Weissman & Weissman

By: Robert A. Weissman

The requirements of a "home improvement contract" are found in Business & Professions Code § 7159. Although many general building contractors make their everyday living in the home improvement industry, surprisingly many are not familiar with the legal requirements for "home improvement contracts". A "home improvement contract" is a contract between an owner or a tenant and either a general or specialty contractor for the remodeling, alteration, repair or improvement of residential property in excess of $500.00.

Sound simple? Yes? Guess again. Every home improvement contract must:

1. Be in writing;
2. Be signed by all the parties;
3. Include the name address and license number of the contractor;
4. Include the name and registration number of any involved salesperson;
5. State the approximate date when work will begin;
6. State the approximate date when work will be completed;
7. Include a plan and scale drawing showing construction specifications;
8. Contain a description of the work to be done;
9. Contain a description of the materials to be used;
10. State the agreed price for the work;
11. Limit the downpayment to the lesser of $1,000.00 or 10% of the contract;
12. Include a schedule of payments (the contractor may never receive in excess of 100% of the value of work performed);
13. The schedule of payments must be stated in dollars and must specifically reference the amount of work to be performed and materials to be provided;
14. Include a statement requiring the contractor to furnish a full and unconditional release from any mechanics' lien;
15. Contain a notice in at least 10 point type stating that the owner or tenant has the right to require a performance and payment bond;
16. All extra work or change orders must be in writing, clearly set forth the scope of work and price (or be unenforceable);
17. Contain a "Notice to Owner";
18. State what constitutes "substantial commencement " of work;
19. Any other matters agreed to by the parties;
20. Comply with the Home Solicitation Law, if applicable;

In addition, the contract must:
21. Be legible;
22. Clearly describe any incorporated document; and
23. A copy signed by the contractor must be furnished to the owner before any work is done.

Until the most recent 1997 changes to the statute, cases almost uniformly held that violations of the home improvement contract requirements subjected the offending contractor to discipline and the misdemeanor statutory penalties of fines and possible imprisonment. The contracts remained enforceable, even many unsigned or unwritten change orders. With the new revisions to the law, I'm not so sure this will still be the case. The statute now provides that change orders must be signed and are unenforceable unless they clearly set forth the scope of work to be encompassed and the price to be charged. Although the statute does not say change orders are unenforceable if they are not signed, I think it is possible a court may interpret the law this way.

ADVICE: Either use a contract which complies with the home improvement contract requirements or hit the beach (since you may be working for free anyway you might as well enjoy yourself ).