Home improvement contracts and you

Home improvement contracts and you: Make sure you understand the basics of a good contract.

In California, there must be a written contract for all home improvement projects over $500.  A home improvement contract and any changes made to it must be in writing, legible, easy to understand, and inform the consumer of their rights to cancel or rescind the contract.  The California Business and Professions Code Section 7159 (“B&P 7159”) sets forth requirements for a home improvement contract.   The code mandates that a contractor’s home improvement contract comply with specific requirements such as the font size for certain language in the contract (no “fine print”) and where in the body of the contract certain warnings and/or language is to be included.

Below, in no particular order, is a list of contract requirements and suggestions to help you avoid potential conflicts with your contractor.

1. The down payment on a contract cannot be more than $1,000.00 or 10% of the contract price, whichever is less.  There are no exceptions, even for specially ordered materials.
2. The contract should describe in detail the products to be used including size, color, amounts of material, manufacturer brand names and production identification as well as how the work will be performed.
3. There must be a detailed payment schedule set forth in the contract.  The progress payments to the contractor cannot exceed the value of the work performed up through the date of payment (with the exception of the down payment).
4. The contract should specify whether you, the homeowner, or the contractor will obtain the necessary permits.
5. The contract must specify an estimated start date and an estimated completion date.
6. If the contract price or scope of work needs to be changed, those changes MUST be described with a written change order signed by you, the homeowner.
7. The home improvement contract must include the proper name, address, and license number of the contractor.
8. The home improvement contract must include a “Notice to Owner” warning about mechanic’s liens which could be recorded by the contractor or its subcontractors and/or material suppliers.
9. The contract must include a notice informing the homeowner of their 3-day right to cancel the contract.  The exception to this rule is for service and repair contracts that cover emergency repairs or services that are less than $750.
10. The contract should also address: (a) Who is responsible for clean up of debris and material, (b) Who takes possession of extra materials, and (c) The length and terms of all warranties for labor and/or materials.

This is a partial list and does not include all of the contractor requirements as set forth in B&P Code Section 7159.  Therefore, we suggest that you consult a knowledgeable construction attorney to review your home improvement contract.

The information provided is general in nature and is not intended to answer every question that may arise under different fact situations and should not be relied on in the place of professional advice in a given case.  If you have specific questions please contact Sweeney, Mason, Wilson & Bosomworth.

By Joseph M. Sweeney, Esq. & Dana R. Corey, Esq.

SWEENEY, MASON, WILSON & BOSOMWORTH is a Professional Law Corporation located at 983 University Avenue, Suite 104C, Los Gatos, California 95032, telephone (408) 356-3000.  This “Legal Notice” is designed to assist our clients and other business owners in spotting issues which may result in costly litigation and court awarded damages if allowed to continue unaddressed.  SWEENEY, MASON, WILSON & BOSOMWORTH’s philosophy is that by educating our clients and other businesses about their legal obligations, including changes in the law, we best serve our legal goal of minimizing or preventing expensive litigation.