📋 What is B&P 7031 Disgorgement?
California Business & Professions Code Section 7031 is one of the most powerful consumer protection laws in the country. It provides that an unlicensed contractor must return ALL compensation received - this is called "disgorgement."
💰 The Power of B&P 7031
Unlike typical breach of contract claims where you must prove damages, B&P 7031 allows you to recover:
- ALL money paid - not just the amount you overpaid
- Even for perfect work - quality is irrelevant
- No offset allowed - contractor cannot reduce by value of work
- Attorney's fees - in many cases
What Work Requires a License?
In California, work requiring a contractor's license includes any project over $500 (including labor AND materials). This covers:
🛠 General Construction
Remodeling, additions, new construction, structural work
🔥 Specialty Trades
Electrical (C-10), plumbing (C-36), HVAC (C-20), roofing (C-39)
🌳 Landscaping
Landscape contractors (C-27) for projects over $500
🏠 Home Services
Pool/spa (C-53), solar (C-46), flooring (C-15), painting (C-33)
Common Unlicensed Contractor Scenarios
- Never Licensed: The contractor never had a California contractor's license
- Expired License: License lapsed during the project and wasn't renewed in time
- Wrong Classification: Licensed as C-33 (painting) but did C-10 (electrical) work
- Exceeded Scope: Handyman doing work over $500 that requires a license
- Suspended License: License was suspended for unpaid fees, bond lapse, or disciplinary action
🚨 Unlicensed = Unenforceable
If a contractor was unlicensed at ANY point during the project, they cannot:
- Sue you for unpaid balances
- File a mechanic's lien
- Enforce any contract term
- Keep any money you paid them
⚖ California Law - B&P 7031
Business & Professions Code Section 7031 is the foundation of unlicensed contractor claims in California. Understanding its provisions is essential to recovering your money.
Key Provisions
B&P 7031(a) - No Right to Sue
"No person engaged in the business or acting in the capacity of a contractor, may bring or maintain any action... for the collection of compensation for the performance of any act or contract where a license is required... without alleging that they were a duly licensed contractor at all times during the performance."
B&P 7031(b) - Disgorgement Remedy
"A person who utilizes the services of an unlicensed contractor may bring an action... to recover all compensation paid to the unlicensed contractor for performance of any act or contract." This is the disgorgement provision that allows you to recover ALL money paid.
B&P 7031(e) - Substantial Compliance Exception
A narrow exception exists if the contractor proves: (1) they were licensed before the work, (2) acted in good faith believing they were licensed, (3) promptly reinstated upon discovery, and (4) disgorgement would be unjust. Courts apply this very strictly.
B&P 7028 - Criminal Penalties
Operating as an unlicensed contractor is a misdemeanor punishable by up to 6 months in jail and/or a fine up to $5,000. First offense: up to $5,000 fine. Second offense within 5 years: up to $10,000 fine and mandatory jail time.
How to Verify Contractor License Status
🔍 CSLB Website
Visit cslb.ca.gov and click "Check a License" - this shows current status and complete history
📅 Historical Status
Request a "Certified License History" from CSLB to see status during your project dates
⚠ The Substantial Compliance Defense
Contractors will often claim "substantial compliance" to avoid disgorgement. However, courts apply this very narrowly. It does NOT apply if:
- The contractor was never licensed
- The license lapsed for more than a short period
- The contractor knew or should have known they were unlicensed
- The contractor had previous license violations
✅ Evidence Checklist
Gathering the right evidence is essential to prove your B&P 7031 claim. Use this checklist.
🔐 License Verification
- ✓ CSLB license lookup printout (current status)
- ✓ Certified license history from CSLB
- ✓ Documentation of dates work was performed
- ✓ Proof license classification didn't cover work
💰 Payment Records
- ✓ All checks written (copies front and back)
- ✓ Bank statements showing payments
- ✓ Credit card statements if applicable
- ✓ Receipts or invoices from contractor
📄 Contract Documents
- ✓ Written contract or proposal
- ✓ Change orders or amendments
- ✓ Text messages or emails about the project
- ✓ Business cards or advertising showing contractor claims
📷 Project Documentation
- ✓ Photos of work performed
- ✓ Permit records (if any)
- ✓ Inspection records
- ✓ Timeline of when work was performed
💡 How to Get Certified License History
Request a Certified License History from CSLB:
- Call CSLB at (800) 321-CSLB (2752)
- Request written certification of license status for specific dates
- Fee is approximately $15
- This provides official proof for court proceedings
📝 Sample Demand Letter Language
Use these sample paragraphs to draft your demand letter to an unlicensed contractor. The key is citing B&P 7031 and demanding return of ALL compensation.
