Bonney Plumbing Reach Settlement

Contractors State License Board, Bonney Plumbing Reach Settlement

Company agrees to multiple terms, including consumer restitution and new business plans

SACRAMENTO – The Contractors State License Board (CSLB) and Bonney Plumbing Heating Air & Rooter Service (Bonney), of Rancho Cordova, have agreed to a stipulated settlement to end an administrative case that could have led to revocation of the company’s three contractor licenses (#696355, #983208, and #987387), as well as the sole ownership license of long-time company owner Richard Mark Bonney (#397205).

CSLB filed an accusation against the licenses in September 2014, after receiving several consumer complaints about the company overcharging customers, failing to pull necessary building permits, misrepresenting work that needed to be done, and using unregistered salespeople when contracting for home improvement work. Several of the customers were in their 80s and 90s.

The founder and initial qualifier of Bonney Plumbing, Mark Bonney, disassociated from the company’s main license (#696355) in November 2014. The complaints were filed for work done while Mr. Bonney was responsible for the company’s operations.

Under the settlement, CSLB has agreed to withdraw its accusation to suspend or revoke Bonney’s licenses; instead, CSLB is issuing six citations, per Business and Professions Code section 7099. Those citations carry a total fine amount of $12,000, and will be disclosed on CSLB’s license look-up feature for five years.

“We are pleased that Bonney’s new owners addressed this matter promptly,” said CSLB Registrar Cindi A. Christenson. “The company has agreed to provide restitution for financially injured customers, and develop a series of business plans to avoid the potential for future contracting law violations.”

As part of the settlement, CSLB also will have increased authority to review Bonney contracts and related documents.

The Bonney Plumbing case highlights the need for consumers to understand the difference between a service and repair contract and a home improvement contract.

A “service and repair” contract is used when immediate or emergency work is needed and the total cost will be under $750, such as for a broken air conditioner or plumbing issue; and the “home improvement contract,” which is any job that is not an emergency and will cost $500 or more in combined labor and material costs.

via Contractors State License Board, Bonney Plumbing Reach Settlement

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Design Professional Liens – A Blueprint

Design Professional Liens: A Blueprint


If you work in the construction industry in California you’re likely familiar with mechanics liens.

But there’s one other type of lien available on construction projects in California: The design professional lien.

So, here’s a blueprint of what you need to know.

What is a design professional lien?

A design professional lien, like a mechanics lien, creates a security interest in real property for services rendered by a design professional prior to commencement of construction. If the design professional is not paid, the design professional can file a lawsuit to foreclose on the design professional lien to have the property sold and the proceeds from the sale used to satisfy the amount of the design professional lien.

Analogy: A design professional lien is like the deed of trust recorded on your home to ensure you pay your mortgage. If you fail to pay your mortgage, the bank can foreclose on the deed of trust to have your house sold, and the proceeds from the sale used to satisfy the amount outstanding on your mortgage. But, with one big difference. While a deed of trust can only be recorded if the homeowner agrees to it, a design professional lien can be recorded without the consent of the property owner, which makes it a powerful payment remedy for design professionals.

On what types of projects can a design professional lien be recorded?

Private projects only.

Who can record a mechanics lien?

“Design professionals,” define as licensed architects, licensed landscape architects, registered professional engineers and licensed land surveyors who provide services pursuant to a written contract with a property owner for the design, engineering, or planning of a work of improvement.

Does a design professional, like certain mechanics lien claimants, have to serve a preliminary notice in order to record a design professional lien?

No. However, there are certain other conditions required before a design professional can record a design professional lien:

  • Written Contract with Property Owner: The design professional must have provided services pursuant to a written contract with the property owner.
  • Building Permit or Other Governmental Approval: A building permit or other governmental approval in furtherance of the work of improvement must have been obtained in connection with or utilizing the services of  the design professional.
  • Construction Not Yet Commenced: Construction of the work of improvement must not have commenced.
  • Payment Default by Property Owner: The property owner must have defaulted on payment under the contract.
  • Notice to Property Owner of Default: Not less than 10 days before recording a design professional lien, the design professional must give the property owner notice demanding payment, stating that a default has occurred under the written contract, and the amount of the default.
  • Single-Family, Owner-Occupied Residences: A design professional lien is unavailable for services provided for a single-family, owner-occupied residence in which the expected construction costs are less than $100,000.

