Things to know Before Entering a Home Improvement Contract
Spring is coming and many homeowners are considering those long-delayed home improvement projects. For uninitiated homeowners, not all contractors are the same and price should not be the only criteria. In California, there are several laws that protect homeowners from unscrupulous contractors.
Contractors are governed by California Business and Professions Code starting with Section 7000. A contractor who performs any “home improvement” work over $500 must provide a written contract to be signed by all parties and the contractor must be licensed by the California Contractor’s Licensing Board. The homeowner can check the status of any potential contractor on the Board’s website- https://www2.cslb.ca.gov. The site will let you know whether the license is active and if the contractor has been subject to disciplinary action, and other information. Some items to also consider are as follows:
- A contractor may not demand all the money up front. Initially a contractor may only request 10% of total contract price or $1,000, which ever is less. Business and Professions Code Section 7159.
- The home improvement contract must identify a specific start date and estimated completion date.
- The contract should specifically identify the scope of work
- Any changes to the work or modifications should be made via a change order, in writing, and signed by all parties.
- The contractor should carry both workers’ compensation insurance (if employing workers on the project) and a comprehensive general liability insurance policy of at least $1,000,000 in coverage. Depending on the size of the project, the contractor may be required to obtain additional liability policies.
If you do not pay your contractor for work completed, the contractor can place a mechanics lien on the property for which work was completed. A contractor can use this statutory device to compel payment. Homeowners should make sure that you timely pay the contractor.
Mark Shem is a Partner in our San Jose office and practices in business litigation, construction law and real estate law.
Legal Disclaimer: This article is designed for general information only. The information presented should not be construed to be formal legal advice, nor the formation of a lawyer/client relationship.