BILL NUMBER: AB 678	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Papan

                        FEBRUARY 22, 2001

   An act to amend Section 7031 of the Business and Professions Code,
relating to contractors.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 678, as introduced, Papan.  Contractors.
   Existing law prohibits any unlicensed contractor from bringing or
maintaining an action to recover compensation in any court in this
state.
   This bill would authorize 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.
   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  (d)
  (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  for which   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)  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.  
   (c)  
   (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
herein 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.  
   (d)  
   (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, the court 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) did not know or reasonably should not have known that he or she
was not duly licensed. Subdivision (b) of Section 143 does not apply
to contractors subject to this subdivision.  
   (e)  
   (f)  The exceptions to the prohibition against the
application of the judicial doctrine of substantial compliance found
in subdivision  (d)   (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  (d)   (e)  and 
(e)   (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.