Is there a deadline to record a design professional lien?

Yes, once construction has commenced a design professional may not record a design professional lien and any design professional lien previously recorded but not foreclosed on by filing a lawsuit becomes null and void. In addition, a design professional is required to record a design professional lien no later than 90 days after the design professional knows or has reason to know that a work of improvement will not be commenced.

Note: California Civil Code section 8306(b)(1) actually states that a design professional lien “expires and is null and void and of no further force or effect on the occurrence of . . . [t]he commencement of the work of improvement for which the design professional provided services.” “Commencement of the work of improvement” is not defined and, as such, disputes can arise as to when “commencement” occurred.

How early can I record a design professional lien?

At any time following: (1) the property owner’s default on payment under the contract; and (2) the 10-day minimum required notice by the design professional.

What information is required to be included in a design professional lien?

Here’s what information is required:

  • The name of the design professional;
  • The amount of the claim;
  • The current owner of record of the site;
  • A legal description of the site; and
  • Identification of the building permit or other governmental approval for the work of improvement.

Are there restrictions on the amount I can demand in a design professional lien?

Yes, the amount demanded in a design professional lien must be the lesser of: (1) the amount of the design professional’s fee for services provided under the contract less any deposit or prior payment made under the contract; and (2) the reasonable value of those services.

Where and how do you record a design professional lien?

A design professional lien should be recorded in the county recorder’s office of the county where the project is located. The recording fee for recording a mechanics lien varies in each county recorder’s office but is usually between $25.00 and $40.00. You should bring in the original (with your originally-signed signature) and I suggest bringing three copies to get file-endorsed for your records.

Do you need to do anything after you record a design professional lien?

Yes, two things. First, you must file a lawsuit to foreclose on the design professional lien within 90 days after the design professional lien is recorded. You must also record a notice of pendency of action within 20 days after filing a lawsuit.

Second, if a lawsuit to foreclose on a design professional lien is not brought to trial within two years after the lawsuit is filed the court may in its discretion dismiss the action for want of prosecution.

Note: You can extend the deadline to foreclose on a design professional lien if you enter into a notice of extension of credit with the owner. In that event, a design professional must file a lawsuit to foreclose on the design professional lien within 90 daysafter the expiration of the notice of credit but in no case later than one year after completion of the work of improvement.

What happens if the property owner sells the property before the design professional records a design professional lien?

Unfortunately, you can only record a design professional lien if the property owner in which you have a written contract with is the owner of the project site at the time a design professional lien is recorded. However, you would still have other remedies available to you such as a breach of contract claim.

What happens if construction commences either before a design professional lien is recorded, or after a design professional lien is recorded but before a lawsuit to foreclose on the design professional lien is filed?

As discussed above, once construction has commenced a design professional may not record a design professional lien and any design professional lien previously recorded but not foreclosed on by filing a lawsuit becomes null and void. If that occurs, a design professional has two options depending on the circumstances.

  • Option 1: If construction commences before a design professional has recorded a design professional lien, the design professional can record a mechanics lien instead.
  • Option 2: If construction commences after a design professional has recorded a design professional lien but before the design professional has filed a lawsuit to foreclose on the design professional lien, the design professional can convert the design professional lien into a mechanics lien as follows:

(1)  Within 30 days after commencement of the work of improvement, the design professional records a mechanics lien for the unpaid amount of the design professional lien.

(2)  The mechanics lien states that it is a converted design professional lien.’

