Business LawWorking Without A Contractor’s License Can Very Risky And Expensive

May 2, 2017by RaxterLaw

Under California Contractor’s State License Law enumerated in Business and Professions Code Sections 7000 to 7191, a contractor may not “bring or maintain” any action for compensation for performing any act or contract for which a license is required unless the contractor  was duly licensed “at all times” during performance.  Bus & Prof Code Section 7031(a).

The License Law requires contractors to establish experience and take a test in the particular specialty category for which they seek a license. Parties are required to also have a License Bond to protect their customers, and comply with numerous other statutes and regulations.

Who is a “contractor” – and thus the kinds of persons required to have a contractor’s license – is set forth in the Business and Professions Code. A “Contractor,” is synonymous with “builder” and, within the meaning of Business and Professions is any person who undertakes to or offers to undertake to, or purports to have the capacity to undertake to, or submits a bid to, or does himself or herself or by or through others, construct, alter, repair, add to, subtract from, improve, move, wreck or demolish any building, highway, road, parking facility, railroad, excavation or other structure, project, development or improvement, or to do any part thereof, including the erection of scaffolding or other structures or works in connection therewith, or the cleaning of grounds or structures in connection therewith, or the preparation and removal of roadway construction zones, lane closures, flagging, or traffic diversions, or the installation, repair, maintenance, or calibration of monitoring equipment for underground storage tanks, and whether or not the performance of work herein described involves the addition to, or fabrication into, any structure, project development or improvement herein described of any material or article of merchandise. “Contractor” includes subcontractor and specialty contractor. “Roadway” includes, but is not limited to, public or city streets, highways, or any public conveyance.

The law attempts to protect the party who hires a contractor by making sure they are at least minimally qualified and by requiring contractors to have a bond in place. So what happens when you hire an unlicensed contractor? Well, first of all you are unable to determine whether the person is qualified to perform the work.

How does the state attempt to prevent unlicensed contractor from performing unlicensed work. Easy, they make it completely acceptable not to pay them. Sounds harsh? It is.

Under Business and Professions Code § 7031 it states in part:

“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, regardless of the merits of the cause of action brought by the person…”

“Regardless of the equities, section 7031 bars all actions, however they are characterized, which effectively seek “compensation” for illegal unlicensed contract work. (Lewis & Queen, supra, 48 Cal.2d at pp. 150-152.) Thus, an unlicensed contractor cannot recover either for the agreed contract price or for the reasonable value of labor and materials. (See Davis Co. v. Superior Court (1969) 1 Cal.App.3d 156, 159 [81 Cal.Rptr. 453]; Grant v. Weatherholt (1954) 123 Cal.App.2d 34, 41-42 [266 P.2d 185].) The statutory prohibition operates even where the person for whom the work was performed knew the contractor was unlicensed. (Pickens, supra, 269 Cal.App.2d at p. 302; Cash v. Blackett (1948) 87 Cal.App.2d 233 [196 P.2d 585].)

“It follows that an unlicensed contractor may not circumvent the clear provisions and purposes of section 7031 simply by alleging that when the illegal contract was made, the other party had no intention of performing. Section 7031 places the risk of such bad faith squarely on the unlicensed contractor’s shoulders. “Knowing that they will receive no help from the courts and must trust completely to each other’s good faith, the parties are less likely to enter an illegal arrangement in the first place. [Citations.]” (Lewis & Queen, supra, 48 Cal.2d at p. 150, italics added”

There you have it – If you are performing work as an unlicensed contractor you will receive no assistance from the courts.  If you are a party that hired an unlicensed contractor the law not only allows you not to pay the contractor – you can possibly recover any amounts paid to an unlicensed contractor.

Do not take this article as an endorsement to intentionally hire unlicensed contractors with the intention not to pay, but rather as a warning to make sure you obtain the proper licenses or work with professionals when you consider hiring a contractor.


27851 Bradley Rd, Ste 145

Menifee, CA 92586


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