Capitol Connection Q&A 1359

By Shauna Krause, President, Capitol Services, Inc.

While contractor law is written in ink the words can be subject to interpretation. That is
where expert understanding is sharpest in avoiding ‘errors’ or misunderstanding…

Q: It appears that, per California Business & Professions Code § 7071.19, professional
liability insurance and errors & omissions insurance will also be required at the time of
obtaining the General contractor license. Is that your understanding as well? I know
when we spoke you had mentioned the need for bonds, liability, and Worker’s
Compensation insurance. Are we to ignore the regulation in regards to the E&O
insurance?

A: No, you do not ignore B&P Code 7071.19 which is referring to the requirement for
liability insurance coverage for Limited Liability Companies (LLC). They use the words
“errors” and “omissions” in the statute to describe the reason for needing to maintain
liability insurance – “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”. But the CSLB does require
that you obtain or show proof of a separate E&O policy. They require that an LLC
maintain at least $1 million in general liability coverage.

Q: We need to replace our Qualifying Individual who left the Company recently. The
person who makes the most sense to have as our new Qualifier is one of our Officers
who is not planning on leaving the company until retirement.
However, he is concerned about providing his personal information to the CSLB. Can
you confirm exactly what personal information he would be required to disclose?
Secondly, specific to his ownership shares, is this something that the general public will
be able to see online?

A: The CSLB requires the Qualifying party list their full name, residential address,
phone number, date of birth, social security number, and percentage of ownership on
the application. They ask for a driver’s license number but it’s not required. The CSLB
never shares personal information, even if someone was to request a copy of a licensee’s entire
file. They always withhold all personal information such as DOB and SSN.
With regards to ownership, on the CSLB’s website the general public will not be able to
see the specific ownership amount the Qualifying Individual has in the company,
however they will be able to see whether the person owns more than 10%, or less than
10%. This is because if the RMO/RME owns less than 10% of the company, they are
required to have a Bond of Qualified Individual on file. If the RMO/RME owns more
than 10%, no Qualifier Bond is required. Outside of the website, if the general public
wanted to see the specific ownership the Qualifier owns, they would need to make a
copy request with the CSLB and pay the fee.

 

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 info@cutredtape.com,
or write us at Capitol Services, Inc., 3609 Bradshaw Rd, Ste H, #343, Sacramento, CA
95827. Search past columns at www.cutredtape.com