Reviewed by Brendan McKee, Managing Broker, DRE #01882732, on October 20, 2026.

In California, doing contracting work without a license is a misdemeanor unless an exemption applies (Business and Professions Code § 7028). The main exemption for small jobs is narrow: the total price for labor, materials and everything else must be less than $1,000, the work must not need a building permit, and the person must not employ anyone on the job or advertise as a contractor (B&P § 7048). For most rental repairs beyond that, hire a licensed contractor, check the license on the CSLB website, and put the job in a written contract.

The short version

  • Unlicensed contracting is a misdemeanor unless an exemption applies (B&P § 7028).
  • The minor work exemption covers only jobs under $1,000 that need no building permit and where the worker has no employees on the job (§ 7048).
  • Check every contractor's license, bond and workers' compensation status on the CSLB license lookup before work starts.
  • A home improvement contract over $500 must be in writing and signed before work begins, and the down payment is capped at $1,000 or 10 percent of the price, whichever is less (§§ 7159, 7159.5).
  • Permits are a separate question from licensing; ask the local building department before work begins.
  • If you pay someone who should have been licensed and was not, § 7031 lets you sue to recover what you paid.

When the work needs a licensed contractor

Start with § 7028: a person who engages in the business of, or acts as, a contractor in California must hold a license unless exempted. Two exemptions matter most for rental owners.

The minor work exemption (§ 7048). As amended by AB 2622 (effective January 1, 2025), the license law does not apply to work on one project when the aggregate contract price for labor, materials and all other items is less than $1,000, the work is "casual, minor, or inconsequential," and it "does not require a building permit." All of these limits apply:

  • A $1,000 job is not exempt; the price must be less than $1,000.
  • The exemption does not apply if the work is part of a larger operation, or if a job is split into smaller contracts to evade the limit (§ 7048(b)).
  • It does not apply to a person who advertises as a contractor or who employs another person to do or help with the work (§ 7048(c)).
  • An unlicensed person may advertise only for jobs under $1,000 and must state that they are not licensed (§ 7027.2).

The owner exemption (§ 7044). An owner who improves their own property is exempt from the license law if none of the improvements are intended or offered for sale and the owner personally does all the work, or uses their own employees paid wages as their sole compensation. An owner who contracts directly with licensed contractors for each trade is also exempt. This exemption covers the license only. It does not exempt the work from permits or from federal lead-safe rules in pre-1978 buildings; see lead-safe repairs in older rentals.

How to check a license on CSLB

The Contractors State License Board's online lookup searches by license number, business name, personnel name or home improvement salesperson registration.

  1. Ask for the license number and search it on the CSLB license lookup (opens in a new tab). The database is unavailable Sundays from 8 p.m. through Monday at 6 a.m. for scheduled maintenance.
  2. On the detail page, confirm the business name and entity type, the issue and expiration dates, and the status.
  3. Check the classifications. The license should cover the trade you are hiring for.
  4. Check the contractor's bond and the workers' compensation entry (an insurer, or a recorded exemption).
  5. Save a dated copy or screenshot in the property file.

Bonds. Every licensed contractor must carry a contractor's bond of $25,000 (B&P § 7071.6(a)). The CSLB record shows the bond on file.

Workers' compensation (B&P § 7125). The current version, in effect until January 1, 2028, requires a workers' compensation certificate for a license, except for a contractor that has no employees, files a statement saying so, and does not hold a C-8, C-20, C-22, C-39 or D-49 classification. The version that becomes operative January 1, 2028 (SB 1455) limits the no-employee exemption to a joint venture with no employees. Until then, a license record can lawfully show an exemption.

What a home improvement contract must say

Repair work on a rental can count as "home improvement": repairing, remodeling, altering or modernizing residential property, including items such as fencing, air conditioning or heating equipment and termite extermination (§ 7151). The rules apply to a contract between a contractor and an owner, or a contractor and a tenant, regardless of how many units the building has (§ 7151.2). Section 7159 applies when the aggregate contract price is more than $500. Service and repair contracts that comply with §§ 7159.10 to 7159.14 are handled separately.

