California Contractor Dispute FAQ

The Contractors State License Board (CSLB) is a California state agency that licenses and regulates the construction industry. Their key functions include:

• Licensing: Issue and renew contractor licenses across 44+ classifications
• Investigation: Investigate consumer complaints against contractors
• Enforcement: Discipline contractors through fines, suspension, or license revocation
• Public Database: Maintain searchable records of all licensed contractors
• Consumer Protection: Help consumers recover money through bond claims

Under Business & Professions Code 7031, any construction work over $500 (combined labor and materials) requires a CSLB license. Working without a license is a misdemeanor under B&P 7028.

Visit cslb.ca.gov and use the "Check a License" feature. You can search by:

• License number
• Business name
• Individual name

The database shows:

• Current status: Active, expired, suspended, or revoked
• License classification: Type of work authorized (C-10 electrical, C-36 plumbing, etc.)
• Bond information: Surety bond status and company
• Workers' comp: Insurance status or exemption
• Complaint history: Past complaints and disciplinary actions

Yes - and this is one of California's strongest consumer protections.

Under Business & Professions Code 7031(b), you can recover ALL money paid to an unlicensed contractor through "disgorgement" - even if the work was completed perfectly. Key points:

• Full refund: The contractor must return every dollar you paid
• No offset: The contractor CANNOT reduce this by the value of work performed
• Quality irrelevant: Even excellent work doesn't protect an unlicensed contractor
• No counterclaims: Under B&P 7031(a), unlicensed contractors cannot sue you for payment

The California Supreme Court confirmed this in MW Erectors, Inc. v. Niederhauser Ornamental & Metal Works Co. (2005) 36 Cal.4th 412.

Under Business & Professions Code 7048, any construction project with combined labor and materials exceeding $500 requires a licensed contractor.

• Under $500: Handymen can legally perform work without a license
• Over $500: A CSLB license is required
• No splitting: Projects cannot be artificially divided to stay under the threshold

This threshold includes:

• All labor costs
• All material costs
• Subcontractor costs
• The total project, not individual payments

Under Business & Professions Code 7107, a contractor has abandoned a project if they:

• Fail to complete the work
• The project is delayed for an unreasonable amount of time
• No substantial progress is being made

Courts typically consider these factors:

• 30+ days without progress: Generally considered unreasonable delay
• No communication: Contractor not returning calls or messages
• Equipment removed: Tools and materials taken from the site
• Started another job: Evidence contractor is working elsewhere
• Subcontractors unpaid: Subs stopping work due to non-payment

Take these steps immediately:

1. Document the site: Take comprehensive photos and videos with dates
2. Send written notice: Demand the contractor return to work within 10 days via certified mail
3. Check license status: Verify at cslb.ca.gov - if unlicensed, you have additional recovery options
4. Get repair/completion estimates: Obtain 2-3 written bids from licensed contractors
5. File a CSLB complaint: This creates an official record and may trigger investigation
6. File a bond claim: Claim against the contractor's $25,000 surety bond
7. Consider small claims court: For damages up to $12,500

Construction work must meet or exceed:

• California Building Code (Title 24): Minimum construction standards
• Manufacturer specifications: Installation requirements for products used
• Industry standards: Accepted practices in the trade
• Contract specifications: What your agreement requires

Under Civil Code 896 (SB 800), residential construction must meet specific functionality standards for:

• Water intrusion and drainage
• Structural integrity
• Soil and foundation issues
• Fire protection systems
• Plumbing, electrical, and HVAC systems

Damages you can recover include:

• Cost of repair: What another contractor charges to fix the defects
• Cost of completion: Finishing unfinished work
• Diminution in value: If defects permanently reduce property value
• Return of overpayments: Money paid for work not performed
• Consequential damages: Hotel costs if home uninhabitable, lost rent, storage fees
• Disgorgement: Full refund if contractor was unlicensed (B&P 7031)

Additional remedies:

• Attorney's fees (if your contract includes a fee provision)
• CSLB complaint (may result in license discipline)
• Bond claim (up to $25,000)

Under Civil Code 896, residential construction has implied warranties regardless of what's in your contract:

• 1 year: Fit and finish (paint, flooring, cosmetic issues)
• 2 years: Plumbing, electrical, mechanical, and HVAC systems
• 4 years: Most other defects (roofing, windows, doors)
• 10 years: Structural defects (foundation, framing, load-bearing elements)

These warranties cannot be waived. Additional warranties may be provided in your contract or by product manufacturers.

