The contractor shall pay to his or her subcontractors, within seven days of receipt of each progress payment, the respective amounts allowed the contractor
on account of the work performed by his or her subcontractors, to the extent of each
subcontractor's interest therein. The payments to subcontractors shall be based on estimates made pursuant to Section 10261. Any diversion by the contractor of payments received for prosecution of a contract,
or failure to reasonably account for the application or use of the payments constitutes
ground for actions prescribed in Section 10253, in addition to disciplinary action by the Contractors' State License Board. The subcontractor shall notify, in writing, the Contractors' State License Board
and the department of any payment less than the amount or percentage approved for
the class or item of work as set forth in Section 10261.
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