To bid for, contract for and perform work on most construction projects in California, a contractor must obtain a contractor's license, and construction contracts and subcontracts entered into must be in the licensee's name. When two licensees endeavor to undertake a project jointly, often they do so as what is commonly referred to as a joint venture or JV. (Such a venture may be established under a detailed written JV, bidding, teaming, partnership or LLC agreement, or may simply be a general partnership that results from the joint submission of a bid or performance of work.) What licensees may not realize is that to contract for work in the name of the joint venture, the licensees must first obtain a joint venture license from the Contractors' State License Board (CSLB). Contractors that JV should carefully review the rules governing when a joint venture license is required.
JV License Requirements
It is a misdemeanor for any person to (i) engage in the business or act in the capacity of a contractor (Bus. & Prof. Code § 7028(a)) or to (ii) submit a bid to a public agency in order to engage in the business or act in the capacity of a contractor (Bus. & Prof. Code § 7028.15(a)), within California without holding the requisite license. Prior to obtaining a joint venture license, the constituent licensees may jointly bid for such a contract or work if, at that time, each of them holds the requisite license (Bus. & Prof. Code §§ 7029.1(b), 7028.15(c)). (A failure to obtain the needed joint venture license will not prevent the imposition of any penalty for a winning bidder's failure to enter into a contract pursuant to the bid.) It is unlawful for the constituent licensees to be awarded a contract jointly, or otherwise act as a contractor, without first having secured a joint venture license (Bus. & Prof. Code § 7029.1(a)).
For both public and private work projects, then, (i) each JV member must be duly licensed at the time of submitting a bid for such a contract or for such work and (ii) the joint venture license must be in place prior to entering into a contract or performing work for which a contractor's license is required.
Applying for a JV License
A joint venture license, by definition, is one that is issued to any combination of two or more licensees (Bus. & Prof. Code § 7029). A joint venture licensee is subject to the Contractors' State License Law, like any other licensee or person performing work that requires a contractor's license. A joint venture license may be issued in any or all of the classifications in which the members of the joint venture are licensed, and the joint venture may add classifications to its license. In order to obtain a joint venture license, the constituent licensees must submit an application to: CSLB Headquarters, Contractors State License Board, P.O. Box 26000, Sacramento, CA 95826-0026.
For the joint venture license application to be approved, the following requirements must be met:
- Each of the constituent licensees participating in the joint venture must show its exact business name and license number as it appears in the records of the CSLB -- an acceptable joint venture business name may include the full business name of each listed entity, part of each listed entity's business name, or be a completely fictitious business name
- Each of the constituent licensee's licenses must be current and active
- One of the official personnel listed on the CSLB's records for each constituent licensee (the owner, a partner or an officer of the corporation, but not a Responsible Managing Employee (RME)) must sign the application
- Pay the required application filing fee and the initial license fee
- Pay any additional classification fees for additional classifications being applied for
- Submit the appropriate Contractor's the original bond or cash deposit; the bond or cash deposit must bear the same business name as the pending joint venture
- Submit a Workers' Compensation Certificate of Insurance if the joint venture is hiring employees, or an exemption form if no employees are being hired
Suspension, Cancelation, Dissolution and Expiration of a JV License
A joint venture license will be canceled upon the cancellation, revocation, or disassociation of any of its constituent licensees or upon the dissolution of the joint venture; the Registrar of Contractors is to be notified in writing within 90 days of the disassociation of a joint venture entity or dissolution of the joint venture and failure to do so will cause the license to be canceled effective the date the written notification is received at the CSLB Headquarters and will be grounds for disciplinary action. If any of the constituent licenses ceases to be current and active or is suspended for any reason, the joint venture license will be suspended.
The joint venture license will expire two years from the last day of the month in which the license was issued. Each license included in the joint venture must be current and active before the joint venture license can be renewed in active status.