BILL NUMBER: AB 1793 AMENDED
BILL TEXT
AMENDED IN SENATE AUGUST 2, 2016
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. 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. 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 revise
certain of the criteria for 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 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.
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.
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 at all times 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 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, 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. 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 enforceable for work performed while the
contractor was duly licensed. 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 for which compensation is sought.
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 shall
may 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.