RE: Demand for Return of All Compensation Under B&P Code 7031
I am writing regarding the [description of work - e.g., "kitchen remodeling services"] you performed at my property located at [PROPERTY ADDRESS] between [START DATE] and [END DATE].
I have confirmed through the California Contractors State License Board that you [were not licensed / your license #[NUMBER] was expired/suspended] during the time you performed this work.
California courts have consistently held that this disgorgement remedy applies regardless of the quality of work performed. In MW Erectors, Inc. v. Niederhauser Ornamental & Metal Works Co. (2005) 36 Cal.4th 412, the California Supreme Court confirmed that unlicensed contractors must disgorge all compensation received, even if the work was performed satisfactorily.
The contractor may not offset the value of work performed or materials provided against the disgorgement amount.
[DATE] - [PAYMENT METHOD] - $[AMOUNT]
[DATE] - [PAYMENT METHOD] - $[AMOUNT]
[DATE] - [PAYMENT METHOD] - $[AMOUNT]
TOTAL COMPENSATION PAID: $[TOTAL]
DEMAND: Pursuant to Business & Professions Code Section 7031(b), I hereby demand that you return the full amount of $[TOTAL] within 15 days of the date of this letter.
1. File a civil lawsuit to recover the full disgorgement amount plus attorney's fees and costs
2. Report your unlicensed contracting activity to the Contractors State License Board for investigation and potential criminal prosecution under B&P Code 7028
3. File a complaint with the local District Attorney's office, as unlicensed contracting is a misdemeanor punishable by fines up to $5,000 and/or imprisonment
Please note that as an unlicensed contractor, you have no right to file any counterclaim against me, enforce any contract provision, or file a mechanic's lien against my property.
[YOUR ADDRESS]
If I do not receive full payment by [DATE - 15 days from letter], I will proceed with litigation without further notice.
This letter is sent without prejudice to any and all rights and remedies I may have under California law.
❓ Frequently Asked Questions
Can I get my money back from an unlicensed contractor?
▼Yes. Under California Business & Professions Code 7031(b), you can recover ALL compensation paid to an unlicensed contractor, even if the work was performed satisfactorily. This is called "disgorgement" - the contractor must return every dollar you paid. The contractor cannot offset this with the value of work performed or materials provided.
What do I need to prove the contractor was unlicensed?
▼You need to show: (1) the contractor performed work requiring a license under B&P 7031, (2) the contractor was not properly licensed at all times during the project, and (3) you paid the contractor for the work. You can verify license status at cslb.ca.gov. Work over $500 (including materials and labor) requires a license.
What is the substantial compliance exception?
▼Under B&P 7031(e), a contractor may avoid disgorgement if they prove: (1) they were licensed at some point before the work, (2) they acted reasonably and in good faith believing they were licensed, (3) they acted promptly to reinstate their license upon discovering the lapse, and (4) requiring disgorgement would be unjust. Courts apply this exception very narrowly.
What is the statute of limitations for these claims?
▼California courts have applied both the 3-year fraud statute (CCP 338(d)) and 4-year catch-all statute (CCP 343) to B&P 7031 claims. The period typically runs from when you discovered or should have discovered the contractor was unlicensed. Some courts have applied the discovery rule, extending the deadline if the contractor concealed their unlicensed status.
🚀 Get Legal Help
B&P 7031 claims can be straightforward if you have the right evidence. Here's when professional help makes sense.
Consider Hiring an Attorney If:
- The amount at stake is substantial ($25,000+)
- The contractor is claiming substantial compliance
- The contractor disputes the license status
- You need to file in Superior Court (over $12,500)
- The contractor has filed a mechanic's lien (invalid, but needs removal)
- There are construction defect issues in addition to the license issue
My Fee Structure
💰 Contingency Fee
33-40% of recovery. No fee unless I collect. Available for claims over $25,000 with clear evidence.
📅 Hourly Rate
$240/hour for complex cases or where contingency isn't available.
📄 Flat Fee
Starting at $450 for demand letter and CSLB complaint preparation.
Paid an Unlicensed Contractor?
I help California homeowners recover every dollar paid to unlicensed contractors using the powerful B&P 7031 disgorgement remedy.