Home Remodel Need to Know

Thinking of remodeling your home, new kitchen, new bath?  Before you sign a contract know what should be in the contract.  Most Home Remodel contractors are not following the required law in drafting their contracts.  The Contract is required under the Business & Professions Code to have numerous provisions.  Most Contractors do not follow the Code which was enacted for your protection.  Contractors don’t follow the Code because a Court has held that failure to provide the notice required in the Code is a ground for disciplinary action; it does not, however deprive the contractor of the right to maintain an action on the contract. Gonzales v. Concord Gardens Mobile Home Park (1979) 90 Cal. App.3rd 871.

The Code provides as follows:

Business & Professions Code § 7159

(a) (1) This section identifies the projects for which a home improvement contract is required,
outlines the contract requirements, and lists the items that shall be included in the contract, or
may be provided as an attachment.
(2) This section does not apply to service and repair contracts that are subject to Section
7159.10, if the contract for the applicable services complies with Sections 7159.10 to 7159.14,
inclusive.
(3) This section does not apply to the sale, installation, and servicing of a fire alarm sold in
conjunction with an alarm system, as defined in Section 7590.1, if all costs attributable to making
the fire alarm system operable, including sale and installation costs, do not exceed five hundred
dollars ($500), and the licensee complies with the requirements set forth in Section 7159.9.
(4) This section does not apply to any costs associated with monitoring a burglar or fire alarm
system.
(5) Failure by the licensee, their agent or salesperson, or by a person subject to be licensed
under this chapter, to provide the specified information, notices, and disclosures in the contract,
or to otherwise fail to comply with any provision of this section, is cause for discipline.
(b) For purposes of this section, “home improvement contract” means an agreement, whether oral or
written, or contained in one or more documents, between a contractor and an owner or between a
contractor and a tenant, regardless of the number of residence or dwelling units contained in the
building in which the tenant resides, if the work is to be performed in, to, or upon the residence
or dwelling unit of the tenant, for the performance of a home improvement, as defined in Section
7151, and includes all labor, services, and materials to be furnished and performed thereunder, if
the aggregate contract price specified in one or more improvement contracts, including all labor,
services, and materials to be furnished by the contractor, exceeds five hundred dollars ($500).
“Home improvement contract” also means an agreement, whether oral or written, or contained in one
or more documents, between a salesperson, whether or not they are a home improvement salesperson,
and an owner or a tenant, regardless of the number of residence or dwelling units contained in the
building in which the tenant resides, which provides for the sale, installation, or furnishing of
home improvement goods or services.
(c) In addition to the specific requirements listed under this section, every home improvement
contract and any person subject to licensure under this chapter or their agent or salesperson shall
comply with all of the following:
(1) The writing shall be legible.
(2) Any printed form shall be readable. Unless a larger typeface is specified in this article, text
in any printed form shall be in at least 10-point typeface and the headings shall be in at least
10- point boldface type.
(3) (A) Before any work is started, the contractor shall give the buyer a copy of the contract
signed and dated by both the contractor and the buyer. The buyer’s receipt of the copy of the
contract initiates the buyer’s rights to cancel the contract pursuant to Sections 1689.5 to
1689.14, inclusive, of the Civil Code.
(B) The contract shall contain on the first page, in a typeface no smaller than that generally used
in the body of the document, both of the following:
(i) The date the buyer signed the contract.

