By D. Kim Lough, construction lawyer with Jennings, Haug & Cunningham
Contractors throughout Arizona are being blindsided by a new administrative oversight role undertaken by the Registrar of Contractors (ROC). The Registrar’s new prosecutorial philosophy toward investigating complaints against licensed contractors places contractors at risk of losing their license for minimal technical violations which may occur even when the contractor is unaware an issue exists. This sea-change warrants a self-audit of your business practices.
License Display Requirements
Contractors should make sure that their license number is prominently displayed as required by A.R.S. §32-1124(B):
• Posted in a conspicuous place on premises where work is being performed;
• Placed on written bids submitted by the company;
• Placed on all broadcasts, publications, internet and billboard advertisings;
• Displayed on letterhead and other documents used to correspond with customers or potential customers.
License number display requires it be preceded with “ROC,” and posting be visible in the following:
• Any and all job sites
• Every page of the company web site
• Included in all email signature blocks sent by the company
• Displayed on all contracts, invoices and company correspondence
Failure to display your license number in compliance with this statute is ground for disciplinary action, including license suspension.
Written Contract Form Requirements
Contract agreements with property owners must include the following minimum requirements of A.R.S. §32-1158(B):
• Contractor name, business address and license number;
• Property owner’s name and mailing address, and the job site address or legal description;
• Date parties entered into contract;
• Estimated date of completion of all work to be performed under the contract;
• Description of work to be performed under the contract;
• Total dollar amount to be paid to the contractor by the owner for all work under the contract, including all applicable taxes (the total dollar amount may be changed by change order executed in accordance with the contract);
• Dollar amount of any progress payment and the stage of construction at which the contractor will be entitled to collect progress payments during the course of construction under the contract (incorporation of prompt pay statutes);
• Upon signing the contract, the owner “shall be provided a legible copy of all documents signed and written and signed receipt” for any amount paid to the contractor;
• The following legend must be prominently displayed in the written contract in at least a 10-point bold type:
“The owner has the right to file a written complaint with the Registrar for an alleged violation of §32-1154, Subsection A. Complaints may be filed with the Arizona Registrar of Contractors at 1700 West Washington Street, Suite 105, Phoenix, Arizona 85007-2812 (602)542-1525 (www.azroc.gov). Complaints, if any, must be filed not more than two years following substantial completion of the work.”
The statutes do not distinguish between commercial and residential construction with regard to the minimum elements of the contract. Therefore, a technical violation may exist if any of the above information is not included, even when dealing with a sophisticated owner.
The ROC also appears to be looking more closely into what a contractor does when its license is temporarily suspended. This can happen if there is a failure to timely renew a license bond. For example, the ROC has revoked a contractor’s license for performing work during a temporary administrative suspension of its license for lack of a bond.
Being diligent in ensuring your business practices comply with these statutes is more critical than ever. If there is a temporary lapse in your license, you will best avoid action by the ROC by refraining from bidding work, executing contracts or performing work until the suspension is lifted. Be sure to check with the ROC web site and your surety to ensure your mailing address is correct for sending renewal notices, and mark these renewal dates on your calendar.
A self-audit of these items is highly recommended. Legal counsel review of contract forms will best ensure compliance with the new statute.