individual had
knowledge or participated in the prohibited act or omission.
(2) A person who was an officer, director, manager, partner, or
member of the personnel of record of a licensee at any time during
which cause for disciplinary action occurred resulting in suspension
or revocation of the licensee's license and who had knowledge of or
participated in the act or omission which was the cause for the
disciplinary action.
(3) A partnership, corporation, limited liability company, firm,
or association of which an existing or new officer, director,
manager, partner, qualifying person, or member of the personnel of
record has had a license suspended or revoked as a result of
disciplinary action.
(4) A partnership, corporation, limited liability company, firm,
or association of which a member of the personnel of record,
including, but not limited to, an officer, director, manager,
partner, or qualifying person was, likewise, a manager, officer,
director, or partner of a licensee at any time during which cause for
disciplinary action occurred resulting in suspension or revocation
of the license, and who had knowledge of or participated in the act
or omission which was the cause for the disciplinary action.
(b) The board shall require as a condition precedent to the
issuance, reissuance, renewal, or restoration of a license to the
applicant, or to the approval of an application to change officers of
a corporation or a limited liability company, or removal of
suspension, or to the continued valid use of a license which has been
suspended or revoked, but which suspension or revocation has been
stayed, that the applicant or licensee file or have on file a
contractor's bond in a sum to be fixed by the registrar based upon
the seriousness of the violation, but which sum shall not be less
than fifteen thousand dollars ($15,000) nor more than 10 times that
amount required by Section 7071.6.
(c) The bond is in addition to, may not be combined with, and does
not replace any other type of bond required by this chapter. The
bond shall remain on file with the registrar for a period of at least
two years and for any additional time that the registrar determines.
The bond period shall run only while the license is current, active,
and in good standing, and shall be extended until the license has
been current, active, and in good standing for the required period.
Each applicant or licensee shall be required to file only one
disciplinary contractor's bond of the type described in this section
for each application or license subject to this bond requirement.
7071.9. (a) If the qualifying individual, as referred to in
Sections 7068 and 7068.1, is neither the proprietor, a general
partner, nor a joint licensee, he or she shall file or have on file a
qualifying individual's bond as provided in Section 7071.10 in the
sum of twelve thousand five hundred dollars ($12,500). This bond is
in addition to, and may not be combined with, any contractor's bond
required by Sections 7071.5 to 7071.8, inclusive, and is required for
the issuance, reinstatement, reactivation, or continued valid use of
a license.
(b) Excluding the claims brought by the beneficiaries specified in
paragraph (1) of subdivision (a) of Section 7071.10, the aggregate
liability of a surety on claims brought against the bond required by
this section shall not exceed the sum of seven thousand five hundred
dollars ($7,500). The bond proceeds in excess of seven thousand five
hundred dollars ($7,500) shall be reserved exclusively for the claims
of the beneficiaries specified in paragraph (1) of subdivision (a)
of Section 7071.10. However, nothing in this section shall be
construed to prevent any beneficiary specified in paragraph (1) of
subdivision (a) of Section 7071.10 from claiming or recovering the
full measure of the bond required by this section. This bond is in
addition to, and may not be combined with, any contractor's bond
required by Sections 7071.5 to 7071.8, inclusive, and is required for
the issuance, reinstatement, reactivation, or continued valid use of
a license.
(c) The responsible managing officer of a corporation shall not be
required to file or have on file a qualifying individual's bond, if
he or she owns 10 percent or more of the voting stock of the
corporation and certifies to that fact on a form prescribed by the
registrar.
(d) The qualifying individual for a limited liability company
shall not be required to file or have on file a qualifying individual'
s bond if he or she owns at least a 10-percent membership interest in
the limited liability company and certifies to that fact on a form
prescribed by the registrar.
7071.10. The qualifying individual's bond required by this article
shall be executed by an admitted surety insurer in favor of the State
of California, in a form acceptable to the registrar and filed with
the registrar by the qualifying individual. The qualifying individual'
s bond shall not be required in addition to the contractor's bond
when, as set forth under paragraph (1) of subdivision (b) of Section
7068, the individual proprietor has qualified for the license by his
or her personal appearance, or the qualifier is a general partner as
set forth under paragraph (2) of subdivision (b) of Section 7068. The
qualifying individual's bond shall be for the benefit of the
following persons:
(a) A homeowner contracting for home improvement upon the
homeowner's personal family residence damaged as a result of a
violation of this chapter by the licensee.