Note: You cannot resurrect a “stale” design professional lien if construction commences after the 90-day deadline to file a lawsuit to foreclose on a design professional lien. For example, if you recorded a design professional lien on January 1, 2015, you would have 90 days or through April 1, 2015 to file a lawsuit to foreclose on the mechanics lien. If, by April 2, 2015, you had not filed a lawsuit to foreclose on the design professional lien your design professional lien would be considered “stale” and unenforceable. If, thereafter, construction commences on the project, you would not be able to resurrect your now “stale” design professional lien and record a mechanics lien instead.

What if the property owner partially or fully pays off the design professional lien?

If a property owner partially or fully pays off a design professional lien the design professional must sign and record a document evidencing partial or full satisfaction and release of the design professional lien.

If you are the property owner is there anything you can do to release property from a mechanic’s lien?

Yes, several things. First, if a lawsuit is not filed to foreclose on a design professional lien within 90 days after the design professional lien is recorded, 90 days after the expiration of a notice of credit, or 1 year after the project is completed, the design professional lien is considered “stale,” and you can file a petition with the court to have the design professional lien expunged. You can recover all reasonable attorneys fees incurred in expunging a “stale” design professional lien.

Second, if a design professional lien is not “stale,” you can obtain a design professional lien release bond. A design professional release bond releases the design professional lien, and the design professional then has to make a claim against the release bond. A design professional lien release bond must be in an amount equal to 125% of the amount claimed in the design professional lien and premiums are typically 2-3% of the total bond amount.

Third, you can negotiate a settlement with the design professional in exchange for the design professional recording a release of its design professional lien.

Are attorneys fees recoverable in a lawsuit seeking to foreclose on a design professional lien?


A post by Garret Murai

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State accuses Bonney Plumbing

State accuses Bonney Plumbing of misleading, overcharging customers

Judge to determine if top-rated company will keep its license.

Below is an article from KCRA’s website about a local plumbing company.

SACRAMENTO, Calif. (KCRA) —The Better Business Bureau rates Bonney Plumbing an A+, and the company is one of the biggest plumbing contractors in Northern California — but KCRA 3’s investigative team has found the business may be in danger of losing its license.

The state of California is accusing Bonney Plumbing of deliberately misleading and overcharging customers.

Two years ago Leonard Granger was looking for a plumber. He needed to replace the water heaters at two homes. So he turned to Bonney, partially he says because the company is among the biggest of its kind in the Sacramento area.

“I saw their ads on TV and I listened to it on the radio,” Granger said. “When they said, ‘You can trust us from the very beginning — we’ll get the permits, we’ll go all the way through the job and conform with the state code and county code,’ and so forth, I thought, ‘Now that’s the outfit I want to work with.’”

The company is certainly high profile. The red-and-blue vans have been a staple since Mark Bonney started the company in 1978. Bonney Plumbing now has more than 100 of those vans, and 150 employees. The business promotes itself with ads on TV. The new pro soccer stadium at Cal Expo is even called Bonney Field.

With that pedigree, Granger hired the company to install the water heaters at his farm in Vacaville and another property in Dixon.

Receipts show Granger paid more than $2,000 for one job and about $1,800 for the other. Granger said Bonney’s employees told him Dixon city code and Solano County code both required expansion tanks to be installed with the water heater. He paid nearly $450 for both tanks.

“I’m not sure what that does,” said Granger, pointing out the tanks to KCRA 3. He added that he paid at least $150 for permits and “administrative fees” on each job.
“(Bonney Plumbing) did a wonderful job,” Granger said. “I have no complaints about the work.”

But months later, that all changed when Granger called the city of Dixon and Solano County to find out why his scheduled inspections hadn’t been completed.

“I called both offices and they looked through their files (and said), ‘We don’t have no reference of the work ever being done,’” Granger said. “’No permit ever permitted or anything.’”

Not only had the person doing the work for Granger not pulled the permits, but Granger building officials say he was charged more than he should have been.

Solano County officials told KCRA 3 that a permit for a replacement water heater should cost $100, not the $150 that Granger was charged for the permit and administrative fees.

For the permit in Granger’s Dixon home, the city said it normally costs anywhere from $36 to about $40. Bonney charged him $163 for the permit and administrative fees. This was on top of the cost of replacing the water heaters.
Bonney never pulled the permit for either job.

