November/December 2012 Newsletter

News from Abdulaziz, Grossbart & Rudman

Abdulaziz, Grossbart & Rudman Newsletter
Nov./Dec. 2012

We hope that you enjoy this edition of our Newsletter.
Remember, if there is anything that you would like to see in the future, please let us know.
The Staff At
Abdulaziz, Grossbart & Rudman




A number of our clients utilize registered salespersons on Home Improvement Projects for more than just sales. Indeed, it is becoming more common in the industry that these persons, who are the first interaction between the customer and the contractor, continue on the project by acting in the manner of a construction manager. Many of these salespersons coordinate the subcontracts, supervise or inspect the work, and negotiate change orders and payments with the customer.


For some time, there has been a controversy in the Home Improvement industry whether salespersons can be independent contractors. The Contractors' Board has declared that a salesperson almost never can be an independent contractor, and requires workers' compensation insurance to be used by the contractor as a salesperson. The Employment Development Department and IRS each have factors that they use in determining whether a person may be deemed an independent contractor or an employee. It does seem to be possible that a pure salesperson, who only negotiates that sale, and nothing more, could possibly fall within the definition provided by the taxing authorities of an independent contractor notwithstanding the opinion of the Contractors' Board. However, when that person who is not an employee of the contractor does anything that would require a contractor's license, we now get into a gray area that can complicate the entire transaction.


Business and Professions Code sections 7026 and 7026.1, among other laws, define the activities of a contractor. The statute is inclusive:


"...any person who undertakes to or offers to undertake to, or purports to have the capacity to undertake to, or submits a bid to, or does himself or herself or by or through others, construct, alter, repair, add to, subtract from, improve, move, wreck or demolish any building, highway, road, parking facility, railroad, excavation or other structure, project, development or improvement, or to do any part thereof, including the erection of scaffolding or other structures or works in connection therewith, or the cleaning of grounds or structures in connection therewith, or the preparation and removal of roadway construction zones, lane closures, flagging, or traffic diversions, or the installation, repair, maintenance, or calibration of monitoring equipment for underground storage tanks, and whether or not the performance of work herein described involves the addition to, or fabrication into, any structure, project, development or improvement herein described of any material or article of merchandise. "Contractor" includes subcontractor and specialty contractor. "Roadway" includes, but is not limited to, public or city streets, highways, or any public conveyance." (emphasis added)

Recently, the Legislature passed AB 2237 which amended Business and Professions Code section 7026.1, which adds to the definition of a contractor on Home Improvement Contracts to include the term "consultant" as a person who: (1) provides or oversees a bid for a construction project, or (2) arranges for and sets up work schedules for contractors and subcontractors and maintains oversight of a construction project. The result of this change makes it crystal clear that a person who undertakes such tasks must either themselves be licensed as a contractor or be an employee of a contractor. Thus, if you classify a salesperson as an independent contractor and then have them perform these tasks, you are contracting with an unlicensed contractor to do these tasks and face the possibility of discipline as well as the inability to collect for the portion of work that they do.


It is a simple task (although perhaps not so easy economically) to make every salesperson an employee of your company. We recommend this to avoid potential ramifications and difficulties in the future.


A contractor and a lawyer are in car accident and show up at the Pearly Gates together.


St. Peter greets them. "Come with me, my sons," he says. "I will take you to the homes where you will spend all of eternity."


The contractor and the lawyer get into St. Peter's holy convertible, and they all head on down a beautiful golden road, which turns into a platinum road, which turns into an even grander road paved with sparkling diamonds.


They pull up in front of a huge luxury mansion, where St. Peter turns to the lawyer and says, "Here is your home for the rest of eternity, my son, enjoy! And if there is anything you need, just let me know."


The contractor is pretty excited as St. Peter goes back down the diamond studded boulevard, down the platinum highway, and onto the street of gold. Then they turn down an avenue of silver, drive along a stone alley and over an unpaved footpath to pull up in front of a rickety aluminum-siding cabin with a little picket fence.


St Peter says, "Here you go!" and starts to leave.


"Hey now, wait just a minute here!" says the shocked contractor. "I've been a good man all my life! I always did my business honestly, treated others fairly, cherished my family, and was a good steward of the Earth! How come the lawyer gets the big mansion and I get this shack?"


St. Peter says: "Well, contractors are a dime a dozen here, but we've never had a lawyer before."


butterfly stairs




In this case, Patrick Jennison (Jennison) owned a condominium within the Dover Village Association (Dover). There was a leaky sewer pipe below the concrete slab of Jennison's condo, and eventually it seeped into the floors and carpets of Jennison's unit as well as another unit. The homeowner's association was told about the problem and fixed it. They then in turn told Jennison he was responsible to pay for all repairs since the sewer pipe exclusively serviced his condo. Jennison refused and Dover filed suit.


Dover stated that Jennison was responsible to pay for repairs because the sewer pipe was "exclusive use common area" and according to the CC&R's he is responsible for repairs to "exclusive use common areas." The court disagreed and in addition to Dover needing to pay for all repairs, Jennison was awarded approximately $17,000 in attorney fees and costs. Dover appealed the decision, but the Appellate court upheld the trial court's decision.


The court stated that according to the CC&R's, the sewer pipe was a genuine common area to be maintained and repaired by Dover. The CC&R's clearly stated that "...pipes, ducts, flues..." are not part of the unit. They further went on to state that the two exclusive use common areas are the patio and garage. The pipes were not located in either of these two areas. The courts felt that this implied that the sewer lines do not fall within that category.


The Davis-Stirling Act, which is set forth in Civil Code 1350 et seq. also provides rules for the governance of condo associations. This Act basically states that a homeowner's association is usually responsible for repairs to "common areas," but the owner is responsible for repairs to "any exclusive use common area appurtenant to the separate interest." As stated above, the CC&R's clearly stated that this was not the case.


We repair what your husband fixed.

Call us when you're backed up.

Where a flush beats a full house.

Your poop is our loot.

#1 in the #2 business.

Professional, affordable and we will always leave the seat down.

Have any other amusing slogans? Send us an email and we can include it in another Newsletter.
Abdulaziz, Grossbart & Rudman
provides this information as a service to its friends and clients. This Newsletter is of a general nature and is not intended to be a substitute for legal advice. This Newsletter does not establish an attorney-client relationship with the reader. Since laws are ever changing, please contact an attorney before using any of the information contained within this Newsletter.
Abdulaziz, Grossbart & Rudman
P.O. Box 15458, North Hollywood, California 91606
(818) 760-2000; (818) 760-3908 (fax)
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