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The California Contractors' State License Law

The California Contractors’ State License Law (“License Law”) under California Business and Professions Code was enacted to protect the general public from incompetence and dishonesty by those who provide construction services in this state. The law provides a comprehensive licensing scheme that requires all contractors doing business in California to possess a valid contractor’s license unless they meet a few narrow statutory exceptions. There are more than 40 types of licenses, primarily dealing with electrical, roofing or plumbing issues. A contractor must have the license appropriate to the work to be done. A contractor with one license cannot use that license for an activity that requires a different license. A “contractor” is broadly defined and determined by the conduct, activity or work that a person undertakes or offers to undertake. An inquiry to the Contractors State License Board may confirm whether a contractor is appropriately licensed.

The License Law applies to the provision of “home improvement goods.” These are goods that are to be so affixed to real property as to become a part of real property. Examples include carpeting, fencing, air conditioning and heating equipment, and termite extermination. The law applies to gardeners, including tree trimmers and those who perform tree removal. The law also applies to interior decorators, painters and an installer of sprinkler systems. The License Law is not limited to the structure of the home itself. It extends to work on driveways, swimming pools, hot tubs, porches, garages or land that is adjacent to the home.

The License Law does not apply to any construction, alteration, improvement or repair of personal property. Therefore, the repair of televisions and computers does not require a license. The law also does not apply to the sale or installation of items that are finished products, materials or merchandise and that will not become a fixed part of the home. For example, a supplier who sells a patented prefabricated kitchen will not be required to have a contractor’s license. Similarly, a supplier who delivers finished cabinets to a home and performs no installation work is not required to have a license. The law also does not apply to those who engage in cleaning work, such as residential cleaning and chimney sweeping.

Therefore, all businesses and individuals who construct or alter, or offer to construct or alter, any building, highway, road, parking facility, railroad, excavation, or other structure in California (other than federal projects located in California) must be licensed by the CSLB if the total cost of labor and materials under one or more contracts on the project is $500 or more.

Current law in California governing the licensing of contractors are contained in Bus. & Prof. Code §§7000-7173.This comprehensive body of law sets forth the requirements for obtaining a construction license, the penalties for performing work without a license, and the various licensing classifications available.

Further, the consequence of unlicensed work is generally the lack of any right to payment for work performed. Bus. & Prof. Code § 7031(a) prevents any unlicensed individual from recovery for the performance on any contract for which a valid contractor's license is required, regardless of the merits of the unlicensed contractor's claim.

There are a few exemptions from the Contractors' State License Law. One exemption is for minor or inconsequential projects for which labor and materials do not amount to more than $500 in the aggregate. This exemption also applies to materials suppliers.

Another important exemption applies to "owner/builders. This exemption typically applies when the owner performs the work on his or her own property or uses his or her own employees to do the work under California Bus. & Prof Code §§ 7044(a).