contractors license & past due debt

[Mineralacc]

Is the financial scrutiny of applicants for contractors license analogous to a prostate exam ?
A often used phrase....'past due debt'.
I mean, can only rich people clear the hurdles in qualifying for a contractors license ?

 

[augie47]

A number of the contractors I work with are far, far from rich, but most have demonstrated an ability to manage their finances which I believe is the concern of licensing boards,

 

[cowboyjwc]

I don't remember because it's been so long now, but I believe here in CA at one time you had to have something like $2000 in start up capital, but I don't remember having to prove that, unless it was on the application and that may have changed.

 

[petersonra]

I think at one time you had to post a $500 or maybe it was a $1000 cash bond to get a GC license somewhere around here. Might have been the county. It was refundable when your license expired. It was considered a major problem by a lot of GCs. They sued and a judge ruled it was somehow illegal and got it eliminated.

 

[kwired]

I think it is unfair to even look at ones finances for something like this, and not just contractors but any similar type of professional license.

How about we refuse to issue drivers licenses to people that have any outstanding debt? Does having outstanding debt mean they will be bad drivers?

As far as a new contractor applicant, you are taking away a potential opportunity for him to build a successful business, all because he has nothing to start with:thumbsdown: Many successful professionals had little or nothing to start with.

And then there are going to be existing businesses that do go through a hard time for whatever reason - if you refuse to renew their license because they have bad debt, you are taking away the opportunity to do business and possibly recover, if they have employees you are taking away jobs, and there could be other snowball type effects.

Management of debt is between the business owner and whoever the debt is with, not licensing boards, maybe there is an unresolved legal dispute behind that debt in some cases.

 

[GoldDigger]

Most states do have what CA refers to as a financial responsibility law.
Either you have insurance (liability) up to the state minimum or you show that you have so much money in cash or liquid assets that you could pay the insurance coverage amount yourself.
In CA proof of insurance is required for vehicle registration.
In some states it may be a condition for getting a driver's license.

Tapatalk!

 

[kwired]

Most states do have what CA refers to as a financial responsibility law.
Either you have insurance (liability) up to the state minimum or you show that you have so much money in cash or liquid assets that you could pay the insurance coverage amount yourself.
In CA proof of insurance is required for vehicle registration.
In some states it may be a condition for getting a driver's license.

Tapatalk!

I don't have a problem with that kind of law, maybe the condition of getting a drivers license but not the rest. You don't have to own a vehicle to be able to drive one, if your employment requires you to drive, I don't think that is necessarily fair that the driver has to have insurance. I never seem to have the problem of having enough cash or liquid assets to get by without having any insurance though.

But if I would quit paying all my insurance I would have a lot more cash on hand:happyyes:

 

[petersonra]

I don't know of any states that require car insurance to get a driver's license. Some states you have to show proof of insurance when you renew if you own a vehicle in the state. Most states require insurance or some other form of financial responsibility as a condition of owning a vehicle.

 

[Fulthrotl]

A number of the contractors I work with are far, far from rich, but most have demonstrated an ability to manage their finances which I believe is the concern of licensing boards,

bullseye.

building contractors have, over generations, demonstrated their ability to
manage other people's money well enough to get most of these laws passed.

in calif. you have to have $2,500 in the bank when you apply for the license.

based on some of my experience as a subcontractor, the group of folks i'm
LAST to trust, are general contractors. your payment as a sub depends not
on how well you do your job, and not how well they do their job, but how
well they do ALL their jobs.

the GC has one job tank, and lo and behold, lots of subs on ALL their jobs
are swinging in the breeze. the last GC i did a contract for of any amount,
cut my draw checks separately, the wholesale house portion, and the rest,
less the retention.

and i understand why he did it. he spends his life dealing with other contractors.
everyone farther down the food chain is at risk, and one sub who stiffs his
supply house gets the whole job liened.

when i do my billing, the material bills, i write a check for the wholesale house
portion, and staple it to a copy of my invoice to my customer, and put it in
the wholesale house's manila envelope.

when i get paid on that invoice, i take that invoice with attached check, and hand
it to my wholesale house. he's trusting me on a handshake, i've never filled out
a credit app, and i respond with complete transparency in where HIS money is at.
he knows how much i'm making. if he saw numbers on my invoices that were stupid
low, he'd do well not to sell me stuff on account, 'cause there is gonna come a day when
i come up short if i don't know how to price my work.

it's not a common way of doing business, but it works for me.

 

[kwired]

I don't know of any states that require car insurance to get a driver's license. Some states you have to show proof of insurance when you renew if you own a vehicle in the state. Most states require insurance or some other form of financial responsibility as a condition of owning a vehicle.