(b) A property owner contracting for the construction of a
single-family dwelling who is damaged as a result of a violation of
this chapter by the licensee. That property owner shall only recover
under this subdivision if the single-family dwelling is not intended
for sale or offered for sale at the time the damages were incurred.
(c) A person damaged as a result of a willful and deliberate
violation of this chapter by the licensee, or by the fraud of the
licensee in the execution or performance of a construction contract.
(d) An employee of the licensee damaged by the licensee's failure
to pay wages.
(e) A person or entity, including an express trust fund described
in Section 3111 of the Civil Code, to whom a portion of the
compensation of an employee of a licensee is paid by agreement with
that employee or the collective bargaining agent of that employee,
that is damaged as the result of the licensee's failure to pay fringe
benefits for its employees including, but not limited to, employer
payments described in Section 1773.1 of the Labor Code and
regulations adopted thereunder (without regard to whether the work
was performed on a public or private work). Damage to an express
trust fund is limited to employer payments required to be made on
behalf of employees of the licensee, as part of the overall
compensation of those employees, which the licensee fails to pay.
7071.10. The qualifying individual's bond required by this article
shall be executed by an admitted surety insurer in favor of the State
of California, in a form acceptable to the registrar and filed with
the registrar by the qualifying individual. The qualifying individual'
s bond shall not be required in addition to the contractor's bond
when, as set forth under paragraph (1) of subdivision (b) of Section
7068, the individual proprietor has qualified for the license by his
or her personal appearance, or the qualifier is a general partner as
set forth under paragraph (2) of subdivision (b) of Section 7068. The
qualifying individual's bond shall be for the benefit of the
following persons:
(a) A homeowner contracting for home improvement upon the
homeowner's personal family residence damaged as a result of a
violation of this chapter by the licensee.
(b) A property owner contracting for the construction of a
single-family dwelling who is damaged as a result of a violation of
this chapter by the licensee. That property owner shall only recover
under this subdivision if the single-family dwelling is not intended
for sale or offered for sale at the time the damages were incurred.
(c) A person damaged as a result of a willful and deliberate
violation of this chapter by the licensee, or by the fraud of the
licensee in the execution or performance of a construction contract.
(d) An employee of the licensee damaged by the licensee's failure
to pay wages.
(e) A person or entity, including a laborer described in
subdivision (b) of Section 8024 of the Civil Code, to which a portion
of the compensation of an employee of a licensee is paid by
agreement with that employee or the collective bargaining agent of
that employee, that is damaged as the result of the licensee's
failure to pay fringe benefits for its employees including, but not
limited to, employer payments described in Section 1773.1 of the
Labor Code and regulations adopted thereunder (without regard to
whether the work was performed on a public or private work). Damage
to a person or entity under this subdivision is limited to employer
payments required to be made on behalf of employees of the licensee,
as part of the overall compensation of those employees, which the
licensee fails to pay.
7071.11. (a) The aggregate liability of a surety on a claim for
wages and fringe benefits brought against a bond required by this
article, other than a bond required by Section 7071.8, shall not
exceed the sum of four thousand dollars ($4,000). If a bond required
by this article is insufficient to pay all claims in full, the sum of
the bond shall be distributed to all claimants in proportion to the
amount of their respective claims.
(b) No license may be renewed, reissued, or reinstated while a
judgment or admitted claim in excess of the amount of the bond
remains unsatisfied.
(c) Except for claims covered by subdivision (d), any action
against a bond required under this article, excluding the judgment
bond specified under Section 7071.17, shall be brought in accordance
with the following:
(1) Within two years after the expiration of the license period
during which the act or omission occurred. The provisions of this
paragraph shall be applicable only if the license has not been
inactivated, canceled, or revoked during the license period for which
the bond was posted and accepted by the registrar as specified under
Section 7071.7.
(2) If the license has been inactivated, canceled, or revoked, an
action shall be brought within two years of the date the license of
the active licensee would have expired had the license not been
inactivated, canceled, or revoked. For the provisions of this
paragraph to be applicable, the act or omission for which the action
is filed must have occurred prior to the date the license was
inactivated, canceled, or revoked.
(3) An action against a disciplinary bond filed by an active
licensee pursuant to Section 7071.8 shall be brought in accordance
with the provisions of paragraph (1) or (2), as applicable, or within
two years after the last date for which a disciplinary bond filed
pursuant to Section 7071.8 was required, whichever date is first.
(d) A claim to recover wages or fringe benefits shall be brought
within six months from the date that the wage or fringe benefit
delinquencies were discovered, but in no event shall a civil action
thereon be brought later than two years from the date the wage or
fringe benefit contributions were due.