“Oh yes, it went from something like $1,300 to $2,000 with all the additional things they added on,” Granger said. “And I wasn’t aware of it. He says that’s all required.”

So, Granger filed a complaint with the Contractors State License Board. It turns out, he wasn’t the only one in a similar situation.

“In some cases, they actually charged the consumers for the permits and then never went and pulled them,” said Rick Lopes, with the board.

The board found Bonney never pulled the permits. It also found the expansion tanks that Granger was told were required for code compliance were not required by the city or county.

The state said the Bonney employees who did the work weren’t registered with the Contractors State License Board, either.

“These people are elderly and not always in the best care of their own faculties,” Lopes said. “And we’re concerned they (are) being taken advantage of.”

The board found three other cases, all of them involving customers older than the age of 80.

“What’s concerning to us about this (is), it looks (like) the work went beyond just the repair work,” Lopes said.

In one case, the state said a 94-year-old customer paid about $3,000 more for a water heater repair than what the state’s expert thought she should have been charged.

In another instance, an 80-year-old woman had her sinks and toilets clogged. After agreeing to replace her sewer line for just more than $6,000, the complaint alleges that her son stepped in — after Bonney had nearly completed the work — and stopped them. The board said this was because a Bonney employee said it would cost another $2,500 to finish.

None of the Bonney employees in these cases were registered with the Contractors State License Board, and in all four cases, the employees failed to pull the building permits.

“We’ve got evidence that leads us to believe that, you know, laws have been broken,” Lopes said. “And it deserves us taking a look at trying to take away the license.”

The board filed an accusation, the most serious action it can take, and referred the case to the state attorney general, who will plead the case before an administrative law judge.

“Our big concern here is to make sure that the people who were harmed receive restitution and that we make sure systems are in place,” Lopes said. “(We want) to make sure this doesn’t become a business practice — that we actually have things in place to make sure these kinds of things don’t happen.”

KCRA 3’s investigative team contacted Bonney Plumbing, hoping to get the company’s response.

A spokesperson would not appear on camera, but in a phone call, Bonney CEO Jimmy Crabbe said he believes the company has been wrongly accused.

He added that it would be “inappropriate to speak about a pending investigation.”

The company did send KCRA 3 a statement saying that in the wake of the Contractors State License Board accusation, it has “dedicated a new department of three additional people to monitor and safeguard the permitting process.”

Yet, the decision is in the hands of a judge to determine if Bonney will keep its license and pay back all the customers in the complaint.

Granger received a letter from Mark Bonney, admitting the company didn’t pull the permits for his job. Bonney gave Granger a $200 check for his “inconvenience.”

Still, Granger is happy the state took his complaint seriously.

“[The state] took my case and took it all the way along with the other people — all the way to the top,” Granger said. “And I really appreciate what they are doing for the little man in this state.”

The Contractors State License Board and the attorney general are still waiting for a hearing date on the accusation.

Mark Bonney has sold the company since the investigation began, but the board is still asking to revoke his license, as well as the licenses of those employees involved in the case.

The board also wants Bonney to pay restitution to the customers listed in the accusation.

[Read more…]

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State Agency Appealing to Licensed Contractors

State Agency Appealing to Licensed Contractors to Help Fill Statewide Job Openings

Department of Housing and Community Development looking for candidates with construction experience

CSLB Press Release 2/6/15 – SACRAMENTO  –  The Contractors State License Board (CSLB) is alerting California’s construction industry about a job recruitment effort underway by another state agency, the Department of Housing and Community Development (HCD). Licensed contractors may find they meet the minimum qualifications for these jobs, and may want to consider the challenges and benefits these opportunities offer.

HCD is recruiting for Housing Inspectors to work under the state job classification of District Representative (DR) I or II in locations around California. The department is responsible for the preservation and expansion of safe and affordable housing, as well as ensuring an adequate supply of housing opportunities for Californians.