Are you sure about the drivers license thing? Many people have a drivers license that don't own a vehicle, the insurance generally covers the vehicle and not a specific driver, now insurance rates are based on who is the principal driver in many cases, and the principal driver is not always the owner of the vehicle either. Anyone with teenage drivers realizes this when they look at their insurance bills.

Someone else drives your vehicle that wasn't authorized to drive it and has an insurance claim incident, your insurance covers it, that does not mean they will not attempt to recover that expense from the unauthorized person, but your vehicle is still insured.

 

[petersonra]

I don't even know if you can buy insurance to cover just a driver. Car liability insurance covers the car and every one who drives it.

 

[GoldDigger]

In CA the vehicle owners policy will usually cover named drivers plus other drivers who have permission of the owner to drive the car.
Some policies may cover named drivers only.
In general a drivers insurance for his own car(s) will not cover him driving someone else's car.
In some states you can get 'non-owner insurance, which just covers your personal liability for injury to others.


Tapatalk!

 

[kwired]

In CA the vehicle owners policy will usually cover named drivers plus other drivers who have permission of the owner to drive the car.
Some policies may cover named drivers only.
In general a drivers insurance for his own car(s) will not cover him driving someone else's car.
In some states you can get 'non-owner insurance, which just covers your personal liability for injury to others.


Tapatalk!

Some policies do cover you if in a rental car, people don't always know that and spend extra for insurance when they do rent a car.

 

[GoldDigger]

Some credit cards when used for deposit and payment will provide rental vehicle protection.

Tapatalk!

 

[kwired]

Of course there are some that buy the insurance when renting a car knowing they will drive that thing hard, and maybe even return it needing repairs

 

[petersonra]

Of course there are some that buy the insurance when renting a car knowing they will drive that thing hard, and maybe even return it needing repairs

where I used to work the service guys would beat up rental cars so bad that several of the local rental car agencies banned our service guys from renting from them. I was in a car with one of them several times when they would see a RR track. They would inevitably speed up and when crossing the tracks yell out "It's a rental!"

 

[growler]

Is the financial scrutiny of applicants for contractors license analogous to a prostate exam ?
A often used phrase....'past due debt'.
I mean, can only rich people clear the hurdles in qualifying for a contractors license ?

It really depends on where you live and what type of contracting you wish to do.

It's normally easier to get a license for smaller types of jobs (residential) than to contract multi-million dollar commercial/industrial jobs ( if you are looking at general contracting ).

There are two types of license, one is a professional license ( electrical, plumbing, HVAC, GC ) and this is for competency. Then you normally need a business license to operate a business in whatever area. This is where they may ask you for proof of financial responsibility. They may want insurance, bonding or even capital.

If you wish to operate a business ( which is what you are doing) in a certain area then the best place to start is the business license office and they will tell you what is required to operate a business in that area.

 

[kwired]

It really depends on where you live and what type of contracting you wish to do.

It's normally easier to get a license for smaller types of jobs (residential) than to contract multi-million dollar commercial/industrial jobs ( if you are looking at general contracting ).

There are two types of license, one is a professional license ( electrical, plumbing, HVAC, GC ) and this is for competency. Then you normally need a business license to operate a business in whatever area. This is where they may ask you for proof of financial responsibility. They may want insurance, bonding or even capital.

If you wish to operate a business ( which is what you are doing) in a certain area then the best place to start is the business license office and they will tell you what is required to operate a business in that area.

Insurance is understandable, requiring someone to have capital seems unconstitutional to me. Not having capital will be kind of self regulating as to what kind of activity you can afford to take on. If you want to do multi-million dollar contracts, you probably are not getting far if you don't have sufficient capital to play with the big boys, most of them will either weed you out from the start, or they will use you and put you in the hole even further if you don't know what you are doing. Seems like usual business to me - unfortunately. To be truly successful by most business standards you have to throw out moral values. If you want to have moral values you can still be successful though, just not always on the same level. Of course not everyone's definition of success in this area is going to be the same either.

 

[bradleyelectric]

Insurance is understandable, requiring someone to have capital seems unconstitutional to me.

I'm pretty sure the Constitution does not address local licensing requirements. Anything not directly addressed by the Constitution is supposed to be outside of the jurisdiction of the federal government.

 

[Sierrasparky]

The reason some agencies require financial information and or worthiness is because they want to make sure you can carry the costs for work until time you can legally receive payment. In CA for residential remodel work you cannot take more than 10% or no more than 1k up front. You can easily have out more than that before work is completed or time for a draw.

CA does not allow any payments greater than work, they also frown on demanding large payments for deliverd material without associated work.

It is easy to go belly up with these rules.