Unlike California, many states do not require construction contractorsor builders to have experience, pass qualifying tests, have minimal financial resources, or obtain a State License to be able to engage in the construction contracting business.
California, by contract, has a very strict comprehensive, and long-established Contractors State License Law, which does require all persons orentities who perform construction work for others to have such demonstrated pre-qualifications.
The principal exception to the California License requirement is forsomeone who acts as an Owner-Builder, constructing a building for one’s self,not for commercial purposes or immediate resale.
Another exception is for a person who acts only as a "Construction Manager" on a project, and only supervises or manages a project, and does not perform or contract to perform any construction work (See related article).
The law requires anyone who acts as a "Contractor" to have a State License.
"Contractor" has a very broad definition under the law:
(QUOTE 7026)
Acting as a "contractor" without a license is a penal offence, a misdemeanor;
(QUOTE 7028)
One who acts as a "contractor" without having a property license during the entire job may not use the Courts to collect any money owed, andallows someone who has hired and paid an unlicensed contractor to bring alegal action to recover all money paid to the unlicensed contractor.
(QUOTE 7031.(a) & (b))
These provisions apply even if the other party knew from the beginning that the builder was unlicensed, and intended to cheat or defraud the unlicensed contractor!
(QUOTE )
The contractor licensing requirement cannot be circumvented by subcontracting with a licensed construction contractor to perform the actual construction work, or by the unlicensed entity acting as a subcontractor to a icensed contractor.
To obtain a contractor license, an owner or permanent employee of a business (the "qualifying individual", sometimes referred to as the "Responsible Managing Officers" or "Responsible Managing Employee", or"RMO" or "RME") must meet the status experience requirements, pass a teston technical matters, and post a license bond to protect consumers.
Although California does not have reciprocity with other states thathave licensing laws, having a license in another state may make it easier to geta California license.
The RME must actually work for the company at least 32 hours perweek.
(QUOTE)
The RMO or RME must actually "supervise", at least to some extent,the California Construction projects of the business.
(QUOTE 7068)
If the RMO or RME fails to perform this function, a Court maydetermine that he or she was a "sham", and that the business was therefore notproperly licensed, with all the consequences discussed above.