(ii) The name and address of the contractor to which the applicable “Notice of Cancellation” is to
be mailed, immediately preceded by a statement advising the buyer that the “Notice of Cancellation”
may be sent to the contractor at the address noted on the contract.
(4) The contract shall include a statement that, upon satisfactory payment being made for any
portion of the work performed, the contractor, prior to any further payment being made, shall
furnish to the person contracting for the home improvement or swimming pool work a full and
unconditional release from any potential lien claimant claim or mechanics lien authorized pursuant
to Sections 8400 and 8404 of the Civil Code for that portion of the work for which payment has been
made.
(5) A change-order form for changes or extra work shall be incorporated into the contract and shall
become part of the contract only if it is in writing and signed by the parties prior to the
commencement of any work covered by a change order.
(6) The contract shall contain, in close proximity to the signatures of the owner and contractor, a
notice stating that the owner or tenant has the right to require the contractor to have a
performance and payment bond.
(7) If the contract provides for a contractor to furnish joint control, the contractor shall not
have any financial or other interest in the joint control.
(8) The provisions of this section are not exclusive and do not relieve the contractor from
compliance with any other applicable provision of law.
(d) A home improvement contract and any changes to the contract shall be in writing and signed by
the parties to the contract prior to the commencement of work covered by the contract or an
applicable change order and, except as provided in paragraph (8) of subdivision (a) of Section
7159.5, shall include or comply with all of the following:
(1) The name, business address, and license number of the contractor.
(2) If applicable, the name and registration number of the home improvement salesperson that
solicited or negotiated the contract.
(3) The following heading on the contract form that identifies the type of contract in at least 10-
point boldface type: “Home Improvement.”
(4) The following statement in at least 12-point boldface type: “You are entitled to a completely
filled in copy of this agreement, signed by both you and the contractor, before any work may be
started.”
(5) The heading: “Contract Price,” followed by the amount of the contract in dollars and cents.
(6) If a finance charge will be charged, the heading: “Finance Charge,” followed by the amount in
dollars and cents. The finance charge is to be set out separately from the contract amount.
(7) The heading: “Description of the Project and Description of the Significant Materials to be
Used and Equipment to be Installed,” followed by a description of the project and a description of
the significant materials to be used and equipment to be installed. For swimming pools, the project
description required under this paragraph also shall include a plan and scale drawing showing the
shape, size, dimensions, and the construction and equipment specifications.
(8) If a downpayment will be charged, the details of the downpayment shall be expressed in
substantially the following form, and shall include the text of the notice as specified in
subparagraph (C):
(A) The heading: “Downpayment.”
(B) A space where the actual downpayment appears.
(C) The following statement in at least 12-point boldface type:

“THE DOWNPAYMENT MAY NOT EXCEED $1,000 OR 10 PERCENT OF THE CONTRACT PRICE, WHICHEVER IS LESS.”

(9) If payments, other than the downpayment, are to be made before the project is completed, the
details of these payments, known as progress payments, shall be expressed in substantially the
following form, and shall include the text of the statement as specified in subparagraph (C):
(A) A schedule of progress payments shall be preceded by the heading: “Schedule of Progress
Payments.”
(B) Each progress payment shall be stated in dollars and cents and specifically reference the
amount of work or services to be performed and materials and equipment to be supplied.
(C) The section of the contract reserved for the progress payments shall include the following
statement in at least 12-point boldface type:

“The schedule of progress payments must specifically describe each phase of work, including the
type and amount of work or services scheduled to be supplied in each phase, along with the amount
of each proposed progress payment. IT IS AGAINST THE LAW FOR A CONTRACTOR TO COLLECT PAYMENT FOR
WORK NOT YET COMPLETED, OR FOR MATERIALS NOT YET DELIVERED. HOWEVER, A CONTRACTOR MAY REQUIRE A
DOWNPAYMENT.”

(10) The contract shall address the commencement of work to be performed in substantially the
following form:
(A) A statement that describes what constitutes substantial commencement of work under the
contract.
(B) The heading: “Approximate Start Date.”
(C) The approximate date on which work will be commenced.
(11) The estimated completion date of the work shall be referenced in the contract in substantially
the following form:
(A) The heading: “Approximate Completion Date.”
(B) The approximate date of completion.
(12) If applicable, the heading: “List of Documents to be Incorporated into the Contract,” followed
by the list of documents incorporated into the contract.
(13) The heading: “Note About Extra Work and Change Orders,” followed by the following statement:

“Extra Work and Change Orders become part of the contract once the order is prepared in writing and
signed by the parties prior to the commencement of work covered by the new change order. The order
must describe the scope of the extra work or change, the cost to be added or subtracted from the
contract, and the effect the order will have on the schedule of progress payments.”