Under Business & Professions Code 7159, contracts for home improvement over $500 must include:

• Contractor information: Legal name, license number, business address, and phone
• Project description: Detailed scope of work and materials to be used
• Contract price: Total price or how price will be calculated
• Payment schedule: When payments are due (with down payment limits)
• Start and completion dates: Approximate timeline
• 3-day cancellation notice: Required statement of your right to cancel
• Cancellation form: A form you can use to cancel
• Bond information: Contractor's surety bond details
• Mechanics lien warning: Notice about lien rights

Under Business & Professions Code 7159 and Civil Code 1689.5-1689.14:

• 3 business days: You can cancel most home improvement contracts signed at your home
• No penalty: Full refund of any payments made
• Written form required: Contractor must provide a cancellation form
• Extended period: If no form provided, cancellation right extends indefinitely until the form is given

Exceptions (where 3-day rule may not apply):

• Emergency repairs you requested
• Contracts signed at the contractor's office
• You initiated contact and requested immediate work

Change orders modify the original contract's scope or price. Under B&P 7159:

• Should be in writing: Signed by both parties before work begins
• Must specify: The additional work, additional cost, and timeline impact
• Verbal change orders: Enforceable but harder to prove - avoid when possible

Protect yourself from "scope creep":

• Get all changes in writing before authorizing additional work
• Request itemized pricing for change orders
• Document any verbal agreements immediately in writing via email
• Keep a running total of all change orders

Under Business & Professions Code 7159.5:

• Maximum down payment: $1,000 OR 10% of the contract price, whichever is LESS
• Progress payments: Must be tied to work actually completed
• Final payment: Should not be made until work passes inspection

Example:

• $8,000 contract = max $800 down payment (10%)
• $15,000 contract = max $1,000 down payment (cap)
• $50,000 contract = max $1,000 down payment (cap)

Yes, you can withhold payment proportional to the defects. Best practices:

1. Document the defects: Photos, videos, dates, descriptions
2. Get repair estimates: 2-3 written bids from licensed contractors
3. Send written notice: Explain what you're withholding and why
4. Be proportional: Don't withhold more than needed to fix the problems
5. Offer to pay undisputed amounts: Pay for completed work that meets standards

Even if you pay your general contractor, unpaid subcontractors can lien your property. Protect yourself:

• Track preliminary notices: When you receive 20-day notices, note who sent them
• Request lien waivers: Get conditional waivers before each progress payment
• Use joint checks: Issue checks payable to both GC and subcontractor
• Verify payments: Ask for proof subs are being paid
• Final lien waivers: Get unconditional waivers from all parties before final payment

A mechanic's lien (under Civil Code 8400-8494) is a claim against your property for unpaid construction work.

Who can file a lien:

• General contractors
• Subcontractors
• Material suppliers
• Equipment lessors
• Laborers

Impact on homeowners:

• Creates a cloud on your property title
• May block sale or refinancing
• Lien holder can foreclose if not resolved
• Appears in title searches

Under Civil Code 8200-8216, most parties (except general contractors with direct contracts) must serve a preliminary 20-day notice to preserve their lien rights.

What it means for you:

• Alerts you that someone (subcontractor, supplier) is providing labor or materials
• Does NOT mean a lien will be filed
• Identifies potential lien claimants
• Required before they can file a lien

When you receive one:

• Keep it on file
• Verify the general contractor is paying this party
• Request lien waivers as payments are made
• Consider joint checks for these parties

Options to remove a lien:

1. Pay the claim: Get a signed lien release recorded
2. Negotiate: Settle for less and get a release
3. Motion to release: If lien is procedurally defective (wrong amount, late filing, etc.)
4. Post a release bond: Under Civil Code 8424, bond replaces the lien on your property
5. Wait for expiration: Liens expire 90 days after recording if no lawsuit is filed (Civil Code 8460)
6. Challenge in court: If you dispute the claim, let them sue and defend

No. Under Business & Professions Code 7031(a), an unlicensed contractor cannot bring any legal action for compensation, including filing a mechanic's lien.

If an unlicensed contractor files a lien:

• The lien is void and unenforceable
• You can file a motion to release the lien
• You may recover attorney's fees for removing it
• The contractor may face additional penalties for wrongful lien

File your complaint:

• Online: cslb.ca.gov (fastest method)
• By mail: Download form from website
• By phone: (800) 321-CSLB (2752)

Include in your complaint:

• Contractor's name, license number, address
• Project address and description
• Detailed timeline of events
• Payment records (checks, receipts, invoices)
• Photos of defective work
• Copies of contracts and change orders
• All correspondence (emails, texts, letters)
• Repair estimates from other contractors

The CSLB process:

1. Acknowledgment: You receive confirmation of your complaint
2. Review: CSLB staff review for jurisdiction and merit
3. Contact contractor: Contractor is notified and asked to respond
4. Investigation: If warranted, a full investigation begins
5. Resolution: Mediation, settlement, or formal action

Possible outcomes:

• Mediation leading to settlement
• Citation and fine against contractor
• License suspension or revocation
• Order to pay restitution
• Referral to District Attorney for criminal prosecution
• Bond claim assistance

California licensed contractors must maintain a $25,000 surety bond that protects consumers.