(e) Whenever the surety makes payment on a claim against a bond
required by this article, whether or not payment is made through a
court action or otherwise, the surety shall, within 30 days of the
payment, provide notice to the registrar. The notice required by this
subdivision shall provide the following information by declaration
on a form prescribed by the registrar:
(1) The name and license number of the contractor.
(2) The surety bond number.
(3) The amount of payment.
(4) The statutory basis upon which the claim is made.
(5) The names of the person or persons to whom payments have been
made.
(6) Whether or not the payments were the result of a good faith
action by the surety.
The notice shall also clearly indicate whether or not the licensee
filed a protest in accordance with this section.
(f) Prior to the settlement of a claim through a good faith
payment by the surety, a licensee shall have not less than 15 days in
which to provide a written protest. This protest shall instruct the
surety not to make payment from the bond on the licensee's account
upon the specific grounds that the claim is opposed by the licensee,
and provide the surety a specific and reasonable basis for the
licensee's opposition to payment.
(1) Whenever a licensee files a protest in accordance with this
subdivision, the board shall investigate the matter and file
disciplinary action as set forth under this chapter if there is
evidence that the surety has sustained a loss as the result of a good
faith payment made for the purpose of mitigating any damages
incurred by any person or entity covered under Section 7071.5.
(2) A licensee that fails to file a protest as specified in this
subdivision shall have 90 days from the date of notification by the
board to submit proof of payment of the actual amount owed to the
surety and, if applicable, proof of payment of any judgment or
admitted claim in excess of the amount of the bond or, by operation
of law, the license shall be suspended at the end of the 90 days. A
license suspension pursuant to this subdivision shall be disclosed
indefinitely as a failure to settle outstanding final liabilities in
violation of this chapter. The disclosure specified by this
subdivision shall also be applicable to all licenses covered by the
provisions of subdivision (g).
(g) During any period in which a surety remains unreimbursed for a
loss or expense sustained on a bond issued pursuant to this article,
the license for which the bond was issued, and any other license on
which any member of the licensee's personnel of record has also been
listed, may not be renewed, reissued, or reinstated while the
licensee was subject to suspension or disciplinary action under this
section.
(h) The licensee may provide the board with a notarized copy of an
accord, reached with the surety to satisfy the debt in lieu of full
payment. By operation of law, failure to abide by the accord shall
result in the automatic suspension of a license to which this section
applies. A license that is suspended for failure to abide by the
accord may only be renewed or reinstated when proof of satisfaction
of all debts is made.
(i) Legal fees may not be charged against the bond by the board.
7071.12. (a) Instead of the bond provided by this article a deposit
may be given pursuant to Article 7 (commencing with Section 995.710)
of Chapter 2 of Title 14 of Part 2 of the Code of Civil Procedure.
(b) If the board is notified, in writing, of a civil action
against the deposit authorized under this section, the deposit or any
portion thereof shall not be released for any purpose, except as
determined by the court.
(c) If any deposit authorized under this section is insufficient
to pay, in full, all claims that have been adjudicated under any
action filed in accordance with this section, the sum of the deposit
shall be distributed to all claimants in proportion to the amount of
their respective claims.
(d) The following limitations periods apply to deposits in lieu of
the bond required by this article:
(1) Any action, other than an action to recover wages or fringe
benefits, against a deposit given in lieu of a contractor's bond or
bond of a qualifying individual filed by an active licensee shall be
brought within three years after the expiration of the license period
during which the act or omission occurred, or within three years of
the date the license of the active licensee was inactivated,
canceled, or revoked by the board, whichever occurs first.
(2) Any action, other than an action to recover wages or fringe
benefits, against a deposit given in lieu of a disciplinary bond
filed by an active licensee pursuant to Section 7071.8 shall be
brought within three years after the expiration of the license period
during which the act or omission occurred, or within three years of
the date the license of the active licensee was inactivated,
canceled, or revoked by the board, or within three years after the
last date for which a deposit given in lieu of a disciplinary bond
filed pursuant to Section 7071.8 was required, whichever date is
first.
(3) A claim to recover wages or fringe benefits shall be brought
within six months from the date that the wage or fringe benefit
delinquencies were discovered, but in no event shall a civil action
thereon be brought later than two years from the date the wage or
fringe benefit contributions were due.
