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San Mateo Construction Law Blog

California Contractor's License Bond Amount Increased Effective January 1, 2016

California Senate Bill 467 (Hill) which was signed by the Governor on October 8, 2015 amended Section 7071.6 of the Business and Professions Code effective January 1, 2016. This amendment increases the California contractor's bond requirement for the issuance, reinstatement, reactivation, renewal, or continued maintenance of a California Contractors license. As of January 1, 2016, the amount of the contractor's bond which is a required condition precedent for licensure will be increased from $12,500 to $15,000. The Contractors State License Board states that a contractor's bond or cash deposit received at CSLB after December 31, 2015 must be in the new required amount of $15,000. Any contractor's bond or cash deposit of $12,500 received after December 31, 2015 will not be processed. If you are being issued a license or your license is up for reinstatement, reactivation or renewal, you should contact your bonding agent to ensure that your bond complies with the new $15,000 requirement. This amendment does not change the aggregate liability limit of $7,500 on any claims brought against a license bond. 

Failure to Report Judgments to the CSLB Will Result in Severe Consequences.

A new case, Pacific Caisson & Shoring, Inc. v. Bernards Bros., Inc. (2015) 236 Cal.App.4th 1246 held that a contractor, whose license was suspended for failing to notify the California Contractors State License Board ("CSLB") of a judgment against it, was not entitled to recover for compensation owed to it, under the substantial compliance exception found in California Business & Professions Code §7031(e).


Contractors who have entered into lease leaseback arrangements with local school districts need to review their agreements in light of the California Fifth District Court of Appeals recent ruling in Davis v. Fresno Unified School District which was decided on June 1, 2015.

Eleventh Circuit Court of Appeals defines Structural Damage as Damage to a Building's Structural Integrity. Hegel v. First Liberty Ins. Corp., (11th Cir. Feb. 27, 2015) 2015 WL 821146

The Hegels had a homeowner's insurance policy with First Liberty for their Spring Hills, Florida residence. That policy insured against "Sinkhole Loss" as an exception to the policy's exclusion for damage caused by earth movement. Under the policy, "Sinkhole Loss means structural damage to the building, including the foundation, caused by sinkhole activity. The policy, however, did not define the term "structural damage."

New Requirement that All Contractors and Subcontractors Bidding on Public Works Projects Be Register with the Department of Industrial Relations

As a result of the passage of Senate Bill (SB) 854, significant changes were made to Cal. Labor Code §1771.1 and §1725.5. All licensed contracts who work on or intend to work on public works projects must be registered with the California Department of Industrial Relations. Beginning March 1, 2015, all contractors were required to register with Department of Industrial Relations in order to bid on public works projects or be listed in a bid proposal. As of April 1, 2015, only contractors who have registered with the Department of Industrial Relations will be eligible to be awarded a public works contract, even if the project did not go out to bid.

Prejudgment Interest is Set at 7% on a Mechanic's Lien Claim Against Non-Contracting, Innocent Owners

In a recent case, Palomar Grading & Paving, Inc. v. Wells Fargo Bank, N.A. et al., Court of Appeal (2014 S.O.S. 4573) the appeal court held that "We determine it is the constitutional default rate that should apply to prejudgment interest on a mechanic's lien as applied to noncontracting, innocent owners."  California's constitutional default rate for prejudgment interest is 7%. 

The Subletting and Subcontracting Fair Practices Act goes into Effect on July 1, 2014

As our earlier post and emails have indicated, last year Governor Brown signed into law a new twist to The Subletting and Subcontracting Fair Practices Act (Act). The change goes into effect on July 1, 2014. If you are a contractor submitting a bid to a public entity for a California public works project will be required to include the contractor license number of each subcontractor you have listed.

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