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Does a contractor have to be licensed for an at cost construction contract (no profit contract)?

Walnut Creek, CA |

There is a dispute with a person that did a construction contract for me for 5000 dollars and he wants all his 5000 dollars but I want repairs done.

He says that he was not making any money so there was no consideration. But he was being compensated for what he spent.

He admits that he is unlicensed but he said that he was doing the work as a favor, just doing it at cost and 7031 did not apply to him.

I thought that 7031 applies to any construction contract more than a certain amount.

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Attorney answers 7

Best Answer

California Business and Professions Code §7031 prohibits an unlicensed contractor from filing suit for payment for work that required a license. Profit is irrelevant. The purpose of the law is to discourage unqualified individuals from performing construction work that could pose safety hazards. California law is merciless with unlicensed contractors. Nor can he sever out the portion that required a license and collect for the rest, unless the other parts were unrelated to the parts that required a license. The owner is almost always in the "driver's seat" when the contractor had no license.

These comments are for general informational purposes and do not create an attorney-client relationship. Do not rely on this post as "legal advice." Consult with a licensed attorney regarding the specific facts of your case and your rights and liabilities.


Yes, a contractor must be licensed. If he is not, he is not entitled to be paid. Whether he was making money or not is irrelevant. You could hire a licensed contractor to perform the repairs and then sue him for the cost.


Your contractor is 100% WRONG! The law doesn't care how much profit he was making, or if he was just doing a "favor" for you. An unlicensed contractor cannot sue for any money owed on a project, and you can demand a refund of any monies you do pay him. You could also file a complaint against him with the Contractors State License Board, if you chose to do so.

Daniel F. Mclennon

Daniel F. Mclennon


Cathleen's note about potentially contacting the Contractors State License Board points to additional leverage you have over the "contractor". That is, the CSLB may initiate criminal prosecution, since contracting without a license in California is a misdemeanor. Perhaps your "contractor" would rather settle with you than risk having the State come after him.


However, notwithstanding subdivision (b) of Section 143, the court may determine that there
has been substantial compliance with licensure requirements under this section if it is shown at an evidentiary hearing that the person who engaged in the business or acted in the capacity of a contractor (1) had been duly licensed as a contractor in this state prior to the performance of the act or contract, (2) acted reasonably and in good faith to maintain proper licensure, (3) did not know or
reasonably should not have known that he or she was not duly licensed when performance of the act or contract commenced, and (4) acted promptly and in good faith to reinstate his or her license upon
learning it was invalid.

This is not a legal advice or solicitation, and does not create an attorney-client relationship. Consult with an attorney. I work for Cardinal Risk Mangement and Cardinal Intellectual Property, IP service companies, but not law firms. I also am the president of Vepachedu Educational Foundation Inc., which is a non profit educational foundation. I also write cultural and scientific compliations for the foundation. I also teach at Northwestern university as a guest lecturer. I also provide some pro-bono guidance on immigration and other issues through Indian American Bar Association. I also have a contract with Cardinal Law Group, a law firm, for IP projects. All this information is on my profile at Avvo and also at Linkedin. Any views/opinions expressed in any context are my personal views in individual capacity only, and do not represent the views and opinions of any firm, client, or anyone else, and is not sponsored or endorsed by them in any way.


Except in certain specified circumstances, California law is clear that a contractor's license (CSLB) is required only for work "valued at $500 or more in labor and materials."

No legal advice here. READ THIS BEFORE you contact me! My responses to questions on Avvo are never intended as legal advice and must not be relied upon as if they were legal advice. I give legal advice ONLY in the course of a formal attorney-client relationship. Exchange of information through Avvo's Questions forum does not establish an attorney-client relationship with me. That relationship is established only by joint execution of a written agreement for legal services. My law firm does not provide free consultations. Please do not call or write to me with a “few questions” that require me to analyze the specific facts of your history and your license application and prescribe for you how to get a State license. Send me an email to schedule a paid Consultation for that kind of information, direction, and assistance. My law firm presently accepts cases involving State and federal licenses and permits; discipline against State and federal licenses; and disciplinary and academic challenges to universities, colleges, boarding schools, and private schools. We take cases of wrongful termination or employment discrimination only if the claims involve peace officers, universities or colleges.


You have a disgorgement action against this unlicensed contractor. Business and Professional Code 7031(b) is applicable even when the unlicensed contractor lost money on the job. You are entitled to recover all $5,000 paid to him. The unlicensed contractor has no equitable defense against your disgorgement claim, such as unjust enrichment. Edward C. Ip www.lawyer4property.

No attorney / client relationship established. The answr is for discussion and general information only. The lawyer had not reviewed any documents or contract prior to the above comments.


Almost all states require contractors to be licensed. the fact that the contractor did not make a profit is irrelavent.

The answer provided to this question is not intended to give legal advice, nor is it intended to create an attorney -client relationship. It is simply an observation and is intended to be a general statement for your consideration There is no substitute for retaining competent legal counsel to assist you with your business activities.

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