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Your Legal Corner - Client Alert Blog

California Unlicensed Contractors

Written By: Melissa C. Marsh, Esq., California Attorney, February 2010 Add to Favorites
Pursuant to California Business & Professions Code § 7031(a), an unlicensed contractor cannot file a lawsuit to collect compensation for the performance of any act or contract requiring a license, regardless of the merits of the lawsuit. California Business and Professions Code §7031(b) further requires that an unlicensed contractor be disgorged of all monies paid by their victims (more than just economic loss) and does not require the client (victim) to prove she or he believed the individual was a licensed contractor. In other words, a person who uses the services of an unlicensed contractor, even if the individual knows the worker is unlicensed, can bring a lawsuit to recover all of the money paid to the unlicensed contractor for performance of any act, or contract, requiring a license. California Business and Professions Code §7031(c).

California Business & Professions Code § 7028 prohibits contracting without a license. Under the law, a person who uses the services of an unlicensed contractor is considered a victim of crime and eligible for restitution for economic losses, regardless of whether that person had knowledge that the contractor was unlicensed. Assembly Bill 370 amends Business and Professions Code §§ 7028 and 7028.16 by adding criminal fines and penalties for engaging in construction without a valid license. Under the new law, it is a misdemeanor for a person to engage in the business of construction, or act in the capacity of a contractor, without having a valid contractor’s license. This new law makes a first conviction punishable by a fine up to$5,000, or imprisonment in a county jail for up to 6 months, as specified, or both. A second conviction is punishable by a fine of 20% of the contract price, 20% of the aggregate payments made to, or at the direction of, the unlicensed contractor, or $5,000, whichever is greater. A third or subsequent conviction is punishable by both a fine and imprisonment in a county jail, as specified, and requires that the fine be at least $5,000 and no more than the greater of $10,000, 20% of the contract price, or 20% of the aggregate payments made to, or at the direction of, the unlicensed contractor.

In sum, unlicensed contractors cannot sue to get paid for any work that requires a contractor's license. The individual for whom an unlicensed contractor performs work requiring a contractor's license is under no legal obligation to pay. A dissatisfied client may bring a lawsuit to recover any monies previously paid to an unlicensed contractor and if the individual files a complaint with the Contractors State License Board (CSLB), the CSLB will investigate and this may lead to criminal charges, fines, and possibly jail time.

Posted In: Real Estate Reporter 

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Disclaimer: The information presented on this web site was prepared by Melissa C. Marsh for general informational purposes only and does not constitute legal advice. The information provided in my articles and alerts should not be relied upon, or used as a substitute for professional legal advice from an attorney you retain to advise or represent you. Your use of this Internet site does not create an attorney- client relationship. Transmission of this article is not intended to create, and receipt of it does not constitute, an attorney-client relationship. All uses of the contents of this site, other than personal uses, are prohibited. You may print or email a copy of any information posted on this web site for your own personal, non-commercial, use, but you may not publish any of the articles or posts on this web site without the Express Written Permission of Melissa C. Marsh.

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Located in Los Angeles, California, the Law Office of Melissa C. Marsh handles business law and corporation law matters as a lawyer for clients throughout Los Angeles including Burbank, Sherman Oaks, Studio City, Valley Village, North Hollywood, Woodland Hills, Hollywood, West LA as well as Riverside County, San Fernando, Ventura County, and Santa Clarita. Attorney Melissa C. Marsh has considerable experience handling business matters both nationally and internationally. We routinely assist our clients with incorporation, forming a California corporation, forming a California llc, partnership, annual minutes, shareholder meetings, director meetings, getting a taxpayer ID number (EIN), buying a business, selling a business, commercial lease review, employee disputes, independent contractors, construction, and personal matters such as preparing a will, living trust, power of attorney, health care directive, and more.