BILL NUMBER: AB 1793	INTRODUCED
	BILL TEXT


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:

  SECTION 1.  Section 7031 of the Business and Professions Code is
amended to read:
   7031.  (a) Except as provided in subdivision (e), no person
engaged in the business or acting in the capacity of a contractor,
may bring or maintain any action, or recover in law or equity in any
action, in any court of this state for the collection of compensation
for the performance of any act or contract where a license is
required by this chapter without alleging that he or she was a duly
licensed contractor at all times during the performance of that act
or contract, regardless of the merits of the cause of action brought
by the person, except that this prohibition shall not apply to
contractors who are each individually licensed under this chapter but
who fail to comply with Section 7029.
   (b) Except as provided in subdivision (e), a person who utilizes
the services of an unlicensed contractor may bring an action in any
court of competent jurisdiction in this state to recover all
compensation paid to the unlicensed contractor for performance of any
act or contract.
   (c) A security interest taken to secure any payment for the
performance of any act or contract for which a license is required by
this chapter is unenforceable if the person performing the act or
contract was not a duly licensed contractor at all times during the
performance of the act or contract.
   (d) If licensure or proper licensure is controverted, then proof
of licensure pursuant to this section shall be made by production of
a verified certificate of licensure from the Contractors' State
License Board which establishes that the individual or entity
bringing the action was duly licensed in the proper classification of
contractors at all times during the performance of any act or
contract covered by the action. Nothing in this subdivision shall
require any person or entity controverting licensure or proper
licensure to produce a verified certificate. When licensure or proper
licensure is controverted, the burden of proof to establish
licensure or proper licensure shall be on the licensee.
   (e) The judicial doctrine of substantial compliance shall not
apply under this section where the person who engaged in the business
or acted in the capacity of a contractor has never been a duly
licensed contractor in this state. However, notwithstanding
subdivision (b) of Section 143, the court  may  
shall  determine that there has been substantial compliance
with licensure requirements under this section if it is shown at an
evidentiary hearing that the person who engaged in the business or
acted in the capacity of a contractor (1) had been duly licensed as a
contractor in this state prior to the performance of the act or
contract, (2) acted reasonably and in good faith to maintain proper
licensure,  (3) did not know or reasonably should not have
known that he or she was not duly licensed when performance of the
act or contract commenced, and (4)   and (3)  acted
promptly and in good faith to  reinstate his or her license
upon learning it was invalid.   remedy the failure to
comply with the licensure requirements under this section upon
learning of the failure. 
   (f) The exceptions to the prohibition against the application of
the judicial doctrine of substantial compliance found in subdivision
(e) shall apply to all contracts entered into on or after January 1,
1992, and to all actions or arbitrations arising therefrom, except
that the amendments to subdivisions (e) and (f) enacted during the
1994 portion of the 1993-94 Regular Session of the Legislature shall
not apply to either of the following:
   (1) Any legal action or arbitration commenced prior to January 1,
1995, regardless of the date on which the parties entered into the
contract.
   (2) Any legal action or arbitration commenced on or after January
1, 1995, if the legal action or arbitration was commenced prior to
January 1, 1995, and was subsequently dismissed.
  SEC. 2.  The amendment of Section 7031 of the Business and
Professions Code made by this act does not constitute a change in,
but is declaratory of, existing law.
   .