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New year brings new penalties for unlicensed contractors

Posted: December 31, 2009 3:21 p.m.
Updated: December 31, 2009 5:00 p.m.
SACRAMENTO - The Contractors State License Board (CSLB) highlights new laws and regulations passed in 2009 that will affect California construction contracting and consumers beginning tomorrow.

Assembly Bill 370 (Eng-Monterey Park) increases the penalties for unlicensed contracting that are identified in Business & Professions (B&P) Code Section 7028. Right now, a first conviction for contracting without a license is a misdemeanor with no set jail time or penalties.

Starting January 1, 2010, a first offense will be punishable by up to a $5,000 fine and/or six months in county jail. A second offense will be punishable by 20 percent of the contract price, or aggregate payments to the unlicensed contractor, or $5,000, whichever is greater, and not less than 90 days in county jail. A third offense would be subject to a fine not less than $5,000 nor greater than $10,000 or 20 percent of the contract price, and a county jail sentence between 90 days and one year.

B&P Code requires that all home improvement jobs valued at $500 or more for labor and materials must be done by a licensed contractor. The bill also amends the Code to include that anybody who uses an unlicensed contractor is a victim entitled to restitution, regardless of whether they knew the contractor was unlicensed.

"CSLB has supported AB 370 throughout the legislative process, which demonstrates how serious we are about protecting consumers and ensuring that they recover damages or losses," said CSLB Registrar Steve Sands. "AB 370 strengthens the law and will help make sure that those who don't comply with licensing and consumer protection laws are held accountable for their actions with fines and jail time."

Another law, AB 457 (Monning-Santa Cruz), ensures that consumers will be notified if a mechanic's lien is placed on their property. Contractors, subcontractors or materials suppliers who are not paid for their work on a home improvement project are entitled to file what is called a mechanic's lien on the property to force payment. The new law ensures that consumers will be notified of a pending lien. If they are not notified, the lien becomes unenforceable. This law takes effect on January 1, 2011.

Senate Bill 821, authored by the Senate Business, Professions & Economic Development Committee, deletes a provision in B&P Section 7044 that prohibits a person from obtaining a contractor license for a period of one year following a violation for acting as an owner-builder without a license or exemption. This legislation also cleans up and makes technical, nonsubstantive changes to several existing sections of B&P Code.

Changes to the California Code of Regulations (CCR) that have been approved by the Office of Administrative Law become effective on December 30, 2009. One of the recently adopted regulations changes the current definition of "advertising" for contractors to include any electronic transmission.

This clarifies that state-issued contractor license numbers must be included in broadcast, online or other electronic advertising in addition to the requirement to include the license number in business documents, print advertising, and any promotional signs or materials. B&P Code requires that anyone who advertises contracting services of less than $500 for labor and materials must state that they are not a licensed contractor in any advertisement.

Other CCR changes include:
* Language modifications to CSLB's C-46 Solar contractor classification to allow for future expansion and/or innovations in the industry

* Changes to CSLB's C-45 Electrical Sign contractor classification to encompass all sign contractors; and

* Elimination of CCR 842, which conflicted with current statute that enables a person who fails a contractor exam (or fails to appear for one) to re-take the test an unlimited amount of times within 18 months of acceptance of their application.

In 2009, CSLB, which operates under the umbrella of the Department of Consumer Affairs, marked its 80th anniversary of protecting consumers by regulating California's construction industry. Today CSLB licenses about 315,000 contractors. In any given year, complaints are filed against only 3% of licensed contractors. In fiscal year 2008-09, CSLB helped consumers recover nearly $36 million in ordered restitution.


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