• Unlicensed Contractor Disputes - Sometimes You Win, and Sometimes You Lose
  • August 3, 2017 | Author: Stanley Dawe Prowse
  • Law Firm: The Law Office of Stanley D. Prowse - Carlsbad Office
  • Years ago, the California State Legislature decided that unlicensed building contractors were getting out of hand, particularly unlicensed contractors doing home improvement work. One new statute aimed at curing the problem by specifically stating that only licensed contractors are entitled to payment. Moreover, even if the homeowner has already paid, the homeowner is entitled to get his money back. This is still true, but in practice it doesn’t work too well. “Contractors” working without a license generally have little or no assets.

    Even licensed contractors with some assets can escape unscathed. In one case, the contractor built a large patio cover for a family for a substantial sum. The contractor was supposed to get a building permit. The structure was supposed to be convertible in the future to an enclosed living space. He didn’t, and it wasn’t. Furthermore, it wasn’t built in compliance with the Building Code, either as a patio cover, or as a future living space.

    The homeowner would not take this lying down, despite cautionary comments from his attorney that paying fees and costs to pursue the contractor might prove to be throwing good money after bad. The contract had an arbitration clause and an attorney fee provision, so we arbitrated. The contractor also had an attorney, who refused to settle. Expert witnesses were required. The arbitration consumed hours of preparation and an entire day. The homeowner prevailed.

    The arbitrator awarded the homeowner both general and compensatory damages. We won! Oops. One week later the contractor filed bankruptcy. Everything he had was out of his creditors’ reach under the Bankruptcy Code.

    Another new statute specifically stated the only permissible way for a contractor to prove his license at a trial was to produce a certified copy of his contractor’s license. This seems straightforward. In one case, my client sued a licensed contractor for breaching the contract, and he responded by cross-complaining against her for the balance due. The contractor and his lawyer were apparently ignorant of the statute, and failed to produce a certified copy of the license.

    After confirming that the contractor had rested his case, I moved for judgment in favor of the homeowner, based on the contractor’s failure to comply with the statute. The judge granted the motion, observing that he had to follow the legislature’s instructions. This was a good thing, considering he then declined to award the homeowner any damages, and indicated the contractor would have prevailed if he had complied with the law.

    On the other hand, some judges don’t regard plain English as straightforward. In another case I’m aware of, another judge simply ignored the same statute, and the contractor prevailed. So much for obeying the law.


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