If you are performing work worth $500 or more in labor and materials, you must be a licensed contractor. To become licensed, a person must:

  • Have four years of education or experience in the field they are seeking licensure
  • Be fingerprinted
  • Pass an FBI background check
  • Be bonded and insured

Is There More Than One Type of Contractor?

California has numerous licensing classifications, outlined below:

  • Class A: General Engineering
  • Class B: General Building Contractor
  • Class C: Specialty Contractor

It is important to note that contractor’s licenses are only required for construction, maintenance, and improvement of real property. Individuals who transport supplies or materials to construction sites, for instance, are not covered. It would also not apply to someone who sells goods or services, although there may be a different licensing board depending on the type of good or service.

For certain jobs, Class A and B contractors may be required to obtain certain Class C certifications or may subcontract with someone with those certifications. Additionally, while many general contractors perform various types of construction work, Class A or B contractors cannot perform fire protection or water well drilling unless they hold Class C certification.

What Are Some Issues Affecting Contractors in California?

According to the California Department of Consumer Affairs, the construction industry is one of the largest in the state. Therefore, you can expect ample regulation and legal protections for both consumers and contractors.

Some common legal issues involving contractors are:

  1. Contract: the terms and conditions of employment, what is expected of the contractor and owner, and how much the work will cost are typically covered by the contract. Additionally, it is not uncommon for breaches of and the enforcement of certain terms to become an issue between consumers and contractors. In addition, if a contractor is hired to inspect the property and fails to discover or disclose defects, they may be held liable.
  2. Property Rights: construction liens, occasionally referred to as mechanic’s liens, are one way of ensuring a contractor is paid for their work. You may also be restricted from working in certain areas by California’s state laws and licensing board.
  3. Personal Injury and Tort: Injuries to subcontractors and employees may trigger worker’s compensation issues. Additionally, even the best construction may fail and injure someone, and a contractor may be held liable for those injuries. Finally, a contractor may have certain duties, such as lateral support.
  4. Criminal and Civil Liability: anyone who is not a licensed contractor that is discovered by the state board faces up to 6 months in jail and up to $5,000 in fines. Multiple convictions can result in fines of $10,000 and jail time. In addition, there are a number of civil fines imposed on licensed contractors who take advantage of consumers, are mentally disabled or elderly, engage in unfair competition, falsely advertise, and engage in many other unscrupulous practices.

Are There Duties Between a Contractor and an Owner?

If a contractor and owner enter into a construction agreement, even if the contract does not specify their duties, the law presumes those duties to exist between them. It has been ruled that contractors and owners have duties related to construction. Parties are required to perform their contractual obligations in good faith.

The contractor has a duty to perform their services in a workmanlike manner for the owner. To fulfill this duty, the contractor must warn the owner if a design or specification may cause damage.

Owners have a duty to cooperate with contractors. It is the owner’s duty not to interfere with or purposefully delay the performance of a contractor.

When Can I Sue a Contractor?

An individual hiring a contractor to fix their home typically signs a contract that specifies the terms of the agreement. This usually includes the work that is to be done, the amount that the owner will pay for the work, and a timeline by which the work is to be completed.

Most lawsuits are filed against contractors when they do not follow the contract they agreed upon with the owner. One example would be a contractor missing a deadline or failing to perform all of the work required.

Other grounds for suing a contractor include:

  • When a contractor performs a job in an unsatisfactory manner;
  • The contractor completes the work but fails to adhere to safety standards;
  • A contractor took advantage of a homeowner, for example, by accepting a deposit or payment but failing to complete the work; or
  • A contractor who overcharges could be held liable for breach of contract.

The homeowner may have a legal claim against the contractor if the contractor fails to meet their obligations or performs subpar work. The lawsuit is filed in civil court by a homeowner against a contractor.

Is it Possible to File a Legal Claim Against a Contractor?

If a homeowner decides to sue a contractor, they must determine what legal grounds they have for their lawsuit. The best course of action is to consult an attorney who can determine which claim is likely to succeed.

The most common grounds include:

  • A breach of contract claim;
  • A fraud claim; or
  • A defective construction work claim.

A breach of contract claim is available when one party fails to follow through with their obligations under a contract. If a party fails to deliver within the specified time frame or if they do not perform at all, there has been a breach.

A contractor can be found liable for breach of contract in the following situations:

  • The project is not started;
  • Deadlines are missed;
  • The project is partially completed; or
  • The contractor fails to utilize construction materials that were previously agreed upon in the contract.

There are four main categories of breach of contract, including:

  • A minor breach;
  • A material breach;
  • A fundamental breach; or
  • An anticipatory breach.

In a minor breach, a party fails to perform part of the contract but does not violate the contract in its entirety. This is also known as an impartial breach.

When a breach is so serious that it affects the entire contract, it is considered a material breach. To be considered a material breach, the breach must also completely defeat the purpose of the agreement. This type of breach is called a total breach.

Fundamental breaches are similar to material breaches. Fundamental breaches, however, are considered more egregious than material breaches.

An anticipatory breach occurs when one party informs the other they will not be able to fulfill the terms of the contract. The breach may also be referred to as anticipatory repudiation.

Homeowners may be able to recover damages for breach of contract, including a refund of payments made to the contractor. Additionally, a homeowner may be entitled to compensation for the difference in the cost of hiring a new contractor.

Is it Necessary to Seek Legal Help?

Due to the complicated nature of legal issues for contractors and the potential for civil liability, if you are a licensed contractor in California, it would be wise to seek the advice of a California contract attorney.

In the event of a legal dispute, you may wish to retain the services of an attorney. If you have unknowingly (or intentionally) engaged in unlicensed contracting work, consulting with an attorney right away might help you avoid criminal prosecution and potentially help you find the right classification for you so that you can continue to operate legally.