7000.  This chapter constitutes, and may be cited as, the
Contractors' State License Law.



7000.2.  Nothing in this code shall be interpreted to prohibit
cities, counties, and cities and counties from requiring contractors
to show proof that they are in compliance with local business tax
requirements of the entity prior to issuing any city, county, or city
and county permit.  Nothing in this code shall be interpreted to
prohibit cities, counties, and cities and counties from denying the
issuance of a permit to a licensed contractor who is not in
compliance with local business tax requirements.
   Any business tax required or collected as part of this process
shall not exceed the amount of the license tax or license fee
authorized by Section 37101 of the Government Code or Section 16000
of the Business and Professions Code.



7000.5.  (a) There is in the Department of Consumer Affairs a
Contractors' State License Board, which consists of  15 members.
   (b) The repeal of this section renders the board subject to the
review required by Division 1.2 (commencing with Section 473).
However, the review of this board by the department shall be limited
to only those unresolved issues identified by the Joint Legislative
Sunset Review Committee.
  (c) This section shall become inoperative on July 1,  2003, and, as
of January 1,  2004, is repealed, unless a later enacted statute,
which becomes effective on or before January 1,  2004, deletes or
extends the dates on which it becomes inoperative and is repealed.



7001.  All members of the board, except the public members, shall be
contractors actively engaged in the contracting business, have been
so engaged for a period of not less than five years preceding the
date of their appointment and shall so continue in the contracting
business during the term of their office.  No one, except a public
member, shall be eligible for appointment who does not at the time
hold an unexpired license to operate as a contractor.
   The public members shall not be licentiates of the board.



7002.  (a) One member of the board shall be a general engineering
contractor, two members shall be general building contractors, two
members shall be specialty contractors, one member shall be a member
of a labor organization representing the building trades, one member
shall be an active local building official, and eight members shall
be public members, one of whom shall be from a statewide senior
citizen organization.
   (b) No public member shall be a current or former licensee of the
board or a close family member of a licensee or be currently or
formerly connected with the construction industry or have any
financial interest in the business of a licensee of the board.  Each
public member shall meet all of the requirements for public
membership on a board as set forth in Chapter 6 (commencing with
Section 450) of Division 1.  Notwithstanding the provisions of this
subdivision and those of Section 450, a representative of a labor
organization shall be eligible for appointment to serve as a public
member of the board.
   (c) Each contractor member of the board shall be of recognized
standing in his or her branch of the contracting business and hold an
unexpired license to operate as a contractor.  In addition, each
contractor member shall, as of the date of his or her appointment, be
actively engaged in the contracting business and have been so
engaged for a period of not less than five years.  Each contractor
member shall remain actively engaged in the contracting business
during the entire term of his or her membership on the board.
   (d) Each member of the board shall be at least 30 years of age and
of good character.  In addition, each member shall have been a
citizen and resident of the State of California for at least five
years next preceding his or her appointment.
   (e) For the purposes of construing this article, the terms
"general engineering contractor," "general building contractor," and
"specialty contractor" shall have the meanings given in Article 4
(commencing with Section 7055) of this chapter.



7003.  Except as otherwise provided, an appointment to fill a
vacancy caused by the expiration of the term of office shall be for a
term of four years and shall be filled, except for a vacancy in the
term of a public member, by a member from the same branch of the
contracting business as was the branch of the member whose term has
expired.  A vacancy in the term of a public member shall be filled by
another public member.  Each member shall hold office until the
appointment and qualification of his or her successor or until the
office is deemed to be vacant pursuant to Section 1774 of the
Government Code, whichever first occurs.
   Vacancies occurring in the membership of the board for any cause
shall be filled by appointment for the balance of the unexpired term.

   No person shall serve as a member of the board for more than two
consecutive terms.
   The Governor shall appoint four of the public members, including
the public member who is from a statewide senior citizen
organization, the local building official, the member of a labor
organization representing the building trades, and the five
contractor members qualified as provided in Section 7002.  The Senate
Rules Committee and the Speaker of the Assembly shall each appoint
two public members.


