California Legislature—2015–16 Regular Session

Assembly BillNo. 1793


Introduced by Assembly Member Holden

February 4, 2016


An act to amend Section 7031 of the Business and Professions Code, relating to contractors.

LEGISLATIVE COUNSEL’S DIGEST

AB 1793, as introduced, Holden. Contractors: license requirements: recovery actions.

Existing law, the Contractors’ State License Law, creates the Contractors’ State License Board within the Department of Consumer Affairs and provides for the licensure and regulation of contractors. Existing law authorizes a person who utilizes an unlicensed contractor to bring an action in any court of competent jurisdiction in this state for recovery of compensation paid to the unlicensed contractor for performance of any act or contract. Existing law authorizes a court to determine that a contractor has substantially complied with licensure requirements if specified conditions are met. Existing law also requires a contractor to demonstrate that he or she acted promptly and in good faith to reinstate his or her license upon learning it was invalid in order to meet substantial compliance of these licensure requirements.

This bill would instead require a court to find that a contractor is in substantial compliance with the licensure requirements if prescribed evidentiary standards are met.

The bill would declare that its provisions are declaratory of existing law.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

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SECTION 1.  

Section 7031 of the Business and Professions
2Code
is amended to read:

3

7031.  

(a) Except as provided in subdivision (e), no person
4engaged in the business or acting in the capacity of a contractor,
5may bring or maintain any action, or recover in law or equity in
6any action, in any court of this state for the collection of
7compensation for the performance of any act or contract where a
8license is required by this chapter without alleging that he or she
9was a duly licensed contractor at all times during the performance
10of that act or contract, regardless of the merits of the cause of action
11brought by the person, except that this prohibition shall not apply
12to contractors who are each individually licensed under this chapter
13but who fail to comply with Section 7029.

14(b) Except as provided in subdivision (e), a person who utilizes
15the services of an unlicensed contractor may bring an action in
16any court of competent jurisdiction in this state to recover all
17compensation paid to the unlicensed contractor for performance
18of any act or contract.

19(c) A security interest taken to secure any payment for the
20performance of any act or contract for which a license is required
21by this chapter is unenforceable if the person performing the act
22or contract was not a duly licensed contractor at all times during
23the performance of the act or contract.

24(d) If licensure or proper licensure is controverted, then proof
25of licensure pursuant to this section shall be made by production
26of a verified certificate of licensure from the Contractors’ State
27License Board which establishes that the individual or entity
28bringing the action was duly licensed in the proper classification
29of contractors at all times during the performance of any act or
30contract covered by the action. Nothing in this subdivision shall
31require any person or entity controverting licensure or proper
32licensure to produce a verified certificate. When licensure or proper
33licensure is controverted, the burden of proof to establish licensure
34or proper licensure shall be on the licensee.

35(e) The judicial doctrine of substantial compliance shall not
36apply under this section where the person who engaged in the
37business or acted in the capacity of a contractor has never been a
38duly licensed contractor in this state. However, notwithstanding
P3    1subdivision (b) of Section 143, the courtbegin delete mayend deletebegin insert shallend insert determine that
2there has been substantial compliance with licensure requirements
3under this section if it is shown at an evidentiary hearing that the
4person who engaged in the business or acted in the capacity of a
5contractor (1) had been duly licensed as a contractor in this state
6prior to the performance of the act or contract, (2) acted reasonably
7and in good faith to maintain proper licensure,begin delete (3) did not know
8or reasonably should not have known that he or she was not duly
9licensed when performance of the act or contract commenced, and
10(4)end delete
begin insert and (3)end insert acted promptly and in good faith tobegin delete reinstate his or her
11license upon learning it was invalid.end delete
begin insert remedy the failure to comply
12with the licensure requirements under this section upon learning
13of the failure.end insert

14(f) The exceptions to the prohibition against the application of
15the judicial doctrine of substantial compliance found in subdivision
16(e) shall apply to all contracts entered into on or after January 1,
171992, and to all actions or arbitrations arising therefrom, except
18that the amendments to subdivisions (e) and (f) enacted during the
191994 portion of the 1993-94 Regular Session of the Legislature
20shall not apply to either of the following:

21(1) Any legal action or arbitration commenced prior to January
221, 1995, regardless of the date on which the parties entered into
23the contract.

24(2) Any legal action or arbitration commenced on or after
25January 1, 1995, if the legal action or arbitration was commenced
26prior to January 1, 1995, and was subsequently dismissed.

27

SEC. 2.  

The amendment of Section 7031 of the Business and
28Professions Code made by this act does not constitute a change
29in, but is declaratory of, existing law.

30.



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