The new law as drafted is vague as to whether property management companies are considered to be within the definition of “consultant” under amended California Business and Professions Code Section 7026.1. However, as outlined below, it is our opinion that this law does not create civil and criminal penalties for property management who do not obtain contractor licenses.
The Contractor’s State License Board (CSLB), the sponsor of AB 2237, indicates that the intent of same is not to license consultants or construction managers but to protect the public from persons presenting themselves as “consultants” but acting in the capacity of a contractor by scheduling subcontractors and exercising responsibility for the construction project. For example, one court found that a swimming pool consultant acting in the capacity of a construction manager was not required to be licensed as a contractor, and the purpose of this law is to clarify that an individual performing such construction consulting services, including project coordinators, is required to be licensed as a contractor and comply with the law.
Existing law requires contractors be licensed with the CSLB, and provides for the regulation of contractors. AB 2237 amends Section 7026.1 to include “consultant” within the definition of “contractor”. A contractor includes any person, consultant to an owner-builder or business “who or which undertakes, offers to undertake, purports to have the capacity to undertake, or submits a bid to construct any building or home improvement project, or part thereof.”
For purposes of this law, “a consultant is a person, other than a public agency or an owner of privately owned real property to be improved, who meets either of the following criteria as it relates to work performed pursuant to a home improvement contract as defined in Section 7151.2:
(A) Provides or oversees a bid for a construction project.
(B) Arranges for and sets up work schedules for contractors and subcontractors and maintains oversight of a construction project.”
Section 7151.2 defines a “home improvement contract” as an agreement, whether oral or written, or contained in one or more documents, between a contractor and an owner . . . or between a salesperson, whether or not he or she is a home improvement salesperson, and . . . an owner . . . which provides for the sale, installation, or furnishing of home improvement goods or services.”
Based on the foregoing, property management does not “provide or oversee” bids for construction work, and although it requests bids from contractors and provides same to the association, it is essentially the “middle-man”. Property managers may request certain items be contained in a bid, but it is not essentially involved in creating and pricing the bid. Rather, property management acts as the representative of the association, or the public which this bill is seeking to protect.
Further, property management may work with contractors to determine dates and time construction workers may be present at the project, and may even require a date by which the project must or should be completed; however, this, in my opinion, does not amount to setting up the work schedules for contractors and subcontractors. Property management typically do not provide contractors with schedules reflecting the scope of work, order and timing in which it is to be performed.
In the event property managers do assume this role, they can protect themselves by becoming licensed, or refrain from doing so and deferring to contractors, which we recommend.
Moreover, property management is often present when contractors are performing work and may provide input regarding same. However, property management is essentially stepping into the shoes of the association and its owners to provide guidance regarding expectations and satisfaction of the work being performed. Therefore, property managers are not consultants.
Pursuant to the Senate Business, Professions and Economic Development Committee’s analysis of AB 2237, the purpose behind AB 2237 was to regulate and prevent unlicensed contracting work. Further, the Senate noted: “. . . unlicensed contractors lack accountability and have a high rate of involvement in construction scams. They compete unfairly with licensed contractors who operate with bonds, insurance and other responsible business practices.”
Further, it observed the bill defines “person” as an individual, firm, corporation, limited liability company, association or other organization, or any combination thereof, and requires a person to be licensed as a contractor if he/she engages in the business of contracting or acts in the capacity of a contractor. (BPC Section 7025)
Therefore, in our opinion and based upon the above legislative analysis, “consultant” for purposes of this new law does not likely include property management companies. However, to protect itself from liability, property management companies may obtain contractor’s licenses, or ensure their property managers do not give advice or instruction to contractors on the scope and type of work to be performed.