A New Assembly Bill Protects Contractors

A new Assembly Bill 1386, sponsored by the California Landscape Contractors Association (CLCA), prevents project owners from using a legal loophole to unjustly supplement themselves at the expense of contracts has been recently signed into law.

For decades, there have been legal provisions that basically stipulate that a consumer is not required to pay an unlicensed contractor, regardless of whether the construction job was done properly or not?EUR??,,????'??+which is extremely detrimental to contractors who have even the briefest lapse in licensure. An assembly member, in the 2000-01 legislative session took this payment issue forward another step. At that time Assembly Bill 678 stipulated that an owner could recover compensation paid to an unlicensed contractor ?EUR??,,????'??? regardless of whether the job was done well or not. Unfortunately, this law did not include a substantial compliance exception. Therefore, any licensed contractor who failed to renew a license on time could have been forced to give compensation back to the project owner for the entire payment of a construction job.

This encouraged project owners to take advantage of contractors who inadvertently allowed their license to lapse during the course of a project. In addition, the law was illogical. If a contractor in substantial compliance can successfully bring a lawsuit against an owner to recover money owed for work performed, then the contractor also should be allowed to assert substantial compliance as a defense to a lawsuit brought by the owner to recover money already paid.

The new AB 1386, which went into effect on January 1st, fixes this problem by applying a substantial compliance test to both instances, which requires a contractor to demonstrate that he or she acted promptly and in good faith to reinstate his or her license upon learning it was invalid?EUR??,,????'??+in order to meet substantial compliance of licensure requirements.

Source: California Landscape Contractors of America