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I have an Arizona KB-1 license under a company name (Corp) and I want to open another company with a partner.

ArizonaLicenses

If I have an Arizona contractors KB-1 license under a company name, say Arizona Construction, Inc., and I want to form another company with a partner, say A&B Construction, Inc., will my license work with the new company and will my partner now have 50% liability for any work performed under this new company with the license?

3 replies

Feb 1, 2022

It sounds like what you are asking is whether you can be the "qualifying party" (the person holding the company license) under A.R.S. § 32-1127 for more that two contractors. So that is the question I am answering. The answer is yes you can act in the capacity of the qualifying party for one additional licensee if ONE of the following conditions exists (either/or): 1. There is a common ownership of at least twenty-five percent of each licensed entity for which the person acts in a qualifying capacity. 2. One licensee is a subsidiary of another licensee for which the same person acts in a qualifying capacity. For the purposes of this paragraph, “subsidiary” means a corporation of which at least twenty-five percent is owned by the other licensee. So as long as you own at least 25% of the new company, your license can be used to be the qualifying party for that company.

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Feb 1, 2022

Thank you. So if my license can be under a new company that I have 50/50 with a partner, the company has the liability, so both me and my partner have liability for the work under the license???

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Feb 1, 2022

I'm not sure what you mean by "liability for the work." Whether someone is liable for something depends on the facts (who did what) the legal theory of the claim (contract or tort), and who exactly is getting sued (an individual or a particular type of business entity like an LLC or corporation. If the contractor is an LLC, for example, as a general matter neither member of the LLC will be liable for the LLC's debts.

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