Generally, home improvement contractors must be licensed by the State of California. To obtain a license, the Contractor must post a bond of at least $7,500 with the Contractor's State License Board. A homeowner who sues a licensed contractor for defective work can also sue the company issuing the bond by naming the bonding company as a Defendant. This may be helpful in cases where the Contractor is insolvent or has gone out of business. The name of the bonding company can be obtained from the Contractor's License Board ((415) 469-6200). However, as a guarantor, the bonding company can only be sued for a maximum of $2,500 in Small Claims Court.

The work itself must be defective. A homeowner cannot sue to recover monies paid to an unlicensed Contractor solely on the basis that he did not have the required license.

A penalty of up to three times the damages, in addition to the actual damages that the owner incurred may be awarded to a homeowner who successfully sues an unlicensed Contractor for damage arising out of work for which a license is required. The total amount of the damages and penalty cannot exceed the Small Claims Court limit.

A Contractor cannot sue and recover payment for home improvement work that requires a Contractor's license, if he has not substantially complied with the licensing laws. To recover, the Contractor must prove that he had the necessary license(s) at the time the work was done. Contact the Contractor's License Board to determine if the Contractor is licensed at their local number (415) 469-6200 or (800) 321-2752. Or write to them at:

There are several exceptions to this general rule. If a homeowner sues an unlicensed Contractor for defective work, the Contractor may be allowed to deduct the cost of his labor and materials from the amount awarded the homeowner. Thus, if an owner successfully sues for $1,000 and the unlicensed Contractor proves that he is owed $500 for labor and materials, the owner will only receive a judgement of $500 (e.g.: $1,000 - $500).

An unlicensed Contractor can also sue for payment for work in a home improvement contract for which a license is not required (e.g.: the installation of finished products that do not become a fixed part of the structure.