Home Improvement Contract Requirements

June 28, 2013 / by / In

In California, contract law is very strict when it comes to home improvement. I decided to write this blog post for anyone who is considering going through the process of hiring a contractor or licensed trade professional to improve their home. In my opinion, any contractor or trade professional who does not follow the laws in California by providing you with all the mandatory forms should not be considered for your project.

There are 7 documents that the state of California requires contractors provide to homeowners. They are:

1. Home improvement contract The home improvement contract should include a clear scope of work in terms that you can understand. For most projects, blueprints, also known as construction documents should be part of the home improvement contract. Everything that is included or excluded should be clearly indicated. There also should be a payment schedule and time frame to complete the project. It should be noted that in California, down payments are not to exceed 10% of the contract price or $1,000, whichever is smaller.

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2. Notice of cancellation The notice of cancellation gives you 3 business days to change your mind for any reason. This gives you a discrete way to cancel in case a home improvement sales person has pressured you to sign.

3. Notice to owner Notice to owner is important advice on how to project against liens being filed on your property. There are a few ways to protect yourself against liens. The most popular is to require lien releases with each progress payment you make.

4. Information about commercial liability insurance This form explains the types of liability insurance coverage available. In California, contractors are not required to carry liability insurance. As a homeowner, the risk is too great not to have insurance coverage in case there is negligence on the part of the contractor.

5. Check out your contractor The Check out your contractor form gives you information how to check out contractors including phone numbers and email to the Contractors State License Board as well as an itemized list of what you should require of your contractor.

6. License law This form simply explains that any project over $500 requires a licensed contractor.


7. Renovate Right It is a federal law that homes built prior to 1978 must be tested for lead. This form explains the hazards of lead, along with testing and removal requirements.

Before you sign a contract, make sure you have a full understanding of the home improve contract and make sure proof of liability insurance naming you as additional insured and worker’s compensation is provided. You should also utilize the contractor’s state license board website, www.cslb.ca.gov and the Better Business Bureau www.bbb.org for research. When in doubt, consult an attorney for advice.
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