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§4.04 Contractor’s License Law—Required License

Lesson 4:
Home Repair & Licensing

Every person who acts or advertises as a contractor must be licensed. [B&PC §§7028, 7027–7027.5.] A contractor who is suing to recover compensation for work requiring a license must allege that he or she was licensed at all times during the performance of the contract. [B&PC §7031(a).] If there is any dispute about whether the contractor was licensed, the contractor must prove licensure by presenting a verified certificate from the Contractor's State License Board to the court; the burden of proof is on the licensee. [B&PC §7031(d).] Use of a fictitious business name that slightly varies from the name on the contractor’s license does not preclude the licensee’s recovery under the contract. [Ball v Steadfast-BLK (2011) 196 CA4th 694, 702 (sole owner’s fictitious business name different from name on license).]

A contractor’s license is automatically suspended if he or she fails to obtain a workers’ compensation policy, or if he or she lets the policy lapse and receives notice of suspension. [B&PC §7125.2.]

A contractor who was not licensed at the time performance under the contract commenced is not entitled to any recovery for work performed even if he or she obtained a license during construction. [Goldstein v Barak Constr. (2008) 164 CA4th 845, 855.] Unlicensed contractors are required to return all compensation received without reductions or offsets for the value of material or services provided. [White v Cridlebaugh (2009) 178 CA4th 506, 520–521.]

A "substantial compliance" exception exists if you determine that the individual was a duly licensed contractor before the performance for which compensation is sought, acted reasonably to maintain the license, did not know or reasonably should not have known that the license had not been maintained when the work began, and acted promptly to reinstate the license on learning that it was invalid. [B&PC §7031(e).] A partnership engaged as a contractor must also satisfy all the requirements to qualify for the “substantial compliance” exception. [Oceguera v Cohen (2009) 172 CA4th 783, 793–795.]

The person who uses the services of an unlicensed contractor may bring an action to recover any compensation paid. [B&PC §7031(b).] Whether the contractor is licensed or unlicensed, parties damaged by the contractor’s acts may claim against the bond in a civil action. In determining jurisdiction, look to the amount of the claim and not the amount of the bond.

A contractor who is not a tribal entity but is hired by an Indian tribe may not assert the tribal sovereign immunity defense. [Twenty-Nine Palms Enters. Corp. v Bardos (2012) 210 CA4th 1435, 1445–1446.]

If a contractor is convicted of violating the license law, any person who used that contractor’s services is a victim of a crime and eligible for restitution for economic losses, regardless of whether that person knew the contractor was unlicensed. [B&P §7028(h).]

A worker hired by an unlicensed contractor who in turn has been hired by a homeowner does not come within the workers' compensation system, despite the contractor's unlicensed status, when the worker has not worked 52 hours or earned $100 within 90 days prior to the date of the injury. [Lab C §3352(h).] A homeowner can still be sued for ordinary negligence, if any can be shown. [Zaragoza v Ibarra (2009) 174 CA4th 1012, 1016, 1022–1023.]

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