Home>Levelset Community>Legal Help>I am doing a bathroom remodel in California. I hired a licensed, bonded GC who carries worker compensation. The home improvement contract is for labor only, I am buying the materials. The contract contains a separate signed draw schedule for payments. This draw schedule has due dates but no or extremely limited description of work that is to be completed before payment on the draw. The GC is aggressive in asking for payment with out stating what work will be completed. I thought is is against the law in California for a contractor to collect payment for work not yet completed. Do I have to make payments on the separate signed draw schedule if there is no description of the work that is to be completed? The contractor said a description of work to be completed is not needed because payments are according to the separate signed draw schedule. Do I need to make the payments only according to the dates of the draws?
I am doing a bathroom remodel in California. I hired a licensed, bonded GC who carries worker compensation. The home improvement contract is for labor only, I am buying the materials. The contract contains a separate signed draw schedule for payments. This draw schedule has due dates but no or extremely limited description of work that is to be completed before payment on the draw. The GC is aggressive in asking for payment with out stating what work will be completed. I thought is is against the law in California for a contractor to collect payment for work not yet completed. Do I have to make payments on the separate signed draw schedule if there is no description of the work that is to be completed? The contractor said a description of work to be completed is not needed because payments are according to the separate signed draw schedule. Do I need to make the payments only according to the dates of the draws?
I do not want payments to get ahead of value of work completed
1 reply
Dec 26, 2018
That's absolutely understandable - no one wants to get out in front of their contractor. Further, when a contractor is insistent that they do not want to specify what work was performed giving rise to payment, that might be a red flag. Ultimately, the contractor is providing work at the service of the property owner - so the owner has every right to know what work is being done in exchange for the money provided. Regarding what's allowable, 7159.5 of the California Business and Professions Code controls how payments shall be made and accepted for a home improvement contract. Under 7159.5(3), a downpayment cannot exceed $1,000 or 10% of the contract - whichever amount is less. Further, generally, payment shouldn't be requested for work performed. As hinted at above, 7159.5(5) states , "Except for a downpayment, the contractor may neither request nor accept payment that exceeds the value of the work performed or material delivered." Thus, a contractor cannot require an owner to get ahead of the value of work completed. Without a proper description of the work already provided, it's impossible to know whether payments are going toward work provided or work to be provided. As for progress payments - 7159.5(4) "If, in addition to a downpayment, the contract provides for payments to be made prior to completion of the work, the contract shall include a schedule of payments in dollars and cents specifically referencing the amount of work or services to be performed and any materials and equipment to be supplied." Note that this section does not require very specific descriptions of work performed - rather, it calls for specific reference to "the amount of work or services to be performed". Finally, it's worth noting that when there have been no real disputes or issues on a project, where progress is coming along nicely, and where the contractor involved is licensed and bonded - it might not be worthwhile to rock the boat! The CSLB has protections in place to make sure property owners are protected from licensed contractors, and if there's no reason to suspect foul play, it might not be worth picking every little battle with a contractor. Granted, a project can spiral out of control fast, so it's important to balance that idea with proper oversight of the job. But, at the end of the day, how to manage a project is ultimately a business and relationship decision.