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Home>Levelset Community>Legal Help>Do i have any recourse if i entered into a contract with a contractor who represented him company as licensed but in essence has an inactive license? Do i have any recourse if he utilized subcontractors who are seeking payment from me for service i paid to him directly?

Do i have any recourse if i entered into a contract with a contractor who represented him company as licensed but in essence has an inactive license? Do i have any recourse if he utilized subcontractors who are seeking payment from me for service i paid to him directly?

CaliforniaPayment Disputes

Pool contract not completed but paid in full. Contractor misrepresented himself as having an active license. Subcontractors are seeking payment for work i have already paid the contractor for.

1 reply

Jun 27, 2018
I'm sorry to hear about that. First, it's worth noting that situations do exist where a homeowner would have to pay for the same work twice. We discuss the idea more in-depth in this article, but when an owner pays their contractor, and that contractor fails to pay subs and suppliers, those subs and suppliers may very well have lien rights and be able to compel payment from an owner. However, that does not mean all hope is lost, especially in California. First, if it comes down to a lien claim, under § 8470 of the California Civil Code, a contractor is required to defend against lien claims based on work provided to them. As in, if a contractor's subcontractor files a lien after going unpaid, that contractor must defend the owner in the lien action. Next, the Golden State is very harsh on unlicensed contractors. In fact, under California Bus. & Prof. Code § 7031(b), "a person who utilizes the services of an unlicensed contractor may bring an action in any court of competent jurisdiction in this state to recover all compensation paid to the unlicensed contractor for performance of any act or contract." This means that an owner can recover amounts that have been paid to an unlicensed contractor - which could be crucial if payment claims are being made by subcontractors and suppliers. However, in the short term that may not be of much help - recovering payments made to a contractor, while entirely possible, would require legal action. So amounts paid could be recovered, but it could take a lengthy legal battle to actually make that recovery. Ultimately, threatening legal action against an unlicensed contractor who has failed to make payments could go a long way. If that contractor becomes aware of the stiff penalties and legal challenges ahead, they might be compelled to make payment. In any event, it would be wise to consult a local construction attorney to discuss the circumstances of the situation and to create a plan for moving forward. Plus, when a demand letter is sent via an attorney, it tends to carry a little extra "umph."
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