BILL NUMBER: AB 1793	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  MAY 4, 2016
	AMENDED IN ASSEMBLY  APRIL 18, 2016

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. The bill, for purposes of a
person seeking recovery of moneys paid to an unlicensed contractor,
also would  delete   remove  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. 
   Existing law authorizes a person who provides work authorized for
a site improvement to have a lien against the property equal to the
value of the work. Existing law provides that a security interest
taken to secure payment for site improvements is unenforceable if the
contractor was not licensed during all times during the performance
of the improvements.  
    The bill would make the security interest enforceable for work
performed while the contractor was duly licensed. 
   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 during the performance of that act or contract
for which compensation is sought, regardless of the merits of the
cause of action brought by the person. 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, 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.
   (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.  
enforceable for work performed while the contractor was duly
licensed. 
   (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 during the performance of any act or contract for which
compensation is sought. 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 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.