Photo of contractor working in house with overlay of California Law clipboard graphic

As a new year begins, it’s time to take note of any new legislation that may affect your business. In California, 2021 brings some additional home improvement regulations and liabilities, along with a new California contractor license classification.

Here is a quick breakdown of these new 2021 law changes that California residential contractors should be aware of.

New B-2 Residential Remodeling Contractor license

One of the most significant changes is that the California Contractors State Licensing Board (CSLB) has added a new classification of contractor licensing, referred to as a “B-2 Residential Remodeling Contractor license.” 

Learn more: The Guide to California Licensing for Contractors

This classification, effective January 1, 2021, is now defined under Cal. Bus. & Prof. Code §7057.5, which defines a residential remodeling contractor as a contractor whose principal contracting business comes from involvement in projects which make improvements to, on, or in an existing residential wood-frame structure, and the project requires the use of at least three unrelated building trades or crafts for a single contract.

One effect of this new classification is lowering the barriers for contractors looking to get licensed, but don’t have the requisite experience in framing and roof structure work — bringing such contractors under the watchful eye and scrutiny of the CSLB.

Here’s a brief summary of the work authorized under a B-2 Residential Remodeling Contractor License.

What a residential remodeling contractor can do

Note that the definition states that there must be at least “three, unrelated building trades or crafts.” So, if less than three trades are required to complete the contract, then they may not accept such a project.

But these “three trades” aren’t unlimited. The statute provides some examples of trades that are covered under this license, such as:

  • Drywall
  • Finish carpentry
  • Flooring
  • Insulation
  • Painting
  • Plastering
  • Roof repair
  • Siding
  • Tiling
  • Installing, repairing, or replacing electrical fixtures (dimmers, fans, lights, outlets, switches, etc.)
  • Installing, repairing, or replacing plumbing fixtures (faucets, sinks, toilets, tubs, etc.)
  • Installing, repairing, or replacing mechanical fixtures (air delivery, return grills, preassembled exhaust fans, etc.)

These trades can either be performed by the B-2 contractor themselves, or subcontracted to someone with the appropriate license.

What a residential remodeling contractor can’t do

The list of acceptable trades above isn’t exhaustive. However, the are specific trades/crafts that may not be included unless the contractor also has a license for that specific trade or subcontracts the work to someone who is licensed. These include C-16 Fire Protection, C-22 Asbestos Abatement, and C-57 Well Drilling.

In addition to those trades, they also may not make any “structural changes” to load-bearing portions of the property, such as footings, foundations, load-bearing walls, partitions, roof structures, etc.

Lastly, you may have gleaned from the list of trades that can be included that there are some limitations to work performed on electrical, plumbing, or mechanical systems.

Minor alterations are allowed, however, any work that requires the installation, replacement, or substantial alteration or extension of the system or its component parts is not covered — unless, of course, the contractor also holds the appropriate license or subcontracts the work to someone who does.

These limitations will be further defined by the CSLB moving forward.

Expansion of the definition of “home improvements”

Another substantial change California residential contractors need to be aware of is the expansion of the definition of “home improvements” under Cal. Bus. & Prof. Code §7151.

So why does this matter? Well let’s take a look at the new definition.

“… the repairing, remodeling, altering, converting, or modernizing of, or adding to, residential property, as well as the reconstruction, restoration, or rebuilding of a residential property that is damaged or destroyed by a natural disaster for which a state of emergency is proclaimed by the Governor… to for which an emergency or major disaster is declared by the President of the United States…”

What’s new here is the “reconstruction, restoration, or rebuilding after natural disaster or state of emergency” portion.

Prior to this legislation, the consumer protections for residential construction projects did not include rebuilds or other construction related activities on homes destroyed due to wildfires. These include protections such as the right to cancel the contract, down payment limitations,  requirement of completion before full payment, and more. 

That gap has now been closed — which also opens up criminal liability to contractors involved in home rebuild projects.

Senior citizen 5-day right to cancel home improvement contracts

There’s one more change that affect residential contractors in California. Although minor in comparison to these other changes, it’s nonetheless an important one that must be included in a California home improvement contract.

Generally, under Cal. Bus. & Prof. Code §7159, home improvement contracts have been required to provide the homeowner with a “Three-Day Right to Cancel” provision. This allows the owner to cancel the contract within 3 business days of execution. That requirement still stands, but now there’s an additional wrinkle.

Under the new law, there’s an additional provision that needs to be included. If the home improvement contract is with an owner who is a “senior citizen” (meaning 65 years or older) the contract must include a “5-Day Right to Cancel.”

This new senior citizen right to cancel applies to all home solicitation contracts, home improvement contracts, PACE assessment contracts, service and repair contracts, and seminar sales contracts.

California residential contractors should review their own contracts to ensure that this provision is included. To review the other requirements, see California Home Improvement Contracts – Details & Requirements.

Special thanks to Christopher Ng of Gibbs Giden LLP for putting these new changes on our radar.