Unlicensed Contractor in California – Avoid Legal and Financial Trouble!

Unlicensed Contractor in California – Avoid Legal and Financial Trouble!

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In California, the law is strict and prohibits hiring an unlicensed contractor, operating as an unlicensed contractor, or even working as an unlicensed contractor while employed by a third party. The contractor faces harsh consequences, and even the owners take risks when contracting these services outside the law.

The California Business and Professions Code (7028 BP) states that operating as a contractor without a license qualifies as a crime, as does working with a suspended license or failing to comply with a correction order.

In California law, the term “contractor” is equivalent to “builder,” and within this meaning, it includes any person who performs construction work, modifications, repairs, improvements, spare parts, moving, demolition, or excavation, among other activities.

Contractors in California: Licenses and Safety

In California, all construction professionals are legally required to possess a license to operate. Both individuals and companies must demonstrate their knowledge, skills, and experience to the Contractors State Licensing Board (CSLB) to obtain it.

The CSLB, as a regulatory body, is responsible for evaluating applicants and granting licenses to those who meet the requirements. Its website explains that to obtain a contractor license, several payments are required per license application (if approved) and a renewal fee every two years to keep the license active.

To grant the contractor’s license, the CSLB must verify that the applicant has four years of experience at the trade level. In addition, the person who made the request must submit a trade exam and licensing and commercial laws. Since 2005, all new contractors must pass a criminal background check.

When do you need a licensed contractor?

Under California law, a contractor’s license is required for:

• Jobs costing more than $500 in materials and labor.
• Any type of construction, improvement, repair, or alteration to real estate.
• The installation of finished products, materials, or merchandise that are part of the property.

It is also important to know that the law establishes certain exceptions; that is, in these cases, having a contractor’s license will not be necessary. Among them are listed:

• Work that costs less than $500.
• Construction, improvements, repairs, and alterations to personal property (computers, televisions).
• Installation of finished products, materials, or merchandise that are not part of the property.

What legal consequences can I face as an unlicensed contractor in California?

Violation of California Business and Professions Code 7028 is considered a misdemeanor. In this sense, the first offense is punishable with:

• Incarceration in a county jail for up to six months (and longer if there are multiple convictions); and/or
• Fines of up to $5,000 (even more for more convictions)
• Administrative fines from $200 to $15,000

The severity of the sanctions increases if the contractor continues to operate illegally. If a second similar violation occurs, the case will result in a mandatory sentence of 90 days in jail and a fine of 20% of the contract price or $5,000.

Furthermore, anyone who illegally uses another person’s contractor license or attempts to deceive consumers by posing as a licensed contractor can be charged with felonies in California, as can anyone contracting work in a state or federal natural disaster area without an active state contractor license. If convicted in any of these cases, the person could serve up to 72 months in one year in state prison.

Additionally, if you are an illegal contractor, consumers are not legally obligated to pay you and cannot be sued for nonpayment.

What are my risks as a homeowner when hiring an unlicensed contractor?

As a homeowner, you will not be completely exempt from liability for requesting the services of an illegal contractor.

While it is true that, as stated before, you can choose not to pay for the work done by the unlicensed contractor, it is no less true that you could also face some undesirable consequences after opting for the services of an illegal contractor in California, among which we have:

• Liability in case of accidents or damages: If you, as a homeowner, contract for a major residential renovation (such as demolition or reconstruction), you will be treated as an employer and will be required to have a safe place of employment. Therefore, you will be required to comply with OSHA (California Division of Occupational Safety and Health) safety standards. If the unlicensed contractor is injured while working on your home, they can file a lawsuit against the homeowner for violating the law. In these cases, most homeowners’ insurance policies do not cover such accidents because they only cover them if contractors are licensed to do repairs.
• Insurance does not cover defective repairs: If your contractor is not licensed and the repairs they performed on your home were defective, you will find that they took a costly risk. Many insurance policies deny coverage to repair subsequent damage on the grounds that you violated the terms of the policy. In addition, some insurance companies may even cancel the policies upon learning that you incurred this action. This means that the homeowner may have to pay out of pocket to repair any subsequent damage.
• Your home could lose value when you sell it: If you made repairs to your home with an unlicensed contractor and then decide to sell it, you are required by law to disclose this fact to the buyer. This obligation is imposed by the California Civil Code in its articles 1102 to 1102.19. Failure to do so has serious consequences since if the buyer discovers this, they can sue the owner for fraud or misrepresentation. In addition, the price of the home may be reduced, as potential buyers will be willing to pay less for a home that has repairs of questionable quality or that may not meet building codes.

What to do as a homeowner regarding unlicensed contractors?

The CSLB has an informative brochure with a series of recommendations so that you do not fall prey to an illegal contractor, such as:

• Verify that the contractor’s license is active. This can be done on the CSLB website or by calling the automated toll-free line 800.321.CSLB (2752)
• Ask the contractor to show their pocket license and a current photo ID
• Request a list of updated contact information for the contractor, subcontractor, and suppliers
• Call your local building department to find out if your building requires permits.
• Ask the contractor if they have civil liability insurance for workplace accidents.
• Do not pay in cash or an initial amount greater than 10% of the contract amount.

What should I do if I am accused of working as an unlicensed contractor?

If you are being accused of working as an unlicensed contractor, the wisest step is to hire a criminal defense attorney in California.

You could probably be charged with offenses under the California Business and Professions Code (7028 BP). However, an experienced professional will help you present an adequate legal defense and explore the best options to prevent you from being fined or going to jail, reducing or dismissing a charge.

Criminal defense specialists in California may be able to resort to the most common defense strategies, such as claiming that you are not a contractor, using the small jobs exemption, or proving that the contractor is an employee.

Unlicensed contractor in California? At Kannan Law, we can help you

Are you being accused of hiring an unlicensed contractor or operating as an unlicensed contractor? 

. We are professionals with experience in these cases who will be happy to help you defend yourself.