By: KeyCrew Media
ACME Real Estate CEO Courtney Poulos says California’s outdated bonding system leaves homeowners vulnerable to fraud
Courtney Poulos thought she had done everything right. As a licensed real estate broker with 20 years of experience, she verified licenses, confirmed bonding and insurance, and documented everything in a detailed contract.
She still lost $250,000 to contractor fraud.
“What I discovered is that even when you do everything right, the system isn’t designed to protect consumers,” says Poulos, founder and CEO of ACME Real Estate in Los Angeles.
The $25,000 Problem
At the heart of the issue is California’s contractor bonding requirement. State law requires a $25,000 surety bond to protect consumers from financial losses resulting from contractor violations.
In practice, it’s often inadequate. “Twenty-five thousand dollars doesn’t always cover the cost of cabinets in a kitchen renovation,” Poulos points out. In her case, the $250,000 project left her with approximately $15,000 from the bond, not because that was the limit, but because other victims had already filed claims.
“Multiple consumers can be drawing from that single $25,000 pool,” she explains. “If someone else already claimed $5,000, there’s only $20,000 left for everyone else.”
The bonding requirement hasn’t been updated to reflect modern construction costs, leaving a gap between the protection consumers think they have and reality.
Licensing Loopholes
Poulos also discovered that California allows licensed contractors to sublease their licenses to unlicensed individuals. “With the company that scammed me, there was one contractor license rented out to multiple individuals who functioned as sales agents,” she explains.
Homeowners believe they’re working with a licensed, bonded contractor, but the person they’re dealing with directly may not hold the license. “It creates opportunities for people to operate in this gray area,” Poulos says.
The Enforcement Gap
When Poulos attempted to report the fraud, the LAPD classified her case as a civil contract dispute rather than criminal fraud. The FBI showed limited interest once it became clear the contractor had moved funds across state lines.
After four years and approximately $50,000 in legal fees, her attorneys delivered difficult news: pursuing the case further would likely cost more than she could recover. She eventually stopped, knowing the contractor continues to operate in Florida.
What Needs to Change
Poulos advocates several reforms: increasing the $25,000 bond to reflect current construction costs, eliminating or strictly regulating license subleasing, improving interstate coordination for fraud prosecutions, and establishing a state recovery fund similar to those in other states.
She’s written to California’s Attorney General outlining these concerns, but hasn’t received a response.
Protecting Yourself
Poulos offers practical advice: verify licenses directly with the Contractors State License Board, check bond history for existing claims, structure payments around completed milestones rather than large upfront deposits, obtain multiple bids, document everything in writing, and consider escrow services for larger projects.
“People hear ‘licensed, bonded, and insured’ and think they’re fully protected,” Poulos says. “But if that bond is $25,000 and your project is $200,000, you need to understand what that really means.”
Poulos discussed contractor fraud on her podcast “The Clean Close,” available on the ACME Real Estate YouTube channel.
“This is happening to homeowners every day across California,” she emphasizes. “The more people understand the limitations of current protections, the more pressure there will be to modernize these requirements.”
Homeowners who have been victims of contractor fraud are encouraged to file complaints with the Contractors State License Board at cslb.ca.gov or call 800-321-CSLB (2752).
Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal advice. While the article aims to highlight issues related to contractor fraud in California, readers are encouraged to seek professional advice from legal or industry experts for specific concerns or actions related to contractor bonding, licensing, or fraud cases.
