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What Happens When the License Holder Dies?

Can the company continue in business? Can current contracts be completed?

Question: What happens when a license holder dies unexpectedly, what happens with his license? (The company is a sole-proprietorship with no employees.)

Can his wife or adult child obtain a temporary license so that the unfinished job can be completed by "subbing" the labor out to another licensed sub-contractor to complete the job (essentially sub-subbing the contract)?

Or is it the general's place to contract with another licensed sub-contractor to get his job completed?

Thanks Diane for any info you can send my way!

Sincerely, Carolyn

Answered by  David J. Barnier, Esq.:

Wow. What a unique and unfortunate circumstance. I'll offer my thoughts in piecemeal, about what happens when a license holder dies.

First, I do not see any way that the family members can circumvent the licensing requirements and become temporarily licensed to perform the remaining work under the contract.

The option of the wife/son taking over the subcontract and in turn hiring licensed subcontractors to perform the work makes sense as a practical solution, but it is no more legal than if the unlicensed wife/son entered into the subcontract in the first place.

In fact, this situation illustrates a license law very well--a company who is unlicensed is not allowed to take on a construction contract even if they are subcontracting all work to licensed subcontractors.

Second, the general contractor will be obligated to complete the work that was to have been performed under that subcontract, but will likely be granted some leeway time-wise and maybe even cost-wise, as a reasonable accommodation seems appropriate to allow the general contractor to retain a replacement subcontractor or to otherwise mobilize the labor, equipment, materials, etc., that will provide the subcontractor's remaining work.

The language of the prime contract will likely control whether the general contractor has a right to additional time and/or extra payment.

Third, there may be accounting issues or quality of work issues related to the work provided by the deceased subcontractor and/or the balance owed/paid to this subcontractor.

The estate of the subcontractor may owe money or may be entitled to money. Insurance in place for the subcontractor may provide a means of recovery.

If the deceased was merely the qualifier for a corporation's license, the rules are different, as the corporation would have a window time to replace this person as the qualifier.

The Contractors State License Board website describes the procedure for replacing the qualifier for a corporate licensee. Also worth noting is that the CSLB website has improved over recent years as a resource for contractors and consumers on licensing issues and contracting issues.

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