(e) In any case in which a claim is filed against a deposit given
in lieu of a bond by any employee or by an employee organization on
behalf of an employee, concerning wages or fringe benefits based upon
the employee's employment, claims for the nonpayment shall be filed
with the Labor Commissioner. The Labor Commissioner shall, pursuant
to the authority vested by Section 96.5 of the Labor Code, conduct
hearings to determine whether or not the wages or fringe benefits
should be paid to the complainant. Upon a finding by the commissioner
that the wages or fringe benefits should be paid to the complainant,
the commissioner shall notify the register of the findings. The
registrar shall not make payment from the deposit on the basis of
findings by the commissioner for a period of 10 days following
determination of the findings. If, within the period, the complainant
or the contractor files written notice with the registrar and the
commissioner of an intention to seek judicial review of the findings
pursuant to Section 11523 of the Government Code, the registrar shall
not make payment if an action is actually filed, except as
determined by the court. If, thereafter, no action is filed within 60
days following determination of findings by the commissioner, the
registrar shall make payment from the deposit to the complainant.
(f) Legal fees may not be charged by the board against any deposit
posted pursuant to this section.
7071.13. Any reference by a contractor in his advertising,
soliciting, or other presentments to the public to any bond required
to be filed pursuant to this chapter is a ground for the suspension
of the license of such contractor.
7071.14. No licensee or applicant for a license under this chapter
shall be denied a contractor's license bond solely because of his
race, religious creed, color, national origin, ancestry, or sex.
Whoever denies a contractor's license bond solely on the grounds
specified herein is liable for each and every such offense for the
actual damages, and two hundred fifty dollars ($250) in addition
thereto, suffered by the licensee or applicant for a license.
7071.15. If a licensee fails to maintain a sufficient bond required
by this article, the license is subject to suspension or revocation
pursuant to Section 996.020 of the Code of Civil Procedure.
7071.17. (a) Notwithstanding any other provision of law, the board
shall require, as a condition precedent to accepting an application
for licensure, renewal, reinstatement, or to change officers or other
personnel of record, that an applicant, previously found to have
failed or refused to pay a contractor, subcontractor, consumer,
materials supplier, or employee based on an unsatisfied final
judgment, file or have on file with the board a bond sufficient to
guarantee payment of an amount equal to the unsatisfied final
judgment or judgments. The applicant shall have 90 days from the date
of notification by the board to file the bond or the application
shall become void and the applicant shall reapply for issuance,
reinstatement, or reactivation of a license. The board may not issue,
reinstate, or reactivate a license until the bond is filed with the
board. The bond required by this section is in addition to the
contractor's bond. The bond shall be on file for a minimum of one
year, after which the bond may be removed by submitting proof of
satisfaction of all debts. The applicant may provide the board with a
notarized copy of any accord, reached with any individual holding an
unsatisfied final judgment, to satisfy a debt in lieu of filing the
bond. The board shall include on the license application for
issuance, reinstatement, or reactivation, a statement, to be made
under penalty of perjury, as to whether there are any unsatisfied
judgments against the applicant on behalf of contractors,
subcontractors, consumers, materials suppliers, or the applicant's
employees. Notwithstanding any other provision of law, if it is found
that the applicant falsified the statement then the license will be
retroactively suspended to the date of issuance and the license will
stay suspended until the bond, satisfaction of judgment, or notarized
copy of any accord applicable under this section is filed.
(b) Notwithstanding any other provision of law, all licensees
shall notify the registrar in writing of any unsatisfied final
judgment imposed on the licensee. If the licensee fails to notify the
registrar in writing within 90 days, the license shall be
automatically suspended on the date that the registrar is informed,
or is made aware of the unsatisfied final judgment. The suspension
shall not be removed until proof of satisfaction of the judgment, or
in lieu thereof, a notarized copy of an accord is submitted to the
registrar. If the licensee notifies the registrar in writing within
90 days of the imposition of any unsatisfied final judgment, the
licensee shall, as a condition to the continual maintenance of the
license, file or have on file with the board a bond sufficient to
guarantee payment of an amount equal to all unsatisfied judgments
applicable under this section. The licensee has 90 days from date of
notification by the board to file the bond or at the end of the 90
days the license shall be automatically suspended. In lieu of filing
the bond required by this section, the licensee may provide the board
with a notarized copy of any accord reached with any individual
holding an unsatisfied final judgment.
(c) By operation of law, failure to maintain the bond or failure
to abide by the accord shall result in the automatic suspension of
any license to which this section applies.
(d) A license that is suspended for failure to comply with the
provisions of this section can only be reinstated when proof of
satisfaction of all debts is made, or when a notarized copy of an
accord has been filed as set forth under this section.
