CSLB Affirms California’s Restrictions on Lead Generation & Solar Broker Services in the Residential Solar Industry Posted on Jan 10, 2020
Recently, California's Contractors State License Board (CSLB) provided an advisory to affirm California protections for solar energy consumers set forth in existing law. All companies engaged in the sale of solar to residential customers would be well advised to take note of the advisory. A summary of the advisory is provided in this blog post below.
C-46 Solar Contractor License Specialty Classification
The CSLB is the primary state agency that is charged with investigating and enforcing compliance with the Contractors’ State License Law for the protection of the public (Business and Professions Code (BPC) §§7006, 7011.4). “The purpose of the licensing law is to protect the public from incompetence and dishonesty in those who provide building and construction services. The licensing requirements provide minimal assurance that all persons offering such services in California have the requisite skill and character, understand applicable local laws and codes, and know the rudiments of administering a contracting business” (UDC-Universal Development v. CH2M Hill (2010) 181 Cal.App.4th 10, 24).
In 1983, CSLB adopted the C-46 Solar Contractor specialty classification. California Code of Regulations, title 16, section 832.46 defines the C-46 classification as follows:
- A solar contractor installs, modifies, maintains, and repairs thermal and photovoltaic solar energy systems.
- A licensee classified in this section shall not undertake or perform building or construction trades, crafts, or skills, except when required to install a thermal or photovoltaic solar energy system.
When a person undertakes work in the C-46 classification, the person is considered a “solar contractor.” Therefore, to perform work under a solar lease or sales agreement to install, modify, maintain, or repair a photovoltaic solar energy system for a home, a person is required to have a C-46 solar contractor’s license (for more information see p.19 of CSLB’s Description of Classifications). Installation of a solar energy product is a “home improvement,” which can only be done by a licensed contractor (BPC §7151).
Lead Generation, Solar Brokering, and Notice of Protections for Consumers
A licensed contractor is permitted to solicit, negotiate, execute, and sell contracts for the installation of these systems personally or through an employee who is a registered salesperson with the CSLB (BPC §§7151.2, 7152, 7154). However, it is becoming common in California for third parties who are not registered salespersons working for licensed solar contractors to generate leads for solar contractors (“lead generators”) or to sell solar contracts to consumers and assist consumers in locating a contractor (“solar brokering”).
Lead generators market solar energy systems to consumers and then sell the list of interested customers to a particular solar contractor or even to multiple contractors. Solar brokers may present themselves as independent contractors who work on system design, price, size, and product with the consumer, and then locate a contractor on the consumer’s behalf. While lead generation and solar brokering through unlicensed salespeople has become a popular method of selling solar technology, in almost all cases soliciting, selling, negotiating, or executing contracts for the installation of these systems requires the salesperson to be employed by a licensed contractor and registered with the CSLB (BPC §§7151.2, 7152, 7154). Thus, the legal scope of functions of an unlicensed lead generator or unregistered or unlicensed solar broker is limited.
While the Business and Professions Code prohibits unlicensed operators from advertising for work requiring a contractor’s license, a lead generator or solar broker may serve as a referral source for licensed contractors, provide contractor contact information to prospective customers, and set up appointments for licensed contractors or their registered home improvement salespersons (BPC §7152 (c)(5)). However, solar energy lead generators or solar brokers cannot provide quotes or offers for the sale and installation of solar photovoltaic systems. This can be done only by a licensed contractor or a registered salesperson who is an employee of a licensed contractor (BPC §§ 7152, 7154). It is a misdemeanor for any person to engage in selling home improvement goods and services without registering with the CSLB (BPC §7153).
The CSLB remains committed to ensuring that the Contractor’s State License Law is followed in the marketing and sale of clean technology home improvements to consumers, and to ensure that consumers are protected from unscrupulous marketing and sales tactics by unlicensed salespeople and installers in an ever-growing solar energy market.