[WSBAPT] RCW 18.27 Contractor Registration - Flipping Properties - L&I Enforcement

[Rob Rowley]

Good afternoon,



Anyone had any experience with enforcement action by L&I seeking to force
individuals who are buying and flipping properties to be registered
contractors under RCW 18.27?  I'm exceedingly familiar with RCW 18.27 and
the effect upon individuals who are in the process of buying, rehabbing and
reselling residential properties within one year of purchase.



What triggered this inquiry is that I'm looking at a notice of infraction
from L&I in which they indicate that the particular investor had violated
RCW 18.27.200(1)(a) by advertising for sale a property that they had
rehabbed and listed for sale within one year. (RCW 18.27.010(1))
Apparently the L&I inspector had got caught wind of the pending sale and
issued a notice of infraction for $1000.



It is my observation that real estate investors will generally purchase
properties to be rehabilitated inside of an LLC and one or more members of
the purchasing LLC will be a licensed contractor.  The licensed contractor
who is a member of the purchasing LLC then obtains the appropriate
permitting from the local municipality for the repairs. The property is
then sold from within the purchasing LLC.



*In particular, this particular L&I inspector is taking the position that
this conduct is a violation of the Act in that an LLC is an improper entity
for holding the property, and that the property should be held within a
partnership or joint venture as set forth in below RCW 18.27.065.  Put
another way, had the same fact pattern occurred where the purchasing entity
was a partnership or joint venture then no violation in the eyes of L&I.
However, because the purchase had occurred within an LLC where one of the
members was an general contractor this is a violation worthy of a notice of
infraction.*



It appears to me that that particular L&I inspector cannot backup this
position with anything substantive.  Any thoughts on the subject?



Thank you.



RCW 18.27.010 (1) "Contractor" includes any person, firm, corporation, or
other entity who or which, in the pursuit of an independent business
undertakes to, or offers to undertake, or submits a bid to, construct,
alter, repair, add to, subtract from, improve, develop, move, wreck, or
demolish any building, highway, road, railroad, excavation or other
structure, project, development, or improvement attached to real estate or
to do any part thereof including the installation of carpeting or other
floor covering, the erection of scaffolding or other structures or works in
connection therewith, the installation or repair of roofing or siding,
performing tree removal services, or cabinet or similar installation; or,
who, to do similar work upon his or her own property, employs members of
more than one trade upon a single job or project or under a single building
permit except as otherwise provided in this chapter*. "Contractor" also
includes a consultant acting as a general contractor. "Contractor" also
includes any person, firm, corporation, or other entity covered by this
subsection, whether or not registered as required under this chapter or who
are otherwise required to be registered or licensed by law, who offer to
sell their property without occupying or using the structures, projects,
developments, or improvements for more than one year from the date the
structure, project, development, or improvement was substantially completed
or abandoned.*



RCW 18.27.065

Partnership or joint venture deemed registered, when.

A partnership or joint venture shall be deemed registered under this
chapter if any one of the general partners or venturers whose name appears
in the name under which the partnership or venture does business is
registered.

[1983 1st ex.s. c 2 § 16.]









*Robert R. Rowley* | Attorney at Law

505 W. Riverside Ave, Suite 500

Spokane, WA  99201

Telephone: (509) 252-5074

Mobile: (509) 994-1143

Facsimile: (509) 928-3084

Email: rob at rowleylegal.com

Web Site: www.rowleylegal.com



Practice concentrated on business, real estate and general legal matters in
Washington and Idaho.



<https://www.facebook.com/rowleylegal>
<https://www.linkedin.com/pub/rob-rowley/11/172/b20>
<https://twitter.com/ROBERTRROWLEY>
<http://www.yelp.com/biz/robert-r-rowley-spokane>



NOTICE: The contents of this message and any attachments may be protected
by the attorney-client privilege, work product doctrine or other applicable
protections.  If you are not the intended recipient or have received this
message in error, please notify the sender and promptly delete the
message.  Thank you for your assistance.

DISCLAIMER: You should recognize that responses provided by e-mail means
are akin to ordinary telephone or face-to-face conversations and do not
reflect the level of factual or legal inquiry or analysis which would be
applied in the case of a formal legal opinion. A formal opinion may very
well reach a different conclusion.
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://mailman.fsr.com/pipermail/wsbapt/attachments/20150323/cc73725f/attachment.html>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image001.jpg
Type: image/jpeg
Size: 20360 bytes
Desc: not available
URL: <http://mailman.fsr.com/pipermail/wsbapt/attachments/20150323/cc73725f/image001.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image003.gif
Type: image/gif
Size: 1317 bytes
Desc: not available
URL: <http://mailman.fsr.com/pipermail/wsbapt/attachments/20150323/cc73725f/image003.gif>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image004.gif
Type: image/gif
Size: 1295 bytes
Desc: not available
URL: <http://mailman.fsr.com/pipermail/wsbapt/attachments/20150323/cc73725f/image004.gif>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image005.gif
Type: image/gif
Size: 1351 bytes
Desc: not available
URL: <http://mailman.fsr.com/pipermail/wsbapt/attachments/20150323/cc73725f/image005.gif>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image008.jpg
Type: image/jpeg
Size: 2560 bytes
Desc: not available
URL: <http://mailman.fsr.com/pipermail/wsbapt/attachments/20150323/cc73725f/image008.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image009.jpg
Type: image/jpeg
Size: 939 bytes
Desc: not available
URL: <http://mailman.fsr.com/pipermail/wsbapt/attachments/20150323/cc73725f/image009.jpg>