(e) This section applies only with respect to an unsatisfied final
judgment that is substantially related to the construction
activities of a licensee licensed under this chapter, or to the
qualifications, functions, or duties of the license.
(f) Except as otherwise provided, this section shall not apply to
an applicant or licensee when the financial obligation covered by
this section has been discharged in a bankruptcy proceeding.
(g) Except as otherwise provided, the bond shall remain in full
force in the amount posted until the entire debt is satisfied. If, at
the time of renewal, the licensee submits proof of partial
satisfaction of the financial obligations covered by this section,
the board may authorize the bond to be reduced to the amount of the
unsatisfied portion of the outstanding judgment. When the licensee
submits proof of satisfaction of all debts, the bond requirement may
be removed.
(h) The board shall take the actions required by this section upon
notification by any party having knowledge of the outstanding
judgment upon a showing of proof of the judgment.
(i) For the purposes of this section, the term "judgment" also
includes any final arbitration award where the time to file a
petition for a trial de novo or a petition to vacate or correct the
arbitration award has expired, and no petition is pending.
(j) The qualifying person and any partner of the licensee or
personnel of the licensee named as a judgment debtor in an
unsatisfied final judgment shall be automatically prohibited from
serving as an officer, director, associate, partner, owner, manager,
qualifying individual, or other personnel of record of another
licensee. This prohibition shall cause the license of any other
existing renewable licensed entity with any of the same personnel of
record as the judgment debtor licensee to be suspended until the
license of the judgment debtor is reinstated or until those same
personnel of record disassociate themselves from the renewable
licensed entity.
(k) For purposes of this section, a cash deposit may be submitted
in lieu of the bond.
(l) Notwithstanding subdivision (f), the failure of a licensee to
notify the registrar of an unsatisfied final judgment in accordance
with this section is cause for disciplinary action.
7071.19. (a) As a condition of the issuance, reinstatement,
reactivation, or continued valid use of a license under this chapter,
in addition to any bond required under this article, a limited
liability company shall, in accordance with the provisions of this
section, maintain a policy or policies of insurance against liability
imposed on or against it by law for damages arising out of claims
based upon acts, errors, or omissions arising out of the contracting
services it provides.
(b) The total aggregate limit of liability under the policy or
policies of insurance required under this section shall be as
follows:
(1) For a limited liability company licensee with five or fewer
persons listed on the members of the personnel of record, the
aggregate limit shall not be less than one million dollars
($1,000,000).
(2) For a limited liability company licensee with more than five
persons listed on the members of the personnel of record, an
additional one hundred thousand dollars ($100,000) of insurance shall
be obtained for each person listed on the personnel of record of the
licensee except that the maximum amount of insurance is not required
to exceed five million dollars ($5,000,000) in any one designated
period, less amounts paid in defending, settling, or discharging
claims as set forth under this section.
(c) The policy or policies required by this section may be issued
on a claims-made or occurrence basis, and shall cover: (1) in the
case of a claims-made policy, claims initially asserted in the
designated period, and (2) in the case of an occurrence policy,
occurrences during the designated period. For purposes of this
section, "designated period" means a policy year or any other period
designated in the policy that is not greater than 12 months. Any
policy or policies secured to satisfy the provisions of this section
shall be written by an insurer or insurers duly licensed by this
state, and may be in a form reasonably available in the commercial
insurance market and may be subject to those terms, conditions,
exclusions, and endorsements that are typically contained in those
policies. A policy or policies of insurance maintained pursuant to
this section may be subject to a deductible or self-insured
retention.
(d) The impairment or exhaustion of the aggregate limit of
liability by amounts paid under any policy in connection with the
settlement, discharge, or defense of claims applicable to a
designated period shall not require the licensee to acquire
additional insurance coverage for that designated period. However,
the aggregate limit of liability coverage (coverage limit) required
by this section shall be reinstated by not later than the
commencement date of the next designated period, and the license of
any licensee that fails to comply with this provision shall be
suspended by operation of law until the date that the licensee
complies with the coverage limit requirements of this section. In
addition, the amount to which any coverage limit is depleted may be
reported on the license record.
(e) Upon the dissolution and winding up of the company, the
company shall, with respect to any insurance policy or policies then
maintained pursuant to this section, maintain or obtain an extended
reporting period endorsement or equivalent provision in the maximum
total aggregate limit of liability required to comply with this
section for a minimum of three years if reasonably available from the
insurer.
