California Contractor Written Contract Requirement

The California contractor written contract requirement refers to the written agreement that must be in place for a contractor to legally work in the home improvement industry. This requirement applies to contractors working both full-time and part-time, as well as to contractors who are working on swimming pools.

What is a Home Improvement Contract?

The term “home improvement" refers to working on a residential property, including:

• Repairing
• Modernizing of
• Altering
• Converting
• Construction
• Erection
• Improvement
• Replacement

Home improvement includes any of these actions on swimming pools, hot tubs, spas, awnings, driveways, terraces, garages, basements, patios, fallout shelters, storm windows, porches, fences, landscaping, and other land or structure that is part of or adjacent to a home for dwelling.

A contract for home improvement tasks is an oral or written agreement between a property owner, or tenant and a contractor. When the agreement is written, it must be included in at least one document. If the work will be done on a multi-family dwelling, the agreement must include what units will be included in the work. Under California Section 7151, home improvement contracts are defined and include all materials, services, and labor that will be performed and furnished under the agreement.

A home improvement contract can also be a written or oral agreement between a property owner or tenant and a salesperson, even if that salesperson isn't licensed to perform home improvement tasks. This agreement can exist between property owners and/or tenants, regardless of how many units are contained in the structure. The agreement may include details about the terms of the furnishing, installation, or sale of home improvement services or goods.

The law around home improvement agreements in California exists to protect property owners from dishonest or untrustworthy contractors, but one of the results of the existence of this law is often more complex contracts that are hard to understand. If you plan to enter into a home improvement contractor, you may wish to consult with a lawyer who has experience with home improvement agreements. An attorney can research the history of the contractor you plan to work with the state licensing board, go through the details of the contract, and make sure you fully understand your rights and responsibilities of the agreement. It is important to consult with a lawyer before you make a commitment to any contractor by signing the agreement.

Required Contract Provisions for Construction Contracts in California

Under the California Business and Profession Code, section 7159, you'll find the statute that manages all home improvement contract requirements in the state.

All home improvement contracts for work being done in California should include several key statements:

• Upon making a satisfactory payment for any part of the work that is performed, the contractor must furnish an unconditional and full release from any possible claimant for a mechanics lien before receiving any additional payment.
• The project owner will not require a contractor to perform changed or extra work without prior written authorization before the work begins, also known as a change order.
• Entitlement to a complete copy of the agreement, signed by both involved parties, before any work begins.
• What constitutes the substantial commencement of the project, as agreed upon by both parties.

Make sure a contract also includes several required subheadings:

• Price of the contract, with details of the payment required for the work being done.
• Description of the project, including equipment to be installed and significant materials that will be used.
• Down payment requirement, which may not exceed 10 percent of the total contract price or $1,000 (whichever is less).
• Schedule of progress payments (if applicable), with the required amount of each payment during the progress of the work. If the agreement does include a progress payment requirement, make sure to include a statement that a contractor cannot charge for any work that hasn't been completed, with the exception of a down payment.
• Any required finance charges that will be applied to a late payment.
• Change orders and extra work, which should outline what will be required if the involved parties sign a change order before the scope of the work changes or additional work is required.
• Approximate start and completion dates.
• Any documents that will be incorporated in the agreement.

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