Most California contractors are aware of dreaded Business and Professions Code section 7031 which has been described even by courts – who typically veer away from ascribing judgment to legislation – as being “harsh[ ],” “draconian” and “unjust.”

For those less familiar with Section 7031, the statute provides two remedies, described as a shield and a sword, against unlicensed contractors who perform work requiring a license. The first, the “shield” also referred to as the “claim preclusion” provision, precludes unlicensed contractors from suing for payment when performing work requiring a license. The second, the “sword” also referred to as the “disgorgement” provision, allows a property owner to sue an unlicensed contractor for disgorgement of all money paid to the unlicensed contractor.