Did You Know?

Unlicensed Contractors Are Common — and Risky: Approximately 25% of contractors in California are unlicensed, according to California State Licensing Board (CSLB) enforcement data. Unlicensed contractors are not subject to CSLB oversight, so they cannot be held accountable for poor workmanship or fraud.

CSLB Handles Thousands of Complaints Annually: In Fiscal Year 2023–2024, CSLB closed 11,042 complaints after field investigations. In 2024, they conducted 38 undercover sting operations through its Statewide Investigative Fraud Team (SWIFT). That's about one a week.

Upfront Payment Limits: Contractors cannot demand more than $1,000 or 10% of the contract price, whichever is less, as an upfront payment for home improvement projects under $10,000.

Written Contracts Required: A written contract is mandatory for all home improvement projects over $500, detailing the scope of work, payment schedule, and cancellation rights.

Owner-Builder Liability: If you pull a permit as an owner-builder, you assume full responsibility for the project's safety and compliance, including liability for any accidents or code violations. Improper work may need to be corrected at the homeowner’s expense.

Contractor Bonds Protect Homeowners: All licensed contractors must have a $25,000 license bond, which helps protect homeowners if the contractor fails to comply with state law, causes property damage, or does not pay subcontractors.

Time Limits for Bond Claims: Homeowners can file a claim against a contractor’s bond for up to four years after the violation occurred.

Disciplinary Bonds: Contractors with revoked or suspended licenses may be required to post a disciplinary bond, sometimes up to 10 times the standard bond, to reinstate their license.

Receipts Required: Contractors must provide a receipt for every payment you make, showing the amount, date, and purpose of the payment. This is essential if you need to file a complaint or bond claim.

Price Protection Rules: Contractors cannot arbitrarily raise the price. The contract must include the total price or a clear method of calculation, and any changes must be documented in a signed change order. Complaints can be filed with the CSLB if overcharging occurs.

Complaint Filing Window: Homeowners have up to four years from the date of an illegal act to file a complaint with the Contractors State License Board (CSLB), regardless of whether the contractor is licensed.

Disaster-Related Scams: Unlicensed contractors often target victims of natural disasters. Always hire licensed professionals to avoid scams and substandard work.

Contractor Advertising Rules: Unlicensed individuals may advertise to perform jobs valued at less than $500, but they must clearly state in the advertisement that they are not a licensed contractor.

Handyperson Exemption: The handyperson exemption for minor repairs in CA is $1,000, allowing certain minor repairs without a license.

Permits and Inspections: Some work requires permits and inspections. Failing to obtain the necessary permits can result in fines and complications when selling the property. Remember that when a contractor tells you it will cost less if they do the job without a permit.