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§4.06 Home Improvement Contracts—Contract Requirements

Lesson 4:
Home Repair & Licensing
The contract must include:

  • Writing: The contract must be in writing and signed by the parties. [B&PC §7159(d) (as operative July 1, 2012).]
  • Buyer’s copy: A copy of the contract must be given to the buyer before any work is started. When the buyer receives a copy, his or her rights to cancel under the Home Solicitation Act [CC §§1689.5 et seq] are triggered. [B&PC §7159(c)(3)(A).]
  • Change orders: A change order form for changes or extra work must be incorporated into the contract and will become part of the contract if it is in writing and signed by the parties prior to commencement of the work covered by the change form. [B&PC §7159(c)(5).] Extra work or a change order is not enforceable against a buyer unless the change order sets forth: (1) the scope of the work encompassed by the order, (2) the amount to be added or subtracted from the contract, and (3) the effect that the order will make in the progress payments or the completion date. [B&PC §7159.6(a).] Similarly, the buyer may not require a contractor to perform extra or change-order work without providing written authorization. [B&PC §7159.6(b).] Failure to comply with these requirements, however, does not preclude the recovery of compensation for work performed based on legal or equitable remedies designed to prevent unjust enrichment. [B&PC §7159.6(c).]
  • Price: Agreed contract amount, including profit, labor, and materials. [B&PC §7159(d)(5).]
  • Down payment: If a down payment will be charged, the down payment may not exceed $1000 or 10 percent of the contract amount, whichever is less. [B&PC §7159(d)(8)(C).]
  • Schedule of payments: If the contract provides for payments to be made before completion of the work, the contract must include a schedule of payments specifically referencing the amount of work or services to be performed and any materials and equipment to be supplied. [B&PC §7159(d)(9)(A)–(B).]
  • Disclosures: Except as provided in §7159.5(a)(8), the contractor or salesperson must provide various notices and disclosures in the contract, including the name, license number, and business address of the contractor or salesperson. [B&PC §7159(d)(1)–(2).] In addition, the contract must include notices regarding commercial general liability insurance, workers’ compensation insurance, change-order work, a mechanics lien warning, the Contractors’ State License Board, and the three-day or seven-day right to cancel. [B&PC §7159(e).]
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