7005.  The Governor may remove any member of the board for
misconduct, incompetency or neglect of duty.



7006.  The board shall meet at least once each calendar quarter for
the purpose of transacting business as may properly come before it.
   Special meetings of the board may be held at times as the board
may provide in its bylaws.  Four members of the board may call a
special meeting at any time.



7007.  Eight members constitute a quorum at a board meeting.
   Due notice of each meeting and the time and place thereof shall be
given each member in the manner provided by the bylaws.



7008.  The board may appoint such committees and make such rules and
regulations as are reasonably necessary to carry out the provisions
of this chapter.  Such rules and regulations shall be adopted in
accordance with the provisions of the Administrative Procedure Act.



7009.  Any member or committee of the board may administer oaths and
may take testimony and proofs concerning all matters within the
jurisdiction of the board.



7010.  The board is vested with all functions and duties relating to
the administration of this chapter, except those functions and
duties vested in the director under the provisions of Division I of
this code.


7011.  The board by and with the approval of the director shall
appoint a registrar of contractors and fix his or her compensation.
   The registrar shall be the executive officer and secretary of the
board and shall carry out all of the administrative duties as
provided in this chapter and as delegated to him or her by the board.

   For the purpose of administration of this chapter, there may be
appointed a deputy registrar, a chief reviewing and hearing officer
and, subject to Section 159.5, other assistants and subordinates as
may be necessary.
   Appointments shall be made in accordance with the provisions of
civil service laws.
   This section shall become inoperative on July 1, 2003, and, as of
January 1, 2004, is repealed, unless a later enacted statute, which
becomes effective on or before January 1, 2004, deletes or extends
the dates on which it becomes inoperative and is repealed.



7011.3.  The registrar shall not assess a civil penalty against a
licensed contractor who has been assessed a specified civil penalty
by the Labor Commissioner under Section 1020 or 1022 of the Labor
Code for the same offense.


7011.4.  (a) Notwithstanding Section 7011, there is in the
Contractors' State License Board, a separate enforcement unit which
shall rigorously enforce this chapter prohibiting all forms of
unlicensed activity.
   (b) Persons employed as deputy registrars in this unit and
designated by the Director of Consumer Affairs  are not peace
officers and are not entitled to safety member retirement benefits.
They do not have the power of arrest.  However, they may issue a
written notice to appear in court pursuant to Chapter 5c (commencing
with Section 853.5) of Title 3 of Part 2 of the Penal Code.



7011.5.  Persons employed as investigators of the Special
Investigations Unit of the Contractors' State License Board and
designated by the Director of Consumer Affairs have the authority of
peace officers while engaged in exercising the powers granted or
performing the duties imposed upon them in investigating the laws
administered by the Contractors' State License Board or commencing
directly or indirectly any criminal prosecution arising from any
investigation conducted under these laws.  All persons herein
referred to shall be deemed to be acting within the scope of
employment with respect to all acts and matters in this section set
forth.



7011.7.  (a) The registrar shall review and investigate complaints
filed in a manner consistent with this chapter and the Budget Act.
It is the intent of the Legislature that complaints be reviewed and
investigated as promptly as resources allow.
   (b) The board shall set as a goal the improvement of its
disciplinary system so that an average of no more than six months
elapses from the receipt of a complaint to the completion of an
investigation.
   (c) Notwithstanding subdivision (a), the goal for completing the
review and investigation of complaints that, in the opinion of the
board, involve complex fraud issues or complex contractual
arrangements, should be no more than one year.



7011.8.  (a) Any person who reports to, or causes a complaint to be
filed with, the Contractors' State License Board that a person
licensed by that entity has engaged in professional misconduct,
knowing the report or complaint to be false, is guilty of an
infraction punishable by a fine not to exceed one thousand dollars
($1,000).
   (b) The board may notify the appropriate district attorney or city
attorney that a person has made or filed what the entity believes to
be a false report or complaint against a licensee.



7012.  The registrar, with the approval of the board and the
director, may, when funds are available, cooperate in the enforcement
of governmental legislation relating to the construction industry,
and, except as provided by Section 159.5, shall appoint such
assistants as may be necessary therefor.



