California homeowners have powerful legal protections when contractors fail to perform. Unlike many states, California requires contractors to be licensed, bonded, and insured—and provides multiple enforcement mechanisms when things go wrong.
Key Leverage Points Against Contractors
$25,000 License Bond: Every licensed contractor must maintain a bond. You can file a claim for contract violations, abandonment, or defective work.
CSLB Complaint: Filing a complaint with the Contractors State License Board can result in license suspension—existential threat to their business.
B&P 7031 (Unlicensed): If the contractor was unlicensed at ANY time during the project, you can recover ALL money paid regardless of work quality.
Mechanics Lien Defense: You can require the contractor to provide unconditional lien releases before final payment.
Civil Code 1029: Contractor fraud penalties including treble damages in some cases.
Why Demand Letters Work
A well-crafted demand letter citing specific code violations signals that you understand your rights and are prepared to pursue them. Most contractors would rather negotiate than face:
CSLB investigation and potential license action
Bond claims affecting their ability to work
Court judgments that become public record
Attorney fee awards if you prevail
Business & Professions Code § 7068.1
"The qualifying individual... shall be responsible for exercising that direct supervision and control of his or her employer's or principal's construction operations as is necessary to secure full compliance with this chapter..."
Understanding Your Leverage
Not all contractor disputes are equal. Your leverage depends on several factors that affect how likely the contractor is to settle versus fight.
Factors That Increase Your Leverage
Active License: Licensed contractors have more to lose—their license, their bond, their reputation.
Payment Ratio: If you've paid more than the value of work completed, you have leverage. The contractor has your money.
Written Contract: Clear contract terms make violations easier to prove.
Documentation: Photos, emails, and records strengthen your position.
Code Violations: Specific B&P Code violations carry automatic penalties.
Unlicensed Period: If the license lapsed during work, B&P 7031 gives you the nuclear option.
Factors That Reduce Your Leverage
No Written Contract: Harder to prove terms and violations.
Mostly Paid: Less financial incentive for contractor to settle.
Subjective Issues: "I don't like the color" is weaker than "roof leaks."
You Modified Work: If you altered their work, causation becomes murky.
The Escalation Strategy
Start with the least aggressive option and escalate only as needed:
Polite Request: Give them a chance to make it right without threats.
Formal Demand: Cite specific code violations and deadlines.
CSLB Complaint: File but offer to withdraw if resolved.
Bond Claim: Pursue the contractor's bond.
Litigation: Small claims (up to $12,500) or civil court.
CSLB Complaints Explained
The Contractors State License Board (CSLB) is your most powerful ally in contractor disputes. Understanding how to use this leverage effectively can make the difference between a quick settlement and a prolonged fight.
What CSLB Can Do
Investigate contractor conduct
Order contractors to correct deficient work
Suspend or revoke licenses
Facilitate bond claims up to $25,000
Refer cases for criminal prosecution
When to File a CSLB Complaint
Consider filing when the contractor has:
Abandoned the project
Performed work requiring a license they don't hold
Violated specific B&P Code sections
Refused to respond to your demand letter
Caused significant financial harm
Strategic Timing
You can mention the possibility of a CSLB complaint in your demand letter as leverage, then actually file if the contractor doesn't respond. Some homeowners file immediately to create urgency. Both approaches can work—the key is following through.
Important
CSLB complaints become public record. Once filed, they affect the contractor's license history permanently. This is powerful leverage, but also means the contractor may become defensive rather than cooperative if you file prematurely.
Bond Claim Process
Every licensed contractor must maintain a $25,000 contractor's license bond. To file a claim:
Look up the contractor's bond company via CSLB license lookup
File a claim directly with the bonding company
Provide documentation of damages and contract violations
The bonding company investigates and may pay valid claims
The contractor must then repay the bonding company or lose their license
Frequently Asked Questions
All California licensed contractors must maintain a $25,000 contractor's license bond. This bond can be claimed against for violations of contractor licensing law. Additionally, contractors may have a separate $15,000 qualifying individual bond if they operate as the qualifier for another company.
Yes. Under Business & Professions Code 7031(b), if a contractor was unlicensed at any point during your project—even if their license simply expired and was later renewed—you can recover ALL compensation paid to them. This applies regardless of whether the work was satisfactory. This is one of the most powerful remedies in California construction law.
Under B&P 7068.1 and CCR 823, the license holder (qualifier) must exercise "direct supervision and control" over all construction operations. This doesn't mean they must be on-site every moment, but they must have sufficient presence and oversight to ensure compliance with building codes and contract requirements. Delegating all work to unsupervised day laborers or subcontractors typically violates this requirement.
You generally have 4 years from the act to file a CSLB complaint. However, for practical leverage purposes, the sooner you file, the better. Recent complaints carry more weight, and statute of limitations for related civil claims may be shorter.
Yes. You can file a claim directly with the contractor's bonding company without filing a lawsuit first. The bonding company will investigate and may pay valid claims. However, if your damages exceed $25,000 or the bonding company disputes the claim, you may need to pursue litigation.
Contractors can file mechanics liens for unpaid work, but this has limits. First, they must have provided the required preliminary notice. Second, they can only lien for the reasonable value of work actually performed. Third, if you have legitimate disputes about work quality, you can contest the lien. Always demand conditional lien releases before making progress payments, and unconditional releases before final payment.
It depends on the amount at stake and complexity. For disputes under $12,500, small claims court is designed for self-representation. For larger disputes or complex issues, attorney involvement often produces better results—and California allows prevailing parties to recover attorney fees in many contractor disputes. Our tiered services let you get as much or as little help as you need.
Before sending your demand letter:
Verify the contractor's license status via CSLB
Gather all documentation (contract, payments, photos, communications)
Get written repair estimates from other contractors
Calculate your total damages
Decide on your deadline and next steps if they don't respond