To make a bond claim:

1. Get bond company info: Look up at cslb.ca.gov under contractor's license
2. Send written claim: Include your name, contractor info, amount claimed, and supporting documents
3. Provide documentation: Contract, payments, photos, estimates
4. Bond company investigates: They review the claim and may contact the contractor
5. Resolution: Payment, denial, or partial payment

Important notes:

• Total bond is $25,000 - may have multiple claimants
• File claims promptly to maximize recovery
• Bond companies often settle valid claims
• If denied, you can sue the bond company

Yes - small claims court is excellent for contractor disputes.

Key details:

• Limit: $12,500 for individuals
• Filing fee: $75-$100 depending on amount
• No attorney needed: You represent yourself
• Fast: Typically heard within 30-70 days

What to bring to court:

• Written contract
• Payment records (checks, credit card statements)
• Photos of defective work (before and after)
• Repair estimates from licensed contractors
• CSLB records (license status, history)
• All correspondence with contractor
• Your demand letter and any response

Your demand letter should include:

1. Your information: Name, address, contact info
2. Contractor information: Name, license number, address
3. Project description: Address, scope of work, dates
4. What went wrong: Specific problems, defects, or breach
5. Damages: Itemized list with documentation
6. Legal citations: B&P 7031, 7107, 7159 as applicable
7. Exact amount demanded: Clear total with breakdown
8. Deadline: 10-15 days to respond
9. Consequences: Legal action, CSLB complaint, bond claim

Key deadlines:

• 4 years: Breach of written contract (CCP 337)
• 2 years: Oral contracts (CCP 339)
• 3-4 years: B&P 7031 unlicensed contractor claims
• 4 years: Patent (obvious) defects (CCP 337.1)
• 10 years: Latent (hidden) defects (CCP 337.15)

The "discovery rule" may extend some deadlines - the clock starts when you discovered or should have discovered the problem, not when the work was done.

Under Business & Professions Code 7110, the contractor is responsible for obtaining required permits unless the contract explicitly states otherwise.

Consequences of unpermitted work:

• CSLB violation against the contractor
• Work may need to be torn out and redone
• Problems selling your home (title issues)
• Insurance may not cover unpermitted work
• Safety risks from uninspected work
• Fines from local building department

Under B&P 7044, homeowners can perform work on their own primary residence without a contractor's license.

Requirements:

• Must be your primary residence
• Work must still meet building codes
• Permits still required where applicable
• Cannot use exemption for investment properties
• Cannot help friends/family under this exemption

Risks of DIY work:

• No warranty protection
• Insurance may not cover DIY work
• May affect resale value
• Liability for injuries to others

Consider hiring a lawyer if:

• Damages exceed $12,500: Beyond small claims court limit
• Mechanic's liens involved: Complex procedures to remove
• Contractor disputes license status: May need certified records
• Structural defects: May need expert witnesses
• Contractor filed lawsuit: You need representation
• SB 800 claims: Complex pre-litigation requirements
• Multiple contractors involved: Complex liability issues
• Insurance bad faith: Denied claims for covered work

For residential construction defects, Civil Code 910-938 (SB 800) requires specific steps before filing a lawsuit:

1. Written notice: Send detailed notice of defects to builder
2. Acknowledgment: Builder has 14 days to acknowledge
3. Inspection: Builder has 30 days to inspect
4. Offer to repair: Builder has 30 days to offer repair
5. Your response: Accept, reject, or negotiate the offer

If builder doesn't respond or you reject the offer, you can proceed with litigation after the process is complete.

Under B&P 7031(e), a contractor may avoid disgorgement if they prove ALL of the following:

1. Previously licensed: They held a valid license before the work
2. Good faith belief: They reasonably believed they were still licensed
3. Prompt action: They quickly reinstated upon discovering the lapse
4. Unjust result: Requiring full disgorgement would be inequitable

Courts apply this very narrowly. It does NOT apply if:

• The contractor was never licensed
• The license lapsed for more than a brief period
• The contractor knew or should have known about the lapse
• There's a history of license violations