When you are getting ready to start a home renovation project for a client, the contract may seem like a detail you both want to get out of the way as fast as possible so that work can get underway. They are eager to see their vision for a renewed living space come to life, and you want to get started turning plans into reality. In California, this is not a step you can skip—any home improvement project over $500 requires a written contract. But it is not something you should rush through, either. A well-written contract helps to avoid misunderstandings, protects your legal rights, and ensures that you meet statutory requirements to avoid civil or criminal penalties.
In addition, a Home Improvement Contract in California has to abide by some very specific and detailed requirements that are set by statute. The specificity means certain provisions have to be in certain order, language for some parts has to be in certain fonts and bold and other requirements. Performing work based on a contract that does not meet these requirements can subject you to citations by the Contractors State License Board as well as put your license and ability to get paid in danger. Below we explain some of the basic requirements for these contracts:
What are the essential terms that should be part of your agreement? Keep in mind that your contract is a written blueprint of what a job will entail; the more thorough and detailed it is, the easier it is to ensure that you and your client share a mutual understanding of what is expected. Among items that must be included under California law are the following:
Description of work: The contract must have a description of the work and be based on plans and specifications. While the statutory requirement is general, ideally you should have a detailed description of what work is to be performed, how, and by whom, as well as what products will be used and what materials will be provided. Also the contract should state if certain materials are not included (for example, tile to be purchased by the homeowner to be used in the kitchen or bathroom).
Payment schedule: The contract must include a detailed, written payment schedule. Down payments legally cannot be more than $1,000 or 10 percent of the contract price, whichever is less, excluding finance charges. There needs to be a schedule of progress payments, meaning when will payments be due. Remember: total payments to a contractor cannot exceed the value of the work performed.
License information: The contract must identify you, your business address, and your contractor license number.
Permit and completion information: The contract must include written information on who will obtain necessary permits as well as provide a date of completion.
Right to cancel: In California, home improvement contracts must give notice of the right to cancel for a limited time after execution. If this notice is not included, the homeowner has the right to rescind the contract without paying compensation.
Change orders (if needed): If any changes need to be made to the contract price or scope of work, they must be done with a written change order signed by the contractor and the customer prior to the change being made. This change order then becomes part of the contract.
It is essential to note that time and materials contracts are not legal for home improvement projects in California. These types of agreements violate legal guidelines that mandate certain requirements, such as including start and stop dates and a firm payment schedule that references the completed work.
Having a proper contract that includes all legally mandated provisions protects you from costly errors and disputes that can arise from omitting required language. Your contract is also an opportunity to include items like arbitration clauses or limits on warranties, helping to reduce your exposure to litigation and risk. An experienced construction attorney can help create a contract specific to the individual needs of your business to meet legal requirements and protect you from avoidable claims.
If you do not have a California complaint Home Improvement contract, or if you have not reviewed your existing contract in some time, you may unknowingly be violating the law or leaving yourself open to expensive legal disputes. Ghassemian Law Group has decades of experience in construction law. We’ve seen everything that can go wrong, and we use that knowledge to craft agreements that protect your rights and prevent trouble from arising in the first place. To find out more about how our construction law experts can create the right contract for you, contact us here today.
This article is informational only and meant to provide guidance. It is not meant to be legal advice and it does not create an attorney-client relationship. For what to do in your specific situation, please consult with a qualified Construction Law attorney.
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