Ever wonder what will happen if by mistake your office person forgets to renew your contractor’s license during an active project?
Under California law you would NOT be able to sue to get payment for your work done on that project. Even worse, the owner could sue to get back all of the amounts paid on the project from you.
This was an absolute rule until recently when the new law went into effect. California Business and Professions Code §7031 now allows a court to determine if “a contractor has substantially complied with license requirements if specified conditions are met,” such as when the contractor did not know or should not reasonably have known that he or she was not licensed at the time.
This is good to know but you cannot count on it. You would still have to show that you acted promptly and with good faith to try to reinstate his or her license upon finding out that the license was not valid.
Keep Your License Up to Date
Given all of this you should NEVER let your contractor’s license expire or become invalid. Send out a memo to the person in charge in your company about your contractor’s license. Make sure more than one way of calendaring your expiration date is implemented. Better safe than sorry.
If your company gets involved any issues with the company license or the individual license of the RME, give us a call. We at Ghassemian Law Group consistently help contractors with their licensing issues. Help is a quick phone call away!