(e) Except as provided in paragraph (8) of subdivision (a) of Section 7159.5, all of the following
notices shall be provided to the owner as part of the contract form as specified or, if otherwise
authorized under this subdivision, may be provided as an attachment to the contract:

(1) A notice concerning commercial general liability insurance. This notice may be provided as an
attachment to the contract if the contract includes the following statement: “A notice concerning
commercial general liability insurance is attached to this contract.” The notice shall include the
heading “Commercial General Liability Insurance (CGL),” followed by whichever of the following
statements is both relevant and correct:
(A) “(The name on the license or ‛This contractor’) does not carry commercial general liability
insurance.”
(B) “(The name on the license or ‛This contractor’) carries commercial general liability
insurance written by (the insurance company). You may call (the insurance company) at
to check the contractor’s insurance coverage.”
(C) “(The name on the license or ‛This contractor’) is self-insured.”
(D) “(The name on the license or ‘This contractor’) is a limited liability company that carries
liability insurance or maintains other security as required by law. You may call (the insurance
company or trust company or bank) at to check on the contractor’s insurance coverage or
security.”
(2) A notice concerning workers’ compensation insurance. This notice may be provided as an
attachment to the contract if the contract includes the statement: “A notice concerning workers’
compensation insurance is attached to this contract.” The notice shall include the heading
“Workers’ Compensation Insurance” followed by whichever of the following statements is correct:
(A) “(The name on the license or ‛This contractor’) has no employees and is exempt from
workers’ compensation requirements.”
(B) “(The name on the license or ‛This contractor’) carries workers’ compensation insurance for all
employees.”
(3) A notice that provides the buyer with the following information about the performance of extra
or change-order work:
(A) A statement that the buyer may not require a contractor to perform extra or change-order work
without providing written authorization prior to the commencement of work covered by the new change
order.
(B) A statement informing the buyer that extra work or a change order is not enforceable against a
buyer unless the change order also identifies all of the following in writing prior to the
commencement of work covered by the new change order:
(i) The scope of work encompassed by the order.
(ii) The amount to be added or subtracted from the contract.
(iii) The effect the order will make in the progress payments or the completion date.
(C) A statement informing the buyer that the contractor’s failure to comply with the requirements
of this paragraph does not preclude the recovery of compensation for work performed based upon
legal or equitable remedies designed to prevent unjust enrichment.
(4) A notice with the heading “Mechanics Lien Warning” written as follows: “MECHANICS LIEN WARNING:
Anyone who helps improve your property, but who is not paid, may record what is called a mechanics
lien on your property. A mechanics lien is a claim, like a mortgage or home equity loan, made
against your property and recorded with the county recorder.

Even if you pay your contractor in full, unpaid subcontractors, suppliers, and laborers who helped
to improve your property may record mechanics liens and sue you in court to foreclose the lien. If
a court finds the lien is valid, you could be forced to pay twice or have a court officer sell your
home to pay the lien. Liens can also affect your credit.
To preserve their right to record a lien, each subcontractor and material supplier must provide you
with a document called a ‘Preliminary Notice.’ This notice is not a lien. The purpose of the notice
is to let you know that the person who sends you the notice has the right to record a lien on your
property if they are not paid.
BE CAREFUL. The Preliminary Notice can be sent up to 20 days after the subcontractor starts work or
the supplier provides material. This can be a big problem if you pay your contractor before you
have received the Preliminary Notices.
You will not get Preliminary Notices from your prime contractor or from laborers who work on your
project. The law assumes that you already know they are improving your property.
PROTECT YOURSELF FROM LIENS. You can protect yourself from liens by getting a list from your
contractor of all the subcontractors and material suppliers that work on your project. Find out
from your contractor when these subcontractors started work and when these suppliers delivered
goods or materials. Then wait 20 days, paying attention to the Preliminary Notices you receive.
PAY WITH JOINT CHECKS. One way to protect yourself is to pay with a joint check. When your
contractor tells you it is time to pay for the work of a subcontractor or supplier who has provided
you with a Preliminary Notice, write a joint check payable to both the contractor and the
subcontractor or material supplier.
For other ways to prevent liens, visit CSLB’s internet website at www.cslb.ca.gov or call CSLB at
800-321-CSLB (2752).
REMEMBER, IF YOU DO NOTHING, YOU RISK HAVING A LIEN PLACED ON YOUR
HOME. This can mean that you may have to pay twice, or face the forced sale of your home to pay
what you owe.”

