Amended in Assembly April 18, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 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 amended, 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. begin insert The bill, for purposes of a person seeking recovery of moneys paid to an unlicensed contractor, also would delete the requirement that the contractor be duly licensed at all times during the performance of the work in order for the contractor to receive compensation. The bill instead would authorize a contractor to retain compensation for the portion of the work performed while the contractor was duly licensed. end insert

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

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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 begin delete at all times end delete during the performance
of that act or begin delete contract, end delete begin insert contract for which compensation is sought, end insert
regardless of the merits of the cause of action brought by the
begin delete person, except that this end delete begin insert person. This end insert 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 begin delete contract. end delete begin insert contract, except that this right to recover
from an unlicensed contractor shall not apply to any compensation
paid to the contractor for work performed during a time when the
contractor was duly licensed. end insert

(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 begin delete at all times end delete during the performance of any act or
contract begin delete covered by the action. end delete begin insert for which compensation is sought. end insert
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 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, and (3) acted promptly
and in good faith to remedy the failure to comply with the licensure
requirements begin delete under this section end delete 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.

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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.

.

end delete