Some duties of the DR I and DR II include:

  • Reviewing and approving plans for building alterations and structures;
  • Conducting complaint  investigations to ensure compliance with state and federal health and safety code regulations;
  • Providing technical code interpretations and other professional assistance; and
  • Conducting field inspections within mobile home and RV parks

Benefits include working from home; use of a state vehicle, flexible schedule, as well as medical, dental, vision, retirement plans, sick leave and vacation. The salary for the DR II ranges from $60,000 to $74,532/year. The DR I range is from $54,660 to $67,824/year.

Note: Candidates will need to take an online examination before applying for a position. More information is available on HCD’s Housing Inspector Recruitment Flyer.


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CSLB Ineptitude

The CSLB is showing their ineptitude yet again!

CSLB IneptitudeHere are the comments to a current application under their review:

12/26/2014 – application received
12/30/2014 – app to case mgmt for flag review
12/31/2014 – printed acknldgmnt lttr to applcnt
01/15/2015 – instructions returned frm case mgmt
01/15/2015 – aiu requested app to be posted
01/16/2015 – app sent to supervisor for review
01/23/2015 – app to case mgmt for flag review
02/04/2015 – instructions returned frm case mgmt
02/04/2015 – aiu requested app to be posted
02/05/2015 – application posted
02/05/2015 – application unposted
02/05/2015 – application posted
02/06/2015 – app to aiu for investigation
02/06/2015 – enforcement

The AIU, which I thought no longer existed, requested the app to be posted on 2/4 (initially requested to be posted by the AIU on 1/5). It was posted on 2/5, then unposted, then posted again, then sent back to the AIU on 2/6?!?!

What the fence post is going on in that building? Is anybody in charge? Does anybody have a clue as to what they are doing?

I talk to people on a daily basis who are being forced to endure the ineptitude of this agency, and I feel horrible for each and every one of them. People’s livelihoods are one the line here. Feeding families, putting gas in the car to get the kids to school. And this type of ridiculous, make your head spin, cluster junk is just not acceptable.

I told this applicant… if I were you, I’d be filing a complaint with my State Representative asking them to contact this group of DCA idiots to find out what the heck is going on in that building.

What was the name of that movie where the guy throws the tv out of the window and shouts “I’m mad as hell and not going to take this anymore”?

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What Can and What Can’t General Building Contractors Do

I’m often asked: What can and what can’t general building contractors do?

Under California law “B” General Building contractors have specific guidelines to follow when it comes to trades they can perform.

general building contractorBusiness and Professions Code section 7057 states that a general building contractor only can take a prime contract that requires two or more unrelated building trades, and that framing and carpentry cannot count as one of the two trades. However, a general contractor may take a prime contract that is only for framing and carpentry, and no separate unrelated trade. If a B licensee takes a subcontract, it, too, must involve two unrelated trades (not including framing and carpentry toward the two) or a B can subcontract to only do the framing and carpentry.

There is no limit to the number of unrelated trades a “B” licensee can perform on a given contract, provided that there are two or more, and that framing and carpentry don’t count as one of the two that must be performed at a minimum.

Two trades that a “B” license holder may not perform as a prime or subcontractor are fire protection and water well drilling. B&P Code §7057 states (full text below) that general building contractors may not do this work unless they qualify for and add these classifications to their license, or unless the general building contractor holds the appropriate license classification or subcontracts with an appropriately licensed specialty contractor to perform the work. The “B” also may subcontract the fire protection or well drilling portions of the project to a qualified licensee.

B&P Code 7057: General Building Contractor

(a) Except as provided in this section, a general building contractor is a contractor whose principal contracting business is in connection with any structure built, being built, or to be built, for the support, shelter, and enclosure of persons, animals, chattels, or movable property of any kind, requiring in its construction the use of at least two unrelated building trades or crafts, or to do or superintend the whole or any part thereof. This does not include anyone who merely furnishes materials or supplies under Section 7045 without fabricating them into, or consuming them in the performance of, the work of the general building contractor.