(5) The following notice shall be provided in at least 12-point typeface:

“Information about the Contractors State License Board (CSLB): CSLB is the state consumer
protection agency that licenses and regulates construction contractors.
Contact CSLB for information about the licensed contractor you are considering, including
information about disclosable complaints, disciplinary actions, and civil judgments that are
reported to CSLB.
Use only licensed contractors. If you file a complaint against a licensed contractor within the
legal deadline (usually four years), CSLB has authority to investigate the complaint. If you use an
unlicensed contractor, CSLB may not be able to help you resolve your complaint. Your only remedy
may be in civil court, and you may be liable for damages arising out of any injuries to the
unlicensed contractor or the unlicensed contractor’s employees.
For more information:
Visit CSLB’s internet website at www.cslb.ca.gov Call CSLB at 800-321-CSLB (2752)
Write CSLB at P.O. Box 26000, Sacramento, CA 95826.”

(6) (A) The notice set forth in subparagraph (B) and entitled “Three-Day Right to Cancel,” or
entitled “Five-Day Right to Cancel” for contracts with a senior citizen, shall be provided to the
buyer unless the contract is:
(i) Negotiated at the contractor’s place of business.
(ii) Subject to the “Seven-Day Right to Cancel,” as set forth in paragraph (7).
(iii) Subject to licensure under the Alarm Company Act (Chapter 11.6 (commencing with Section
7590)), provided the alarm company licensee complies with Sections 1689.5, 1689.6, and 1689.7 of
the Civil Code, as applicable.

(B) (i) “Three-Day Right to Cancel
You, the buyer, have the right to cancel this contract within three business days. You may cancel
by emailing, mailing, faxing, or delivering a written notice to the contractor at the contractor’s
place of business by midnight of the third business day after you received a signed and dated copy
of the contract that includes this notice. Include your name, your address, and the date you
received the signed copy of the contract and this notice.
If you cancel, the contractor must return to you anything you paid within 10 days of receiving the
notice of cancellation. For your part, you must make available to the contractor at your residence,
in substantially as good condition as you received them, goods delivered to you under this contract
or sale. Or, you may, if you wish, comply with the contractor’s instructions on how to return the
goods at the contractor’s expense and risk. If you do make the goods available to the contractor
and the contractor does not pick them up within 20 days of the date of your notice of cancellation,
you may keep them without any further obligation. If you fail to make the goods available to the
contractor, or if you agree to return the goods to the contractor and fail to do so, then you
remain liable for performance of all obligations under the contract.”

(ii) References to “three” and “third” in the notice set forth in clause (i) shall be changed to
“five” and “fifth,” respectively, for a buyer who is a senior citizen.
(C) The notice required by this paragraph shall comply with all of the following:
(i) The text of the notice is at least 12-point boldface type.
(ii) The notice is in immediate proximity to a space reserved for the owner’s signature.
(iii) The owner acknowledges receipt of the notice by signing and dating the notice form in the
signature space.
(iv) The notice is written in the same language, e.g., Spanish, as that principally used in any
oral sales presentation.
(v) The notice may be attached to the contract if the contract includes, in at least 12-point
boldface type, a checkbox with one of the following statements, as applicable:
(I) For a contract with a senior citizen: “The law requires that the contractor give you a notice
explaining your right to cancel. Initial the checkbox if the contractor has given you a ‛Notice of
the Five-Day Right to Cancel.’ ”
(II) For all other contracts: “The law requires that the contractor give you a notice explaining
your right to cancel. Initial the checkbox if the contractor has given you a ‛Notice of the Three-
Day Right to Cancel.’”
(vi) (I) The notice shall be accompanied by a completed form in duplicate, captioned “Notice of
Cancellation,” which also shall be attached to the agreement or offer to purchase and be easily
detachable, and which shall contain the following statement written in the same language, e.g.,
Spanish, as used in the contract:

“Notice of Cancellation”
/enter date of transaction/ (Date)
“You may cancel this transaction, without any penalty or obligation, within three business days
from the above date.
If you cancel, any property traded in, any payments made by you under the contract or sale, and any
negotiable instrument executed by you will be returned within 10 days following receipt by the
seller of your cancellation notice, and any security interest arising out of the transaction will
be canceled.
If you cancel, you must make available to the seller at your residence, in substantially as good
condition as when received, any goods delivered to you under this contract or sale, or you may, if
you wish, comply with the instructions of the seller regarding the return shipment of the goods at
the seller’s expense and risk.
If you do make the goods available to the seller and the seller does not pick them up within 20
days of the date of your notice of cancellation, you may retain or dispose of the goods without any
further obligation. If you fail to make the goods available to the seller, or if you agree to
return the goods to the seller and fail to do so, then you remain liable for performance of all
obligations under the contract.”
To cancel this transaction, mail or deliver a signed and dated copy of this cancellation notice, or
any other written notice, or send a telegram
to ,

at
/address of seller’s place of business/ not later than midnight of .
(Date)
I hereby cancel this transaction. (Date)
(Buyer’s signature)

