Contractors: unlicensed work.

Plain English Breakdown

The official source material does not provide specific details on enforcement mechanisms or penalties, leaving these aspects uncertain.

Rules for Unlicensed Contractors

This law changes how contractors without a license can get paid and affects security interests related to their work, but only for small residential projects with 25 or fewer units.

What This Bill Does

• Limits the ability of unlicensed contractors to collect payment for construction work on properties with 25 or fewer units.
• Allows licensed contractors who temporarily lose their license due to administrative reasons to still get paid if they were licensed when the contract started and during most of the project.
• Changes rules about security interests taken by contractors, making them unenforceable only during times when the contractor is not licensed.

Who It Names or Affects

• Contractors who do construction work on residential properties with 25 or fewer units
• Homeowners hiring contractors for small residential projects

Terms To Know

unlicensed contractor

A person doing construction work without a required license from the state.

security interest

An agreement that allows someone to take possession of property if payments are not made on time.

Limits and Unknowns

• The bill does not apply to construction work for larger residential properties or commercial projects.
• It is unclear how this law will be enforced and what penalties might exist for breaking it.

Official Summary Text

SB 342, as amended, Umberg.
Contractors: unlicensed work.
Existing law, the Contractors State License Law, establishes the Contractors State License Board in the Department of Consumer Affairs to license and regulate contractors. Existing law prohibits a person engaging in the business or acting in the capacity of a contractor from recovering compensation for work performed that requires a contractor’s license unless the person was a duly licensed contractor at all times during the performance of the act or contract, except as specified.
This bill, for construction work other than private construction work for residential real property of 25 units or less, would instead prohibit the collection of compensation for the period of time where the person was unlicensed. If the person’s license was suspended only because of an administrative purpose, including failing to renew their license on time, the
bill would limit the amount the person is ineligible to recover to actual damages or $10,000 per day, whichever is greater.
Existing law makes a security interest taken to secure a payment for the performance of an act or contract that requires a contractor’s license 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.
This bill, for construction work other than private construction work for residential real property of 25 units or less, would limit the unenforceability of the security interest to any period of time when the person performing the act or contract is not licensed.
This bill would instead
allow that person to recover compensation for that work if the person was a duly licensed contractor at the time the contract was executed and during the portion of the times of the performance of that act or contract for which they are seeking to recover compensation.
Existing law authorizes a person who uses the services of an unlicensed contractor to bring an action to recover all compensation paid to the unlicensed contractor for performance of any act or contract.
This bill would
limit the application of that authorization to private construction work for residential real property of 25 units or less.
instead authorize that person to recover the portion of compensation paid to the unlicensed contractor for work performed during
the time in which the contractor was unlicensed.

Current Bill Text

Download Bill PDF