Contractor Licensing FAQ

California Business and Professions Code Section 7028 requires a contractor's license for any person or entity who contracts to perform work requiring construction, alteration, repair, or improvement, where the total contract price for labor, materials, and all other items is $500 or more. This threshold includes the value of all labor and materials provided, not just the contractor's fee.

The license requirement applies to the full range of construction activities including general building, specialty trades like electrical, plumbing, HVAC, and roofing, and specific activities like tree service, landscaping, and swimming pool construction. Property owners may perform work on their own primary residence without a license if they do the work themselves, though electrical and plumbing work may require permits and inspections.

Hiring an unlicensed contractor in California creates significant risks for homeowners and provides fewer protections if problems arise. Unlicensed contractors cannot legally file mechanics liens, but there is also no bond or license to file claims against if the contractor fails to perform. Unlicensed contractors are not subject to CSLB oversight, so you cannot file a CSLB complaint or access contractor bond remedies.

If the unlicensed contractor's work causes injury or property damage, you may have difficulty recovering because they likely lack proper insurance. Your own homeowner's insurance may not cover work performed by unlicensed contractors. Work performed without proper licensing may not meet code requirements and could fail inspection. Always verify a contractor's license status through the CSLB website before hiring.

No, under California Business and Professions Code Section 7031, a person who performs work as a contractor without a valid license at all times during the performance of the contract cannot bring or maintain any action to collect compensation for the work. This is one of the strongest contractor licensing enforcement provisions in the country and serves as a powerful defense for homeowners who hired unlicensed contractors.

The court must apply Section 7031 even if the homeowner received the benefit of the work and even if the contractor substantially performed. The contractor's lack of license is a complete bar to recovery. However, if the contractor was properly licensed at the start but the license lapsed during the project, the substantial compliance doctrine under Section 7031(e) may allow limited recovery in some circumstances.

Verifying a contractor's license in California is free and easy through the Contractors State License Board website or by calling the CSLB. The online license check tool allows you to search by license number, contractor name, or business name. The search results provide comprehensive information including the license number, business name and address, license classification, license status, expiration date, workers' compensation insurance status, and bonding company information.

The CSLB website also shows any disciplinary actions, legal actions, or complaints against the contractor. Verify that the license is active and in good standing, that the license classification covers the type of work you need, and that workers' compensation insurance is current if the contractor has employees. Ask for the contractor's pocket license card and compare it to the online records.

California has three main categories of contractor licenses, each with specific classifications. Class A General Engineering Contractor licenses authorize work requiring specialized engineering knowledge and skill, including highways, tunnels, bridges, sewers, and pipelines. Class B General Building Contractor licenses authorize construction of structures including residential and commercial buildings.

Class C Specialty Contractor licenses cover 42 specific trade classifications for specialty work. Common C licenses include C-10 Electrical, C-36 Plumbing, C-20 HVAC, C-39 Roofing, C-33 Painting, C-27 Landscaping, and many others. The license type determines the scope of work a contractor is legally authorized to perform. Hiring a contractor without the proper classification for your project can create problems similar to hiring an unlicensed contractor.

Unlicensed contracting is a criminal offense in California with escalating penalties for repeat offenses. Under Business and Professions Code Section 7028, a first conviction is a misdemeanor punishable by a fine of up to $5,000, or imprisonment in county jail for up to six months, or both. For a second offense within five years, the fine increases to up to $5,000 and imprisonment can be up to one year.

A third or subsequent offense within five years is punishable by a fine of $5,000 to $10,000 and 90 days to one year imprisonment. Under Section 7028.1, if the unlicensed work causes property damage or bodily injury, the offense can be charged as a felony punishable by one to three years in state prison and fines up to $10,000. Prosecutors may also pursue charges for theft, fraud, or elder abuse in appropriate cases.

California provides several avenues for recovering money from unlicensed contractors who perform defective work or fail to complete projects. You can sue the unlicensed contractor directly in civil court for breach of contract, fraud, or negligence. While the unlicensed contractor cannot counter-sue for payment under Business and Professions Code Section 7031, you retain all your normal legal remedies.

For smaller claims, California small claims court handles cases up to $12,500 for individuals. You can file a complaint with the CSLB, which investigates unlicensed contractor activity and may refer cases for criminal prosecution. If you paid by credit card, you may be able to dispute the charges with your credit card company. Document all evidence of the contractor's unlicensed status, the agreement, payments made, and work performed.

California requires licensed contractors to maintain specific insurance and bonding, though requirements vary based on whether the contractor has employees. All licensed contractors must maintain a contractor's license bond of at least $25,000 under Business and Professions Code Section 7071.6. This bond protects homeowners and others who are damaged by contractor violations.

Contractors with employees must maintain workers' compensation insurance covering job-related injuries. Contractors without employees must file a certificate of exemption. While not required by state law, many contractors also carry general liability insurance. Before hiring a contractor, verify their bond status and workers' compensation coverage through the CSLB website, and request proof of liability insurance directly from the contractor.

If a contractor's license expires during your project, it creates legal complications similar to unlicensed contracting. Under Business and Professions Code Section 7031(e), a contractor who was properly licensed when the contract was executed may recover compensation for work performed during periods when they were properly licensed if they substantially complied with licensing requirements and their failure to hold a license was due to inadvertence or excusable neglect.

Monitor your contractor's license status throughout the project using the CSLB website. If you discover the license has expired, notify the contractor in writing immediately and request proof of license reinstatement before work continues. Work performed while the contractor is unlicensed may not be covered by insurance or the contractor's bond. You may have grounds to terminate the contract if the contractor cannot promptly restore their license.

California allows property owners to act as their own contractor on their primary residence without a contractor's license under the owner-builder exemption. To use this exemption, you must own the property, the property must be your principal residence, you must either perform the work yourself or supervise construction using employees on your payroll, and you must not build more than one structure per year.

If you sell the property within one year of completion, you may face liability for any defects and must disclose that you acted as owner-builder. For certain work, particularly electrical, plumbing, and HVAC, permits and inspections are still required. The owner-builder exemption does not relieve you of responsibility for obtaining proper permits, following building codes, and ensuring work meets safety standards.