(b) A general building contractor may take a prime contract or a subcontract for a framing or carpentry project. However, a general building contractor shall not take a prime contract for any project involving trades other than framing or carpentry unless the prime contract requires at least two unrelated building trades or crafts other than framing or carpentry, or unless the general building contractor holds the appropriate license classification or subcontracts with an appropriately licensed contractor to perform the work. A general building contractor shall not take a subcontract involving trades other than framing or carpentry, unless the subcontract requires at least two unrelated trades or crafts other than framing or carpentry, or unless the general building contractor holds the appropriate license classification. The general building contractor shall not count framing or carpentry in calculating the two unrelated trades necessary in order for the general building contractor to be able to take a prime contract or subcontract for a project involving other trades.

(c) A general building contractor shall not contract for any project that includes a fire protection system as provided for in Section 7026.12 or 7026.13, or the “C-57” Well Drilling classification as provided for in Section 13750.5 of the Water Code, unless the general building contractor holds the appropriate license classification, or subcontracts with the appropriately licensed contractor.

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CSLB Issues 1000000th Contractors License

It finally happened! The CSLB issued the 1,000,000th contractors license!

1000000th Contractors LicenseI find it interesting that it went to a D49 Tree Service contractor. For some reason, I always felt that such a prestigious number would go to a B or an A contractor. Someone who was put thru the license application wringer. Not to diminish this newly licensed contractor, I congratulate him, but I’m sure he had it easy with a simple application and only having to take the law & business exam.

Here is the press release:

Contractors State License Board Issues 1,000,000th Contractor License

Milestone reached 85 years after first license issued

SACRAMENTO  –  The nation’s largest industry* reached a milestone in California over the weekend as the Contractors State License Board (CSLB) issued its one-millionth contractor license. License 1,000,000 was issued on Saturday, January 10, 2015, to a tree service company in Norwalk (Los Angeles County).

“This milestone says a lot about the resiliency of the construction industry,” said CSLB Registrar Cindi Christenson. “Despite ups and downs in the marketplace, this industry is a major reason the state has thrived, especially during the past century, and why California is the envy of many other states and countries. Construction has helped our state though a depression, economic downturns, wars, natural disasters, and many other challenges.”
CSLB was created on August 14, 1929, with the support of the state’s construction industry, so the public would be protected from irresponsible contractors. CSLB began as the Contractors’ License Bureau under the Department of Professional and Vocational Standards. The Department had complete control over Bureau operations.

The Bureau changed into its current Board format on September 15, 1935, enabling appointed industry representatives to have a say in the state’s construction industry regulations. Today, CSLB is a semi-autonomous board within the state Department of Consumer Affairs.

The law that created the Board also defined three contractor categories that remain in effect today. They are “A” General Engineering, “B” General Building, and “C” Specialty contractors. In 1939, those categories evolved into the original license “classifications” and CSLB also began to examine applicants on their trade qualifications.

Beyond building homes and major infrastructure and transportation systems, California’s construction industry was especially robust in the mid-1940’s after the end of World War II, and produced remarkable and iconic structures during the 20th century that include the California aqueduct; dozens of bridges, among them the Golden Gate and Bay Bridges; multiple dams; and countless low, mid-, and high-rise commercial and residential buildings.

Detailed below are the years when each 100,000 license milestone was reached. There currently are about 284,000 licensed contractors in California, in more than 40 different licensing classifications.

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The New CSLB Registrar

The New CSLB Registrar is Cindi Christenson!

The CSLB announced today who the new Registrar is that will replace outgoing Steve Sands. The press release is below.Cindi Christenson CSLB Registrar

I was hoping they’d bring in someone with some construction background, but instead they just promoted the Deputy Registrar. She is a career state employee/lawyer. At this time, we have no idea if she has any clue as to what it’s like working in the trades. Her bio does say she has a degree in mechanical engineering, but I doubt that long ago degree translates to any actual construction experience.