Contract pointRule
Writing and signaturesThe contract and any changes must be in writing and signed before work begins (§ 7159(d))
Your copyBefore work starts, the contractor gives you a copy signed and dated by both (§ 7159(c)(3)(A))
Required detailsContractor name, business address and license number; a "Home Improvement" heading; the contract price; a description of the work and significant materials; approximate start and completion dates (§ 7159(d))
Required noticesYour right to require a performance and payment bond; a subcontractor statement; liability and workers' compensation insurance notices; the Mechanics Lien Warning; the right-to-cancel notice where it applies (§ 7159(c), (e))
Down paymentNo more than $1,000 or 10 percent of the contract amount, whichever is less (§ 7159.5(a)(3))
Progress paymentsExcept for the down payment, the contractor may not request or accept payment that exceeds the value of work performed or material delivered (§ 7159.5(a)(5))
Lien releasesOn request after a payment, the contractor must furnish an unconditional lien release for the work paid for, and you may withhold further payments until it is provided (§ 7159.5(a)(6))

Permits

A license does not replace a permit. In unincorporated San Diego County, the County's permit guide (PDS 110) states that both the person doing the work and the person hiring them are responsible for finding out from the building official whether a permit is required before work begins.

In the City of San Diego, water heater replacements, furnace and air conditioner replacements, panel replacements and repiping all need a permit; for houses and duplexes these usually qualify for a self-issued "Simple" permit, while apartment buildings of three or more units need plans. If an owner does the work or hires different contractors, the City requires the Owner-Builder Verification Form (DS-3042) before the permit is issued (Information Bulletin 103). The major systems guide covers which repairs need which permits.

The risks of hiring unlicensed

  • An unlicensed contractor cannot sue to collect payment for work that required a license (§ 7031(a)).
  • A person who used an unlicensed contractor may sue to recover all compensation paid (§ 7031(b)).
  • A security interest taken to secure payment to an unlicensed contractor is unenforceable (§ 7031(c)).
  • A person who used an unlicensed contractor is treated as a victim of crime and is eligible for restitution for economic losses, whether or not they knew (§ 7028(h)).

Paying contractors and 1099s

For payments made in 2026, the Form 1099-NEC threshold is $2,000 (it was $600 for 2025 payments). Whether an individual landlord must file 1099s depends on whether the rental activity is a trade or business, so ask a tax professional. Collecting a Form W-9 from each contractor before the first payment keeps the option open. See 1099 rules for landlords, and record each job as a repair or an improvement (repairs vs improvements).

For owners

Keep a short vendor file for each contractor: license printout with the date checked, the signed contract, change orders, invoices, lien releases and permit records. Recheck a license before each new job, not just the first one. Plan larger jobs ahead with the maintenance budgeting guide, and if you live far away, see managing a Coronado rental from afar for setting up repair authority. For how tenant requests flow into repairs, see handling maintenance requests and emergency repairs.

McKee Properties manages rentals and runs an in-house maintenance division, Certified Property Maintenance; see maintenance services.

Local rules

Permit rules are local. The City of San Diego's Development Services Department and the County's Planning & Development Services (for unincorporated areas) publish their own exemptions, and each of the county's other cities, such as Coronado, Chula Vista and Oceanside, sets its own. Ask the building department of the city where the rental sits before the job is scheduled.

Frequently asked questions

Can a handyman legally do repairs on my California rental?

Yes, for small jobs within B&P § 7048: the total price must be less than $1,000, the job must not need a building permit, and the handyman must not employ anyone on the job or advertise as a contractor. Work above those limits, or split up to stay under them, needs a licensed contractor unless another exemption applies.

What happens if I hire an unlicensed contractor?

Under § 7031, the unlicensed contractor cannot sue you to collect payment for work that required a license, and you may sue to recover all compensation you paid. Section 7028(h) also makes you eligible for restitution as a crime victim.

How much can a contractor ask for up front?

For a home improvement contract covered by § 7159, the down payment may not exceed $1,000 or 10 percent of the contract amount, whichever is less (§ 7159.5(a)(3)). After that, the contractor may not ask for or accept more than the value of the work done or materials delivered, unless an approved bond or joint control arrangement applies (§ 7159.5(a)(8)).

Does a licensed contractor have to carry workers' compensation?

Until January 1, 2028, a contractor with no employees may file an exemption unless it holds a C-8, C-20, C-22, C-39 or D-49 classification. From January 1, 2028, the exemption is limited to joint ventures with no employees (B&P § 7125). The CSLB license page shows the insurer or the exemption on file.

Can I do repairs on my own rental without a license?

Section 7044 exempts an owner who personally does the work, or uses their own wage employees, on property not intended or offered for sale. The exemption covers the license only: permits still apply, the City of San Diego asks owner-builders to sign form DS-3042, and EPA lead-safe rules can apply to owner-done work in pre-1978 rentals.

This is general information, not legal or tax advice. Rules change; confirm your situation with a California attorney, your local building or fire department, or a licensed professional.

Sources

Verified October 19, 2026.

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