/name of seller/

(II) The reference to “three” in the statement set forth in subclause (I) shall be changed to
“five” for a buyer who is a senior citizen.
(7) (A) The following notice entitled “Seven-Day Right to Cancel” shall be provided to the buyer
for any contract that is written for the repair or restoration of residential premises damaged by
any sudden or catastrophic event for which a state of emergency has been declared by the President
of the United States or the Governor, or for which a local emergency has been declared by the
executive officer or governing body of any city, county, or city and county:

“Seven-Day Right to Cancel
You, the buyer, have the right to cancel this contract within seven business days. You may cancel
by emailing, mailing, faxing, or delivering a written notice to the contractor at the contractor’s
place of business by midnight of the seventh business day after you received a signed and dated
copy of the contract that includes this notice. Include your name, your address, and the date you
received the signed copy of the contract and this notice.

If you cancel, the contractor must return to you anything you paid within 10 days of receiving the
notice of cancellation. For your part, you must make available to the contractor at your residence,
in substantially as good condition as you received them, goods delivered to you under this contract
or sale. Or, you may, if you wish, comply with the contractor’s instructions on how to return the
goods at the contractor’s expense and risk. If you do make the goods available to the contractor
and the contractor does not pick them up within 20 days of the date of your notice of cancellation,
you may keep them without any further obligation. If you fail to make the goods available to the
contractor, or if you agree to return the goods to the contractor and fail to do so, then you
remain liable for performance of all obligations under the contract.”

(B) The “Seven-Day Right to Cancel” notice required by this subdivision shall comply with all of
the following:
(i) The text of the notice is at least 12-point boldface type.
(ii) The notice is in immediate proximity to a space reserved for the owner’s signature.
(iii) The owner acknowledges receipt of the notice by signing and dating the notice form in the
signature space.
(iv) The notice is written in the same language, e.g., Spanish, as that principally used in any
oral sales presentation.
(v) The notice may be attached to the contract if the contract includes, in at least 12-point
boldface type, a checkbox with the following statement: “The law requires that the contractor give
you a notice explaining your right to cancel. Initial the checkbox if the contractor has given you
a ‛Notice of the Seven-Day Right to Cancel.’ ”
(vi) The notice shall be accompanied by a completed form in duplicate, captioned “Notice of
Cancellation,” which shall also be attached to the agreement or offer to purchase and be easily
detachable, and which shall contain the following statement written in the same language, e.g.,
Spanish, as used in the contract:
“Notice of Cancellation”
/enter date of transaction/ (Date)
“You may cancel this transaction, without any penalty or obligation, within seven business days
from the above date.
If you cancel, any property traded in, any payments made by you under the contract or sale, and any
negotiable instrument executed by you will be returned within 10 days following receipt by the
seller of your cancellation notice, and any security interest arising out of the transaction will
be canceled.
If you cancel, you must make available to the seller at your residence, in substantially as good
condition as when received, any goods delivered to you under this contract or sale, or you may, if
you wish, comply with the instructions of the seller regarding the return shipment of the goods at
the seller’s expense and risk.
If you do make the goods available to the seller and the seller does not pick them up within 20
days of the date of your notice of cancellation, you may retain or dispose of the goods without any
further obligation. If you fail to make the goods available to the seller, or if you agree to
return the goods to the seller and fail to do so, then you remain liable for performance of all
obligations under the contract.”

To cancel this transaction, mail or deliver a signed and dated copy of this cancellation notice, or
any other written notice, or send a telegram
to ,
/name of seller/ at
/address of seller’s place of business/ not later than midnight of .
(Date)
I hereby cancel this transaction. (Date)
(Buyer’s signature)
(f) The five-day right to cancel added by the act that amended paragraph (6) of subdivision (e)
shall apply to contracts entered into on or after January 1, 2021.
(Amended by Stats. 2020, Ch. 312, Sec. 73.5. (SB 1474) Effective January 1, 2021.)