Amended in Senate August 2, 2016

Amended in Assembly May 4, 2016

Amended in Assembly April 18, 2016

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 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 arebegin delete met.end deletebegin insert met, including that the contractor did not know or should not reasonably have known, that he or she was not duly licensed when the performance under the contract occurred.end insert 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 wouldbegin delete instead requireend deletebegin insert revise certain of the criteria forend insert a court to find that a contractor is in substantial compliance with the licensurebegin delete 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 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.end deletebegin insert requirements, including removing the condition that the contractor did not know or should not have reasonably have known, that he or she was unlicensed during performance of the contract.end insert

begin delete

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.

end delete
begin delete

The bill would make the security interest enforceable for work performed while the contractor was duly licensed.

end delete

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

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

P2    1

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 contractorbegin insert at all timesend insert during the performance
10of that act or contractbegin delete for which compensation is sought,end delete regardless
11of the merits of the cause of action brought by thebegin delete person. Thisend delete
12begin insert person, except that thisend insert prohibition shall not apply to contractors
13who are each individually licensed under this chapter but who fail
14to comply with Section 7029.

P3    1(b) Except as provided in subdivision (e), a person who utilizes
2the services of an unlicensed contractor may bring an action in
3any court of competent jurisdiction in this state to recover all
4compensation paid to the unlicensed contractor for performance
5of any act orbegin delete contract, except that this right to recover from an
6unlicensed contractor shall not apply to any compensation paid to
7the contractor for work performed during a time when the
8contractor was duly licensed.end delete
begin insert contract.end insert

9(c) A security interest taken to secure any payment for the
10performance of any act or contract for which a license is required
11by this chapter is begin delete enforceable for work performed while the
12contractor was duly licensed.end delete
begin insert unenforceable if the person
13performing the act or contract was not a duly licensed contractor
14at all times during the performance of the act or contract.end insert

15(d) If licensure or proper licensure is controverted, then proof
16of licensure pursuant to this section shall be made by production
17of a verified certificate of licensure from the Contractors’ State
18License Board which establishes that the individual or entity
19bringing the action was duly licensed in the proper classification
20of contractorsbegin insert at all timesend insert during the performance of any act or
21contractbegin delete for which compensation is sought.end deletebegin insert covered by the action.end insert
22 Nothing in this subdivision shall require any person or entity
23controverting licensure or proper licensure to produce a verified
24certificate. When licensure or proper licensure is controverted, the
25burden of proof to establish licensure or proper licensure shall be
26on the licensee.

27(e) The judicial doctrine of substantial compliance shall not
28apply under this section where the person who engaged in the
29business or acted in the capacity of a contractor has never been a
30duly licensed contractor in this state. However, notwithstanding
31subdivision (b) of Section 143, the courtbegin delete shallend deletebegin insert mayend insert determine that
32there has been substantial compliance with licensure requirements
33under this section if it is shown at an evidentiary hearing that the
34person who engaged in the business or acted in the capacity of a
35contractor (1) had been duly licensed as a contractor in this state
36prior to the performance of the act or contract, (2) acted reasonably
37and in good faith to maintain proper licensure, and (3) acted
38promptly and in good faith to remedy the failure to comply with
39the licensure requirements upon learning of the failure.

P4    1(f) The exceptions to the prohibition against the application of
2the judicial doctrine of substantial compliance found in subdivision
3(e) shall apply to all contracts entered into on or after January 1,
41992, and to all actions or arbitrations arising therefrom, except
5that the amendments to subdivisions (e) and (f) enacted during the
61994 portion of the 1993-94 Regular Session of the Legislature
7shall not apply to either of the following:

8(1) Any legal action or arbitration commenced prior to January
91, 1995, regardless of the date on which the parties entered into
10the contract.

11(2) Any legal action or arbitration commenced on or after
12January 1, 1995, if the legal action or arbitration was commenced
13prior to January 1, 1995, and was subsequently dismissed.



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