A homeowner has a $40,000 judgment against a licensed contractor for incomplete work on the family residence. The contractor's $25,000 license bond is also being pursued by an unpaid framer ($8,000 wage claim) and by a non-residential commercial owner ($30,000 damages). Under the §7071.11 priority scheme, the homeowner can expect approximately:
Explanation
Bus. & Prof. Code §7071.11 priority order: (1) wage/benefit/trust-fund claims by employees, (2) damages to a RESIDENTIAL property owner under a home improvement contract, (3) damages to a non-residential property owner, (4) other claims. Each higher priority is paid in full before any lower priority receives anything; pro-rating applies only WITHIN a tier when funds are insufficient. Here: framer ($8,000 wages) is paid first as priority 1, leaving $17,000. The residential homeowner is paid next as priority 2 and gets the entire remaining $17,000 ($40,000 claim partially satisfied). The commercial owner (priority 3) gets nothing from the bond and must pursue the contractor personally.
Law Reference: Bus. & Prof. Code §7071.6Practice all 1605 questions free — no signup required.
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