Construction contracts can range from the exceptionally simple, to the exceedingly complex. Generally, the rule of “freedom of contract” allows for parties to contact how they wish — a freedom that usually extends to the construction business.
However, there are some situations in certain industries where certain aspects of a contract are mandated by state rules. For the California construction industry, Home Improvement contracts fall into this category.
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Why Do California Home Improvement Contracts Require Specific Language?
When there are strong public policy concerns surrounding the subject matter of certain agreements, the law will often require specific language to be used in construction contracts. This is exactly the case with California Home Improvement Contracts.
In California, homeowners enjoy some broad protections with respect to construction work to their residence. These protections extend to the contract document used for the work itself. Contractors in California must pay careful attention to the requirements for home improvement construction contract. Failure to meet these requirements can result in the contract being rendered invalid, which can have serious implications if a dispute arises.
What Must Be Included in a California Home Improvement Contract?
While there are best practices for what should be contained in all good and sufficient contracts for construction work, there are specific form, text, and payment requirements that must be used in California Home Improvement Contracts as mandated by California law.
A Home Improvement Contract in California must be:
- In writing and must be signed by all parties to the contract.
- Legible and all printed forms must also be legible.
- Delivered to the property owner prior to the commencement of work. The contract must also include the following sentence in at least 12-point bold type:
“You are entitled to a completely filled in copy of this agreement, signed by both you and the contractor, before any work may be started.”
- Written at least 10-point font, and headings must be in at least 10-point bold.
- The only payment that a contractor may require or accept prior to the actual work subject to the payment being completed is a down payment.
- The down payment required by a Home Improvement Contract cannot be more than $1,000 or 10% of the contract amount, whichever is less, and the contract must include the following sentence in at least 12-point bold, CAPITAL type:
“THE DOWN PAYMENT MAY NOT EXCEED $1,000 OR 10 PERCENT OF THE CONTRACT PRICE, WHICHEVER IS LESS.
- If the project includes or is specifically for a swimming pool, a plan and scale drawing showing the shape, size, dimensions, construction and equipment specifications must be included with the contract.
- To the extent the contract calls for progress payments, the section describing the progress payment schedule must include the following statement in at least 12-point bold type:
“The schedule of progress payments must specifically describe each phase of work, including the type and amount of work or services scheduled to be supplied in each phase, along with the amount of each proposed progress payment. IT IS AGAINST THE LAW FOR A CONTRACTOR TO COLLECT PAYMENT FOR WORK NOT YET COMPLETED, OR FOR MATERIALS NOT YET DELIVERED. HOWEVER, A CONTRACTOR MAY REQUIRE A DOWN PAYMENT.”
- The Home Improvement Contract must include several Consumer Notices. These notices are mandatory, and they’re very lengthy. They include notice about:
- Extra Work and Change orders
- Commercial General Liability Insurance
- Workers’ Compensation Insurance
- Mechanics’ Lien Warning
- Contractor’s Board notice
- Cancellation Notice
Home Improvement Contract Template Available for Download
- Download a California Home Improvement Contract template. Our free template meets all of California’s strict requirements.
Bottom Line on California Home Improvement Contracts
All of these elements must be present on a California Home Improvement contract, and it’s very important to use the precise language that’s required. Any contractor in California who performs work for a residential property owner should take careful consideration of these requirements. Without a legally sufficient contract template, contractors might not be protected in the unfortunate event that there’s a dispute.