Today's Law As Amended


Add To My Favorites | print page

AB-1920 Contractors: compensation.(2011-2012)



As Amends the Law Today


SECTION 1.

 Section 7031 of the Business and Professions Code is amended to read:

7031.
 (a) (1)  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 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.
(2) This subdivision shall not apply if the person who engaged in the business or acted in the capacity of a contractor (A) had been previously licensed as a contractor in this state in the appropriate classification for the work contracted or performed, and (B) the board has acted to retroactively reinstate the license from the date work commenced through the date of completion.
(3) If a contractor holding a valid license contracted for, or performed a portion of, any work outside of his or her license classification and the value of the unlicensed work does not exceed 20 percent of the contract price, the contractor shall not be prevented from bringing or maintaining an action to recover compensation payable for that portion of work contracted or performed for which the contractor was duly licensed.
(b) (1)  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.
(2) This subdivision shall not apply if the unlicensed contractor (A) had been previously licensed as a contractor in this state in the appropriate classification for the work contracted or performed, and (B) the board has acted to retroactively reinstate the license from the date work commenced through the date of completion.
(3) If an action brought under this subdivision is based on a claim that a contractor holding a valid license contracted for, or performed a portion of, any work outside of his or her license classification and the value of the unlicensed work does not exceed 20 percent of the contract price, any action to recover compensation previously paid to the contractor shall be limited to the value of that portion of the work contracted or performed that was outside the classification for which 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.
(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 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 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)  contract and the loss of licensure did not occur due to an affirmative disciplinary action by the registrar that resulted from an accusation, arbitration, or citation. In making a determination of substantial compliance, the court may consider mitigating factors for a loss of licensure, including whether (1) the contractor  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. (2) the contractor knew or should have known of the loss of licensure, (3) the contractor took prompt action to request reinstatement of the license after learning that it was invalid, and (4) persons receiving the benefit of the work performed would be unjustly enriched. In addition, the court may consider aggravating factors for a loss of licensure, including (1) the seriousness of the violation that resulted in the loss of licensure, and (2) the degree to which the loss of licensure harmed or could have harmed the public. 
(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.
SEC. 2.
 It is the intent of the Legislature that this act affects only the rights of the parties to a contract to bring an action to recover moneys paid or payable under Section 7031. This act shall not be construed to limit or modify any other administrative, civil, or criminal actions authorized to be brought by the registrar of the board or other law enforcement agency to enforce any provision of this chapter.