(f) Prior to the issuance, reinstatement, or reactivation of a
limited liability company license as provided under this chapter, the
applicant or licensee shall, in the manner prescribed by the
registrar, submit the information and documentation required by this
section and requested by the registrar, demonstrating compliance with
the financial security requirements specified by this section.
(g) For any insurance policy secured by a licensee in satisfaction
of this section, a Certificate of Liability Insurance, signed by an
authorized agent or employee of the insurer, shall be submitted
electronically or otherwise to the registrar. The insurer issuing the
certificate shall report to the registrar the following information
for any policy required under this section: name, license number,
policy number, dates that coverage is scheduled to commence and
lapse, the date and amount of any payment of claims, and cancellation
date if applicable.
(h) Upon the issuance, reinstatement, or reactivation of a license
under this section, the registrar may post the following information
to the licensee's license record on the Internet:
(1) The name of the insurer or insurers providing the liability
policy or policies submitted by the licensee for the most recent
designated period.
(2) The policy number(s) and the sum of the aggregate limit of
liability provided by each.
7071.6.5. (a) The board shall require, as a condition precedent to
the issuance, reissuance, reinstatement, reactivation, renewal, or
continued valid use of a limited liability company license, that the
applicant or licensee file or have on file a surety bond in the sum
of one hundred thousand dollars ($100,000).
(b) The bond required by this section shall be executed by an
admitted surety in favor of the State of California, in a form
acceptable to the registrar and filed with the registrar,
electronically or otherwise, by the applicant or licensee.
(c) The bond required by this section shall be for the benefit of
any employee damaged by his or her employer's failure to pay wages,
interest on wages, or fringe benefits and is intended to serve as an
additional safeguard for workers employed by or contracted to work
for a limited liability company.
(d) If an applicant or licensee subject to subdivision (a) is also
a party to a collective bargaining agreement, the bond required by
this section shall also cover, in addition to the coverage described
in subdivision (c), welfare fund contributions, pension fund
contributions, and apprentice program contributions.
(e) The bond required by this section shall not be applicable to a
licensee whose license has been inactivated on the official records
of the board during the period the license is inactive.
7072. Following receipt of the application fee and an application
furnishing complete information in the manner required by the
registrar, and after such examination and investigation as he may
require, the registrar, within 15 days after approval of the
application, shall notify the applicant that a license may be issued
to him on payment of the initial license fee provided in Article 8
(commencing at Section 7135), and, when the initial license fee is
paid, shall issue a license to him permitting him to engage in
business as a contractor under the terms of this chapter.
7072.5. (a) Upon the issuance of a license, a plasticized pocket
card of a size, design, and content as may be determined by the
registrar shall be issued at no cost to each licensee, or to the
partners, managers, officers, or responsible managing officers of
licensees licensed as other than individuals, which card shall be
evidence that the licensee is duly licensed pursuant to this chapter.
All cards issued shall be surrendered upon the suspension,
revocation, or denial of renewal of the license, and shall be mailed
or delivered to the board within five days of the suspension,
revocation, or denial.
(b) When a person to whom a card is issued terminates his or her
position, office, or association with a licensee that is licensed as
other than an individual, that person shall surrender his or her card
to the licensee and within five days thereafter the card shall be
mailed or delivered by the licensee to the board for cancellation.
7073. (a) The registrar may deny any application for a license or
supplemental classification where the applicant has failed to comply
with any rule or regulation adopted pursuant to this chapter or where
there are grounds for denial under Section 480. Procedures for
denial of an application shall be conducted in accordance with
Section 485.
(b) When the board has denied an application for a license on
grounds that the applicant has committed a crime substantially
related to qualifications, functions, or duties of a contractor, it
shall, in its decision or in its notice under subdivision (b) of
Section 485, inform the applicant of the earliest date on which the
applicant may reapply for a license. The board shall develop
criteria, similar to the criteria developed to evaluate
rehabilitation, to establish the earliest date on which the applicant
may reapply. The date set by the registrar shall not be more than
five years from the effective date of the decision or service of
notice under subdivision (b) of Section 485.
(c) The board shall inform an applicant that all competent
evidence of rehabilitation shall be considered upon reapplication.
(d) Along with the decision or notice under subdivision (b) of
Section 485, the board shall serve a copy of the criteria for
rehabilitation formulated under Section 482.
(e) In lieu of denying licensure as authorized under this section,
the registrar may issue an applicant a probationary license with
terms and conditions. During the probationary period, if information
is brought to the attention of the