Contracts & Home Improvement Rules

The contract rules are where the CSLB protects consumers, and they show up all over the exam. Most questions come down to a few hard limits a contractor cannot exceed and a list of disclosures every home improvement contract must contain.

Home improvement contracts must be in writing

A home improvement contract must be in writing, and the contractor must give the buyer a copy signed and dated by both parties before work starts. Any change order or “extra” must also be put in writing and signed by both parties before that work proceeds.

The down payment limit

This is one of the most common exam questions. On a home improvement contract the down payment may not exceed the lesser of $1,000 or 10 percent of the contract price. An excessive down payment is one of the most-cited problems with home improvement contracts. Beyond the down payment, the contractor may only demand payment as work is completed or materials delivered, following the payment schedule.

Required disclosures

Every home improvement contract must include, among other items:

• The contractor’s name, address, and license number
• A description of the work, materials, and equipment
• The payment schedule and start/completion dates
• The Mechanics Lien Warning (warns the owner that unpaid subs or suppliers may lien the home)
• The buyer’s right to cancel and the Notice of Cancellation
• Permits and tests, and any salesperson’s name and registration number

Recent changes

• AB 1327 added the contractor’s email address to required contact details and lets the buyer cancel by email.
• SB 517 requires disclosure of subcontractor details — name, contact information, license number, and classification — when the consumer requests them.

Any violation of the home improvement and service-and-repair contract laws subjects the contractor to discipline by the CSLB.