California’s Often Ignored Rules for Home Improvement Contracts
What California Law Requires in a Home Improvement Contract
Home improvement contracts in California are strictly regulated under Business and Professions Code sections 7159 and 7159.5. These rules protect homeowners by requiring clear, written contracts that spell out the work, price, payment schedule, and key consumer rights.
The Main Requirements
Fixed Contract Price – The total price must be stated in writing. Time and material contracts are not allowed.
Down Payment – The down payment can’t exceed $1,000 or 10%, whichever is less.
Progress Schedule Required – The contract must include a clear payment schedule that shows when each payment is due and what work will be done before that payment is made. In other words, the homeowner should never pay ahead.
No Billing Before Work Completed – A contractor cannot collect payment for work not yet completed — except for the initial down payment, which is limited to the lesser of 10% of the contract price or $1,000. Each payment must match the value of the work actually completed or materials delivered.
Written Change Orders – Any change in price or work must be in writing and signed by both parties.
Start and Completion Dates – The contract must list approximate start and finish dates.
Right to Cancel Notice – Homeowners get three business days to cancel.
CSLB and Insurance Information – The contractor’s license number, workers’ comp status, and CSLB contact info must be disclosed.
CSLB Consequences
The Contractors State License Board (CSLB) may impose serious penalties for violating section 7159, including license suspension or revocation and civil fines.
Red Flags and Practical Experience
In my experience, contractors who ignore the home improvement contract requirements often ignore other laws too — hiring unlicensed subcontractors, not obtaining workers’ comp coverage, or performing poor-quality work. A bad contract – or no contract at all – is often a warning sign of bigger problems.
Bottom Line
A compliant home improvement contract protects both sides, but especially the homeowner. If your contractor does not have a compliant home improvement contract, they could face CSLB discipline, and it may be a red flag for potential other laws and details the contractor may later ignore.