Section 7071.17 of the Business and Professions Code requires contractors notify the Contractors State License Board (CSLB) of any unsatisfied "construction related" civil court judgment within 90 days of the judgment date.
The same law applies to arbitration awards unless the arbitration was provided by the CSLB. If the CSLB is notified of the judgment in a timely manner, the contractor is given another 90 days to resolve the judgement. If the judgment is not resolved within that 90 days, the license is suspended until the judgment is resolved. If the contractor fails to notify the CSLB of the judgment within the required 90 days then the contractor's license is suspended upon notification. Any party to the judgment can notify the CSLB of the judgment.
The unsatisfied civil court judgment or arbitration award must be final and "construction related". What the law actually says is that the judgment must be "...substantially related to the construction activities of a licensee licensed under this chapter, or to the qualifications, functions or duties of the license...". The CSLB interprets that to mean that if your judgment relates to the contractor's business in any way, it is "construction related". If you hired a contractor to do work for you and the judgment is related to that work, the judgment would be "construction related". It could also mean that the contractor did not pay the rent for the office, the utility bills for the office, or other bill incurred by the business, or did not pay a material supplier, subcontractor, or an employee. Very few judgments are not "construction related". If you have a judgment or arbitration award and you do not believe the contractor has notified the CSLB, please send a legible copy along with a brief description of what makes this judgment "construction related". If the contractor disputes that the judgment meets the legal criteria, we will ask you and the contractor for documentation. If the judgment is not "construction related", we will remove it from the contractor's license record.
ALERT Anyone can report a construction-related judgment against a contractor by sending a copy of the judgment to the CSLB Judgment Unit (see address below). In fact, most of the judgments received by CSLB are sent by the person to whom the contractor owes money.
Frequently Asked Questions:
How will I know what is going on with the judgment?
When we are notified of a judgment or arbitration award, we send a letter to the contractor with a copy to the judgment creditor. After that initial notification, every time one of the parties notifies us of some action on the judgment, we send a letter to the contractor with a copy to the judgment creditor. That way both parties are kept informed of the status of the judgment and its effect upon the contractor's license.
When is the contractor going to pay my judgment?
The CSLB is not a collection agency. What the law enables us to do is to suspend the contractor's license if the judgment is not satisfied. That suspension or threat of suspension often causes the contractor to pay the judgment rather than have the license suspended, but not always.
What if the contractor wants to make payments to me?
You are not obligated to accept payments, however you should keep in mind that it may be the only way you will get your money. If you and the contractor set up a payment agreement, make sure it is in writing with the dollar amount owed, the amount of the monthly payment, the date the payment is due each month, when the payment is considered late, and when the last payment is to be made. You both need to sign the agreement. If there is a judgment on file and you have made an agreement for payments, please send us a copy of that agreement and we will lift the suspension. If you notify us that the contractor has failed to make the payments, we will reimpose the suspension immediately. It is possible that with a Small Claims judgment, the judge will order that the judgment creditor accept a payment agreement.
What happens if the contractor appeals the judgment?
If you have sent us the judgment and the contractor appeals it, please send us a copy of the appeal. We will lift the suspension until the appeal is heard and decided. If the appeal is decided in your favor, be sure to send us a copy of the decision so that we can update the record and take appropriate action.
What happens if the contractor files bankruptcy?
The federal bankruptcy laws require that all efforts to collect money from a bankrupt person/business stop once the bankruptcy is filed. We do require that the contractor notify us that he/she has filed bankruptcy and named you as a creditor. If you are named as a creditor in the bankruptcy, you will be notified of the creditors meeting by the bankruptcy court. That is your opportunity to be heard by the bankruptcy trustee regarding whether your case should be included in the bankruptcy or not. You may want to contact an attorney to discuss the conditions that must be met to have your case dismissed from the bankruptcy.
If the contractor pays the judgment, who has to file the "Acknowledgment of Satisfaction of Judgment"?
You are required to file the satisfaction if the judgment has been paid. If you have sent us the judgment and the contractor pays the judgment, please send us a copy of the satisfaction or a letter stating that the judgment has been satisfied.
Please send legible copies of the judgment and any correspondence to:
Attn: Judgment Unit
P.O. Box 26000
Sacramento, CA 95826
Please include the contractor's license number on any documents you send and a short explanation of what the document represents.