Did I assume this is the candidate they’d choose? Yes. Do I feel let down by the CSLB yet again? Yes. My wish was that they’d hire someone who picked up a hammer to earn a living at least once in their life. Only time will tell if she is the person to undo the massive cluster junk that is taking place in the Licensing Department.

Press Release:

Cindi Christenson Named Contractors State License Board

Registrar of Contractors

CSLB Board announces selection to replace retiring Registrar Stephen P. Sands

SACRAMENTO  –   California Contractors State License Board (CSLB) Board Chairman David Dias today announced the selection of CSLB Chief Deputy Registrar Cindi A. Christenson to serve as the board’s new Registrar of Contractors, effective January 1, 2015, following a nationwide executive search.

“We are pleased and confident with our decision to promote Cindi Christenson who, as a 33-year career state executive, has successfully demonstrated her fiscal, policy, regulation, legislative, and operational management abilities,” added Dias. “She also will have the distinction of serving as CSLB’s first female Registrar of Contractors, among the known 15 executives who have served in this position since 1929.”

Ms. Christenson has served as second in command for CSLB’s more than 400 employees and eight consumer protection offices, with direct oversight of the board’s $60 million budget, operating policies and procedures, and executive team since 2009.

Before joining CSLB, Ms. Christenson was the executive officer for the California Board of Professional Engineers and Land Surveyors from 1996 to 2009 and, from 1988 to 1996, was that organization’s senior engineering registrar. She also worked with the state Department of Water Resources as an associate mechanical engineer from 1981 to 1988.

Ms. Christenson received her juris doctorate from the Lincoln Law School of Sacramento in 2003, and is a licensed mechanical engineer after earning her Bachelor of Science degree in Mechanical Engineering from California Polytechnic State University, San Luis Obispo. She and her husband, Michael, are residents of El Dorado Hills, CA.


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Happy Veterans Day!

I’d like to wish all of my fellow Veterans a Happy Veterans Day! Thank you for your service!!

US Navy

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State Authorities Warn Against Price Gouging

State Authorities Warn Against Price Gouging

Water well drillers must follow pricing guidelines set by emergency declaration.

SACRAMENTO – The California Contractors State License Board (CSLB) reminds all contractors, especially those with C-57 Well Drilling and C-61/D-21 Machinery and Pumps licenses, to make sure the prices they are charging for water well drilling or related services during the state’s emergency drought declaration are within legal guidelines. It has come to CSLB’s attention that price gouging may be occurring in some California counties where the drought has taken a serious toll on individual residential water wells, especially in Tulare and Kern counties.

Remember that the legal down payment is 10 percent of the total contract price or $1,000, whichever is less, for residential water well drilling.

The marketplace demand for drilling services is not justification for raising prices for the same services that would have been charged prior to the declared state of emergency. California Penal Code (PC) section 396 clearly states that “…when a declared state of emergency results in abnormal disruptions of the market, the public interest requires that excessive and unjustified increases in the prices of essential consumer goods and services [is] prohibited…during and shortly after a declared state of emergency.”

PC §396 (c) states the following for contractors:

“…[Upon the emergency declaration or] a period of 180 days following that declaration, it is unlawful for a contractor to sell or offer to sell any repair or reconstruction services or any services used in emergency cleanup for a price of more than 10 percent above the price charged by that person for those services immediately prior to the proclamation of emergency.

However, a greater price increase is not unlawful if that person can prove that the increase in price was directly attributable to additional costs imposed on it by the supplier of the goods, or directly attributable to additional costs for labor or materials used to provide the services, provided that in those situations where the increase in price is attributable to the additional costs imposed by the contractor’s supplier or additional costs of providing the service during the state of emergency, the price represents no more than 10 percent above the total of the cost to the contractor plus the markup customarily applied by the contractor for that good or service in the usual course of business immediately prior to the onset of the state of emergency.”

A violation of PC §396 is a misdemeanor and could result in county jail imprisonment for up to one year or by a $10,000 fine, or both. This violation also constitutes unlawful business practice and unfair competition within California Business and Professions Code and could result in additional civil penalties.

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