A message from our lobbyists:
All,
I wanted to give you a brief update on AB 1793 (Holden) – B&P Code Section 7031 fix legislation.
As you know, currently, under the Contractors State Licensing Law (CSLL), an individual, corporation or public agency construction project owner that utilizes a contractor and later discovers the contractor to be unlicensed at any time during the project (for even just one day), to seek recovery from and disgorge the contractor for the cost of all construction related work performed by the contractor on the project.
Our bill attempted to strike a fair and thoughtful balance between upholding high consumer protection within the construction industry, while not unfairly punishing contractors who may have an inadvertent licensing lapse due to clerical or technical errors. The bill amended existing law to ensure that properly licensed and law abiding construction firms are not placed at fatal monetary risk, by limiting the recovery time and disgorgement amount to monies paid to the contractor for work performed while the contractor was not properly licensed. Nothing in the measure allowed an unlicensed contractor to seek or retain any monies paid to them for the performance of a construction contract while they were not duly licensed.
The bill had been sailing through both houses and committees on consent. That all changed last week when AB 1793 was sent to Senate Judiciary Committee for hearing and the Chair, Senator Jackson raised two concerns and provided the following suggestions
Segmentation Provisions:
She suggests eliminating the segmentation provisions between the licensed period and the unlicensed period. She was concerned that this may open the door for unlicensed contractors to conduct business before being properly licensed. (Which was untrue – BPC 7028 provides that it is a misdemeanor to contract without a license.
Liberalize the doctrine of substantial compliance
She would like to give the court more discretion to make the judgment and figure out equity.
I met with the Chair’s staff last Friday and this Monday, as the bill was heard yesterday, in an effort to keep the bill moving. Her staff was on the same page regarding the problem in the law, but was adamant the better remedy is some amount of latitude for the courts to decide a case on the facts in the event of a paperwork or technical error. We asked if they would allow the bill to continue to move if we amended the measure to remove the segmentation provision and limit the bill to solely allow for some judicial discretion in a narrow circumstance of a technical error.
Long story short, they accepted our proposal and the bill moved out of committee yesterday. Feel free to contact me if you have any questions.