According to B&P Code Section 7031, what happens to a contractor's right to payment if they perform work while unlicensed?
Correct Answer
A) No compensation can be recovered for work performed
B&P Code Section 7031 states that no person engaged in contracting without a license may bring or maintain any action to recover compensation for work performed.
Why This Is the Correct Answer
B&P Code Section 7031 is one of the harshest provisions in California contractor law: it completely bars an unlicensed contractor from recovering any compensation for work performed—including labor, materials, and overhead. Courts have consistently enforced this rule even when the work was completed satisfactorily and the owner benefited from it. The purpose is to protect consumers and deter unlicensed activity.
Why the Other Options Are Wrong
Option B: Payment is reduced by 25%
There is no provision in B&P Code Section 7031 for a 25% reduction in payment. The statute does not allow partial recovery; it imposes a complete bar on compensation for unlicensed work.
Option C: Only material costs can be recovered
Recovering material costs only is not permitted under Section 7031. The bar on recovery is total—the contractor cannot recover for materials, labor, overhead, profit, or any other component of the contract price.
Option D: Payment is delayed until license is obtained
Payment is not merely delayed while the contractor obtains a license. Once work is performed without a license, the right to recover that compensation is permanently forfeited. Obtaining a license after the fact does not cure the violation for past work.
Memory Technique
Think of Section 7031 as the 'no license, no pay' rule—if you work without a license, you work for free. The law treats it as if the contract never existed for payment purposes.
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