7013.  The board may in its discretion review and sustain or reverse
by a majority vote any action or decision of the registrar.
   This section shall apply to any action, decision, order, or
proceeding of the registrar conducted in accordance with the
provisions of Chapter 5 (commencing with Section 11500) of Part 1 of
Division 3 of Title 2 of the Government Code.



7014.  The board may procure equipment and records necessary to
carry out the provisions of this chapter.



7015.  The board shall adopt a seal for its own use.  The seal shall
have the words "Contractors' State License Board, State of
California, Department of Consumer Affairs," and the care and custody
thereof shall be in the hands of the registrar.




7016.  Each member of the board shall receive a per diem and
expenses as provided in Section 103.



7017.  The board, in addition to the usual periodic reports, shall
within 30 days prior to the meeting of the general session of the
Legislature submit to the Governor and the Legislature a full and
true report of its transactions during the preceding biennium
including a complete statement of the receipts and expenditures of
the board during the period.
   A copy of the report shall be filed with the Secretary of State.




7018.5.  (a) The board shall prescribe a form entitled "Notice to
Owner" which shall state:
   "Under the California Mechanics' Lien Law, any contractor,
subcontractor, laborer, supplier, or other person or entity who helps
to improve your property, but is not paid for his or her work or
supplies, has a right to place a lien on your home, land, or property
where the work was performed and to sue you in court to obtain
payment.
   This means that after a court hearing, your home, land, and
property could be sold by a court officer and the proceeds of the
sale used to satisfy what you owe.  This can happen even if you have
paid your contractor in full if the contractor's subcontractors,
laborers, or suppliers remain unpaid.
   To preserve their rights to file a claim or lien against your
property, certain claimants such as subcontractors or material
suppliers are each required to provide you with a document called a
"Preliminary Notice." Contractors and laborers who contract with
owners directly do not have to provide such notice since you are
aware of their existence as an owner.  A preliminary notice is not a
lien against your property.  Its purpose is to notify you of persons
or entities that may have a right to file a lien against your
property if they are not paid.  In order to perfect their lien
rights, a contractor, subcontractor, supplier, or laborer must file a
mechanics' lien with the county recorder which then becomes a
recorded lien against your property.  Generally, the maximum time
allowed for filing a mechanics' lien against your property is 90 days
after substantial completion of your project.
   TO INSURE EXTRA PROTECTION FOR YOURSELF AND YOUR PROPERTY, YOU MAY
WISH TO TAKE ONE OR MORE OF THE FOLLOWING STEPS:
   (1) Require that your contractor supply you with a payment and
performance bond (not a license bond), which provides that the
bonding company will either complete the project or pay damages up to
the amount of the bond.  This payment and performance bond as well
as a copy of the construction contract should be filed with the
county recorder for your further protection.  The payment and
performance bond will usually cost from 1 to 5 percent of the
contract amount depending on the contractor's bonding ability.  If a
contractor cannot obtain such bonding, it may indicate his or her
financial incapacity.
   (2) Require that payments be made directly to subcontractors and
material suppliers through a joint control.  Funding services may be
available, for a fee, in your area which will establish voucher or
other means of payment to your contractor.  These services may also
provide you with lien waivers and other forms of protection.  Any
joint control agreement should include the addendum approved by the
registrar.
   (3) Issue joint checks for payment, made out to both your
contractor and subcontractors or material suppliers involved in the
project.  The joint checks should be made payable to the persons or
entities which send preliminary notices to you.  Those persons or
entities have indicated that they may have lien rights on your
property, therefore you need to protect yourself.  This will help to
insure that all persons due payment are actually paid.
   (4) Upon making payment on any completed phase of the project, and
before making any further payments, require your contractor to
provide you with unconditional "Waiver and Release" forms signed by
each material supplier, subcontractor, and laborer involved in that
portion of the work for which payment was made.  The statutory lien
releases are set forth in exact language in Section 3262 of the Civil
Code.  Most stationery stores will sell the "Waiver and Release"
forms if your contractor does not have them.  The material suppliers,
subcontractors, and laborers that you obtain releases from are those
persons or entities who have filed preliminary notices with you.  If
you are not certain of the material suppliers, subcontractors, and
laborers working on your project, you may obtain a list from your
contractor.  On projects involving improvements to a single-family
residence or a duplex owned by individuals, the persons signing these
releases lose the right to file a mechanics' lien claim against your
property.  In other types of construction, this protection may still
be important, but may not be as complete.
   To protect yourself under this option, you must be certain that
all material suppliers, subcontractors, and laborers have signed the
"Waiver and Release" form.  If a mechanics' lien has been filed
against your property, it can only be voluntarily released by a
recorded "Release of Mechanics' Lien" signed by the person or entity
that filed the mechanics' lien against your property unless the
lawsuit to enforce the lien was not timely filed.  You should not
make any final payments until any and all such liens are removed.
You should consult an attorney if a lien is filed against your
property."
   (b) Each contractor licensed under this chapter, prior to entering
into a contract with an owner for work specified as home improvement
or swimming pool construction pursuant to Section 7159, shall give a
copy of this "Notice to Owner" to the owner, the owner's agent, or
the payer.  The failure to provide this notice as required shall
constitute grounds for disciplinary action.



