In a recent decision, the California Court of Appeal held that an unlicensed contractor is not entitled to any compensation or credit for materials or labor supplied to improve property. In White v. Cridlebaugh, the court acknowledged that California’s licensing laws can be used as both a shield and a sword. The licensing laws act as a shield by prohibiting suit by an unlicensed contractor to collect for labor or materials supplied for the improvement of property. The laws act as a sword because California Business and Professions Code section 7031(b) requires that an unlicensed contractor repay an owner for all compensation received for work performed (and materials supplied) without the requisite license.
The Cridlebaugh court concluded that the legislature’s use of the word “all” in Section 7031(b) precluded an unlicensed contractor from asserting any offset or credit for work performed or materials supplied, regardless of the circumstances. The court reasoned that any other conclusion would dilute the deterrent effect of California’s licensing laws.