Legal Question in Construction Law in California

Unlicensed contractors are an enormous problem in the construction industry. There is a reason they are unlicensed - almost always because they are not skilled enough or ethical enough to carry on a legitimate business. I cannot overstate how often I encounter problems with unlicensed contractors.

That said, let's address your problem. At least in theory, you can go to small claims court and get a judgment to recover your $7000 from the unlicensed contractor. I doubt, however, that you'd ever be able to collect from the guy. Virtually all the unlicensed contractors I encounter live hand to mouth with nothing to their names. If you know the guy personally, maybe you'll have better luck. Contracting without a license is also a crime. Turn him into the police/DA. You can also see if the CSLB will go after him. If either of these governmental agencies get involved, then there will be increased pressure for him to return your $7000. He isn't entitled to even one dime even if he did a perfect job.

Second, the licensed stucco contractor does have a right to lien your house providing that he properly served you with a preliminary notice of lien. There are a whole bunch of deadlines involved and if he follows those deadlines, then he'll be able to sue you to get paid. The question is whether he'll pay the legal fees to do this because you can no longer file a mechanics lien lawsuit in small claims court. This means having to go to Superior Court. If it's only $7000, I suspect the stucco guy won't hire a lawyer. Still, it leaves you with the lien on your property. But, after 90 days, the lien becomes void. Despite that it becomes void, title companies will still not write title insurance if it stays there. Lenders are generally scared off as well. You can, however, hire a lawyer to get rid of the lien through a pretty fast procedure and charge the contractor the attorney's fees, up to a certain amount. Usually a demand letter from the lawyer threatening the attorney's fees is enough to get the contractor to voluntarily release the lien.