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Did You Know CA Laws On Hiring Unlicensed Contractors

        CSLB You Tube Doing It Right: Hiring a Licensed Contractor
 
  • California state law mandates that all construction jobs costing $500 or more for labor and materials must be conducted by a validly licensed contractor. Receiving a contractor's license requires contractors to pass several tests and get a background check from the California Department of Justice. Typically, individuals with offenses, infractions, or citations substantially related to contracting or contracting related businesses are not issued licenses. There are currently over 300,000 licensed contractors in California in varying specialty trades including general building contractor A and B.

    Because unlicensed contractors don't carry worker's compensation insurance, commercial general liability insurance, or any type of bonds, they almost always are the low bidder on a job. However, there is a high price to a low bid. If a worker (hired by the unlicensed contractor) is injured on the job, the homeowner or property owner could be liable and cause unexpected increased insurance premiums. Without commercial general liability insurance in place problems, defects, and shoddy construction which results in property damage or personal injury will not be covered, and the homeowner or property owner will be stuck with the damage and no one to pay for it.

    The Bottom Line

    Make sure you thoroughly check out your contractor prior to signing a contract. Check online for manufactures recommendations for installation and weight specifications. Make sure you check references by calling previous clients, and if your not sure about the contract have a competent attorney review the contract documents prior to execution.

    Picture to the right is a Bad installation, this contractor is no longer in business.


Did You Know That...
 
  • California Business & Professions Code section 7031 sets forth the basic restrictions on an unlicensed contractor's right to collect compensation for work that requires a license. Unlicensed contractors cannot sue to collect compensation for the performance of any act or contract where a license is required, regardless of the merits of the lawsuit. Cal. B. & P. Code 7031 (a). On the other hand, a person who utilizes the services of an unlicensed contractor can bring a lawsuit to recover all of the money paid to the unlicensed contractor for performance of any act or contract where a license is required. Cal. B. & P. Code 7031(b). If security is taken to secure payment for the performance of any act or contract for which a license is required, an unlicensed contractor will be unable to foreclose on that security because the underlying security agreement will be deemed unenforceable. Cal. B. & P. Code 7031( c ).
  • California Business & Professions Code section 7028 prohibits contracting without a license. It is a misdemeanor for any person to engage in business or act in the capacity of a contractor within California without having a valid license. Cal. B. & P. Code 7028(a). If there is a previous conviction for contracting without a license, the court will impose a fine of 20 percent of the aggregate sum of the cost of materials and labor furnished and the cost of completing the work to be performed or four thousand five hundred dollars ($4,500), whichever is greater, and the person shall be confined in a county jail for not less than 90 days, except in an unusual case where the interests of justice would be served by imposition of a lesser sentence or a fine. Cal. B. & P. Code 7028 (b) (emphasis added).
  • California Business & Professions Code section 7027.1 prohibits an unlicensed contractor from advertising the possession of a valid license. It is a misdemeanor for any person to advertise for work that requires a license if that person does not hold a valid license in the classification advertised, except that a licensed building or engineering contractor may advertise as a general contractor. Cal. B. & P. Code 7027.1(a). A violation of section 7027.1 is punishable by a fine of not less than seven hundred dollars ($700) and not more than one thousand dollars ($1,000) in addition to any other punishment imposed. Cal. B. & P. Code 7027.1 ( c ).
  • California Business & Professions Code section 7027.3 prohibits any contractor from fraudulently using another contractor's valid license. Any person with intent to defraud, licensed or unlicensed, who willfully and intentionally uses a contractor's license number that does not correspond to the number on a currently valid contractor's license held by that person, is punishable by a maximum fine of ten thousand dollars ($10,000), or by imprisonment in state prison, or in county jail for not more than one year, or by both that fine and imprisonment. This is in addition to any other penalties that are available. Cal. B. & P. Code 7027.3.
  • California Business & Professions Code section 7028.15 prohibits unlicensed contractors from participating in public works. It is a misdemeanor for any person to submit a bid to a public agency in order to work as a contractor without being licensed, unless very specific exceptions apply. Cal. B. & P. Code 7028.15(a). If there is a previous conviction for bidding on public works without a license, the court will impose a fine of 20 percent of the aggregate sum of the cost of materials and labor furnished and the cost of completing the work to be performed or four thousand five hundred dollars ($4,500), whichever is greater, or imprisonment in the county jail for not less than 10 days nor more than six months, or both. Cal. B. & P. Code 7028.15 (b).
What Can You Do?
  • Visit the State Contractors Board http://www.cslb.ca.gov

    Consumers Area

    The CSLB Website provides a wide range of tools to help you have a better experience when you hire a contractor and make sure the job is done right. Learn the steps you need to take to select a licensed and qualified contractor, check a contractor's license, negotiate a clear contract, prevent disputes and mechanic's lien, or resolve disputes with the contractor if they arise.

    Hire a Licensed Contractor

    This section provides information about hiring a contractor, laws and regulations, owner builders, swimming pools, arbitration and other issues.

    Know the Risks of Being an Owner/Builder

    If you are considering doing a construction job as an owner/builder, there are a number of important issues to be aware of. This section will guide you through some of the facts that owner/builders face.

    Filing a Construction Complaint

    This section provides information on the process and procedures for filing a construction complaint.

    Legal Issues for Consumers

    This section provides information on mechanics liens, new and pending legislation, what you need to know about small claims court and civil judgments.

 
 

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Last modified: 03/26/12.