7019.  (a) If funding is made available for that purpose, the board
may contract with licensed professionals, as appropriate, for the
site investigation of consumer complaints.  The registrar shall
determine the rate of reimbursement for licensed professionals
performing inspections on behalf of the board.  All reports shall be
completed on a form prescribed by the registrar.
   (b) As used in this section, "licensed professionals" means, but
is not limited to, engineers, architects, landscape architects, and
geologists licensed, certificated, or registered pursuant to this
division.



7019.5.  The board shall contract for a feasibility study relating
to the development of a system for joint enforcement actions with
respect to contractors by the board, the Department of Industrial
Relations, the Employment Development Department, and the Franchise
Tax Board.  The study should include, but not be limited to, the
means of accomplishing the following:
   (a) Establishment of a common identification number which may be
utilized by all those agencies.
   (b) Assessment of the current state of technology in the affected
departments.
   (c) Assessment of the ability, and any impediments, of the
affected departments to share information.
   (d) Comparison of the standards of proof in the issuance of
citations and other administrative enforcement actions.
   (e) Ways to consolidate enforcement actions and procedures among
the departments.


7020.  The board shall maintain a computerized enforcement tracking
system for consumer complaints.



7021.  The board shall conduct the following studies and reviews,
and shall report to the department and the Legislature no later than
October 1, 2001.
   (a) The board shall conduct a comprehensive study of the issues
surrounding home improvement contracts that involve home equity
lending fraud and scams, and provide recommendations to deal with
this problem.
   (b) The board shall conduct a comprehensive study of its
reorganization ("reengineering") plan to restructure intake,
mediation, and investigation services, and evaluate the impact this
effort has had on consumer and industry access to board staff, its
ability to reduce timeframes for complaint processing and
investigations, increasing mediations, investigations, and legal
actions, productivity of staff, and overall costs to the board.
   (c) The board shall conduct a comprehensive study and review of
recovery fund programs in California and other states which provide
compensation to consumers for financial injury caused by a licensed
professional.  It should evaluate the effectiveness of these programs
and whether such a recovery fund could benefit consumers who are
harmed as a result of contractor fraud, poor workmanship,
malfeasance, abandonment, failure to perform, or other illegal acts.

   (d) The board shall conduct a comprehensive study in consultation
with the Department of Insurance, on the use of surety bonds to
compensate homeowners for financial injury sustained as a result of a
contractor's fraud, poor workmanship, malfeasance, abandonment,
failure to perform, or other illegal acts.  This study shall include
consideration of the payout criteria of bonds, increasing the bond
amount, a "step-bonding" approach based on the amount of the prime
contract, and the requirement of performance or payment bonds.  This
study shall additionally consider whether to require contractors to
carry general liability insurance and whether to establish a
guarantee program in order to provide the appropriate insurance and
bond coverage in connection with a homeowner's employment of a
contractor.
   (e) The board shall review its current disclosure policy and
provide recommended changes.