California Home Improvement Contracts (Section 7159)

California Bus. & Prof. Code section 7159 contains most (not all) of the requirements for a home improvement contract ("HIC") for CSLB-licensed contractors.

It's long, difficult to read, and detailed. Depending on how you count, there are over 90 separate requirements for a typical HIC in section 7159 alone. That number increases for swimming pool contractors, for contracts with senior citizen homeowners, and for other various situations.

Without going into detail (which would take pages and pages to do effectively), I'm going to highlight some of the sections that are typically (or easily) missed.

1. Discipline – Failure to provide the specified information, notices, and disclosures in the contract (note: actually in the contract), or to fail to comply with any provision of section 7159, is cause for discipline. Cal. Bus. & Prof. Code section 7159(a)(5).

2. Formatting – The HIC must be readable, must be in at least size 10 font, and headings need to be bold. Section 7159(a)(c).

3. More Formatting – The law requires at least size 12 font for several of the notices. See Section 7159(d)(4), (d)(8)(C), (d)(9)(C), (e)(5), (e)(6)(C)(i), (e)(6)(C)(v), (e)(7)(B)(i), (e)(7)(B)(v).

4. Copy to Homeowner – Before any work begins, the contractor must give the homeowner a copy. Section 7159(c)(3)(A).

5. Unconditional Releases – The HIC must include a statement that, upon satisfactory payment, the contractor shall provide a full and unconditional release from any lien claims. Section 7159(c)(4).

6. Notice of Performance Bond – The HIC shall contain, in close proximity to the signatures, a notice stating that the homeowner has the right to require a performance and payment bond. Section 7159(c)(6).

7. Changes in Signed Writing – The HIC and all change orders have to be in writing and signed by the contractor and homeowner. Section 7159(d).

8. "Home Improvement" – The HIC must identify itself in a heading on the first page as being for "Home Improvement" (usually with a title "Home Improvement Contract"). Section 7159(d)(3).

9. Downpayments – If the contractor charges a downpayment, the downpayment must have its own heading, space for the amount of the downpayment, and a reminder that it can only be 10% of the contract price or $1,000, whichever is less. Section 7159(d)(8).

10. Start and End Dates – The HIC must have an approximate start date and approximate end date. Section 7159(d)(10), (11). Note that the language says "start date" and "end date," not an estimate of weeks or months.

11. Verbatim Notices – The HIC must include a notice about commercial general liability insurance, a notice about workers' compensation insurance, a notice about extras and change orders, a notice about liens, a notice about the CSLB with its contact information, and various rights to cancel. Section 7159(e)(1) through (e)(7), (f).

As I mentioned, these are highlights. This list is not exhaustive for section 7159, much less in general (it covers about 15 of the approximately 94 requirements). See Section 7159(c)(8).

Section 7159 is not a gripping read, but it is critical that contractors be familiar with it. You will need to read section 7159 in its entirety, create a checklist, and make sure your HIC adheres to those requirements. If not, then it's time to update your HIC template.