Unlicensed Contractors in California – Damages and Claims Available to Clients
- Yakup Sari, Esq.
- Aug 18, 2025
- 5 min read
Updated: Oct 12, 2025
In California, anyone who builds, remodels, or improves property must hold a valid contractor’s license if the total labor and materials exceed $500. Yet many unlicensed contractors operate without the required license, bond, or insurance—leaving property owners financially exposed when things go wrong.
This article outlines the legal remedies and damages available to homeowners and property owners in California who have hired unlicensed contractors, whether knowingly or unknowingly.
Core Statutory Remedies for Hiring an Unlicensed Contractor
1. Disgorgement / Restitution
Business & Professions Code § 7031
California follows a strict public policy that aims to deter unlicensed contracting—even when that seems harsh. According to §7031(a), an unlicensed contractor cannot recover any payment for work that required a license.
Even more powerful, §7031(b) allows the homeowner or property owner to recover 100% of all compensation paid, not just amounts paid while the contractor was unlicensed.
According to California Civil Jury Instructions (CACI No. 4561), you are entitled to a full refund—even if the contractor completed part of the job or added value to your property. Courts enforce this strictly: if the contractor was unlicensed at any point during the project, you can sue for the entire amount paid. This remedy is called disgorgement.
⚠️ Time limit: Disgorgement claims must be filed within one year after project completion or cessation of work.
2. Treble (Triple) Damages
Code of Civil Procedure § 1029.8
If the contractor’s unlicensed work caused property damage or personal injury, you may be entitled to triple damages under California law.
In addition to treble damages, the court may award legal costs and attorney’s fees—although additional damages are capped at $10,000.
This statute is a strong deterrent against unlicensed activity under the Contractors State License Law.
3. Fines and Criminal Penalties
Business & Professions Code § 7028
Contracting without a license in California is a misdemeanor, and penalties escalate with each offense:
First offense: Up to $5,000 fine, 6 months in jail, or both
Second offense: Minimum $5,000 or 20% of the contract price, plus 90 days in jail
Third offense: $5,000–$10,000 fine, and 90 days to 1 year in jail
These are cumulative penalties, emphasizing how seriously California treats contractor licensing violations.
4. Illegal Advertising & Fraudulent License Numbers
Business & Professions Code § 7027.1 & § 7027.3
Advertising contracting services without a valid license is a misdemeanor, punishable by $700–$1,000 fine.
Using another person’s contractor license number with fraudulent intent can lead to $10,000 fines and up to 1 year imprisonment in state prison or county jail.
This includes websites, signage, business cards, and digital platforms. These penalties support stronger consumer protection.
5. Permit Misrepresentations
B&P § 7031.5 & Health & Safety Code § 19825
Applicants for building permits must verify their contractor’s license or claim a valid exemption. Violations can result in civil penalties up to $500.
While minor compared to other penalties, this supports claims when proving the contractor’s misconduct.
6. Administrative Fines (CSLB)
The Contractors State License Board (CSLB) may impose civil fines of $200 per day per unlicensed worker, in addition to criminal penalties.
For larger jobs or repeat offenders, these fines add significant legal and financial pressure and support the client’s civil case.
Additional Civil Claims Clients May File
Beyond statutory remedies, homeowners may also pursue common law claims if harmed by an unlicensed contractor:
Claim Type | What You Can Recover | Legal Basis |
Breach of Contract | Cost to correct work, reduced property value, consequential losses | Even if they can’t enforce the contract, you can sue for defective work. |
Negligence | Repair costs, injury compensation, loss of use | For unsafe or poor-quality work that caused damage or harm. |
Fraud / Misrepresentation | Rescission, compensatory and punitive damages | If they lied about licensing or concealed major issues. Civil Code § 3294 applies. |
Theft / Conversion | Value of misused payments or materials, punitive damages | If the contractor took money/materials and didn’t perform as agreed. |
Why Acting Quickly Is Critical
Disgorgement claims under §7031 have a strict 1-year statute of limitations. Waiting too long may bar recovery, even if the contractor was clearly unlicensed.
To strengthen your case:
Save invoices, photos, emails, texts, and contracts
Maintain a record of payments and communications
Speak with a construction law attorney early to explore your options
Practical Tips for California Property Owners
✔️ Always verify the contractor’s license
Use the CSLB license lookup tool: https://www.cslb.ca.gov/OnlineServices/CheckLicenseII/CheckLicense.aspx
✔️ Put everything in writing
Written contracts, change orders, and receipts are crucial to proving your claims.
✔️ Document everything
Take photos of the work, especially any defects or safety concerns.
✔️ Consult legal counsel
An attorney can evaluate whether you qualify for disgorgement, treble damages, or fraud-based compensation.
Conclusion: California Law Is Clear—Unlicensed Contracting Comes at a High Cost
California imposes some of the harshest penalties in the U.S. for unlicensed contractors. If you’ve been affected, you may be able to:
Recover all money paid
Obtain triple damages and attorney’s fees
Sue for fraud, negligence, or theft
Push for criminal prosecution
These remedies exist to protect you—and to send a clear message: contracting without a license is a serious offense.
At SARI LAW FIRM, we help California homeowners and property owners take legal action against unlicensed contractors. If you suspect you’ve been taken advantage of, contact us today for a free consultation. Let’s hold the right people accountable and make things right.
📞 Contact us | Serving clients across Los Angeles, Orange County, Santa Ana, and all of California.
Disclaimer: This article is provided for general information only and does not constitute legal advice. Anyone dealing with an unlicensed contractor should consult a qualified California attorney.
FAQ
Is it illegal to hire an unlicensed contractor in California?
It’s not illegal for homeowners, but it is risky. Contractors must be licensed for work over $500, and hiring an unlicensed one can expose you to legal and financial problems.
What can I recover if I hired an unlicensed contractor?
Under Business & Professions Code §7031, you may be entitled to full restitution (disgorgement), even if the work was partially completed.
How long do I have to file a claim against an unlicensed contractor?
You generally have 1 year from project completion or when work stopped to file a disgorgement claim.
Can I sue for fraud or negligence too?
Yes. If the contractor lied about licensing or caused harm due to poor workmanship, you may have claims for fraud, negligence, and even punitive damages.
How can I check if a contractor is licensed?
Use the CSLB’s online tool to verify contractor license status: Check License
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