Home Improvement Contracts in California: Key Requirements
Licensed contractors operating in the state of California are likely familiar with the regulations established by the Contractor State Licensing Board (CSLB); however, many are unaware that the California Business and Professions Code also imposes its own set of unique constraints. Specifically, Section 7159 of the California Business and Professions Code provides explicit parameters governing the content and format of “Home Improvement Contracts.”
Pursuant to Section 7159, a Home Improvement Contract is categorized as an agreement between a contractor and an owner or tenant for performing home improvement work on their residence or dwelling unit, including all labor, services, and materials, if the total contract price exceeds $500.
“Home Improvement Contract” also includes agreements between a salesperson and an owner or tenant for the sale, installation, or provision of home improvement goods or services, regardless of the number of dwelling units.
Section 7159 mandates that all Home Improvement Contracts must be documented in the form of a written agreement which includes clear, comprehensive, and essential details such as the contractor’s name, address, license number, start and completion dates, description of work, materials to be used, payment schedule, and total contract price. While these requirements aim to protect both homeowners and contractors by establishing clear expectations and guidelines, Section 7159 mandates an extensive list of additional details, requirements, and notices including:
Each contract must provide the homeowner with a detailed description of the work to be performed, including specific measurements, materials, and any applicable plans or specifications.
The contractor’s license information, including the license number, classification, and expiration date, must be prominently displayed on the contract along with a notice that homeowners should verify the contractor’s license status with the CSLB to ensure that they are hiring a legitimate and qualified professional.
Homeowners must be provided with a Notice of Right to Cancel if the contract is signed at the residence of the homeowner. This notice also requires that homeowners are provided with a three-day window to cancel the contract without any penalties or obligations. It is the obligation of the contractor to provide a completed copy of the Notice of Right to Cancel along with the contract.
The contract should outline the payment schedule, specifying the amount and timing of payments. It should also include a “Mechanic’s Lien Warning” informing the homeowner of potential legal remedies available if the contractor fails to pay subcontractors or suppliers.
If any changes or modifications are made during the course of the project, they must be documented in writing as change orders to the Home Improvement Contract, signed by both parties. Change orders must clearly state the revised work, materials, and corresponding costs.
Each Home Improvement Contract must include any warranties and/or guarantees provided by the contractor for the workmanship or materials to ensures homeowners are aware of their rights and remedies in case of any defects or issues arising after the completion of the project.
The above is not an exhaustive list of the many requirements contained in Section 7159. In fact, Section 7159 also contains many tedious formatting requirements for each Home Improvement Contract, including mandated font sizes, font style, and organizational structure. Given the complicated structure of Section 7159, understanding the primary requirements of Home Improvement Contracts in California is crucial for both homeowners and contractors embarking on renovation or construction projects. Taking the time to carefully review, draft, and negotiate a well-prepared contract can help mitigate risks, protect investments, and ensure successful operations. If you have any questions surrounding Home Improvement Contracts or would like to ensure that you are in compliance with Section 7159, as either a contractor or a homeowner, please reach out to John Bennett at email@example.com or (858) 746-6488 or any member of the FELLP Law team at (858) 746-6480 to schedule a consultation.
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