Home Remodel What You Need to Know

ORANGE COUNTY

Construction Law Attorneys

Home Remodel What You Need to Know

August 1, 2021 Ashley Baron

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.

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.

“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.

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.”

(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.”

(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.

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.

(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 ,

/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