One of the most litigated industries involves construction, with disputes centered on timely and proper performance, change orders, delays, payment and grounds for withholding payment, liability for defects, and other contractors and subcontractors disputes. Within the construction industry, the area that may have the most disputes associated with it involves Home Improvement Contracts.
We have represented homeowners, builders and contractors on both sides of construction disputes in Walnut Creek, Danville, San Ramon, and the greater Contra Costa, Solano and Alameda County areas. Regarding home improvement contracts, a properly prepared Home Improvement Contract could have helped the parties avoid the dispute in the first place. We will post a series of blogs addressing Home Improvement Contracts, their importance and requirements.
Contractors are regulated by the California Business & Professions Code, but many contractors and homeowners do not know that in response to unsavory contractors taking advantage of homeowners, the California legislature enacted laws to protect homeowners. These laws impose very strict requirements on home improvement contractors regarding what the Home Improvement Contract must contain. While some contractors may think the language is simply advisory, they would be shocked to know that failure to include specific language in your contract or to adhere to other requirements could have severe penalties, including:
(i) a misdemeanor conviction and fine of between $100 and $5,000;
(ii) imprisonment of up to one year, or both.
Those penalties are in addition to any administrative action the Contractors State License Board (“CSLB”) may take against the contractor.
A “Home Improvement Contract” is an oral or written agreement between a contractor and owner or tenant for work to be performed upon the residence or dwelling unit for the performance of a “home improvement,” if the aggregate price for all labor, services and materials is greater than $500.00. Cal. Bus & Prof Code § 7159(b).
“Home improvement” means the repairing, remodeling, altering, converting, or modernizing of, or adding to, residential property and shall include, but not be limited to, the construction, erection, replacement, or improvement of driveways, swimming pools, including spas and hot tubs, terraces, patios, awnings, storm windows, landscaping, fences, porches, garages, fallout shelters, basements, and other improvements of the structures or land which is adjacent to a dwelling house. “Home improvement” also means the installation of home improvement goods or the furnishing of home improvement services. Cal. Bus & Prof Code § 7151.
If you are a contractor that installs windows, garage doors, gutter systems, carpeting, flooring, counter tops, cabinets, fencing, roofing, or any other myriad form of home improvement services, then you are likely a home improvement contractor and you probably need to comply with the imposed requirements.
The next Parts of this series will address the specific requirements of a Home Improvement Contract. However, If your contract is the typical 1-2 page, short form agreement, if you charge more than $1,000 or 10% of the contract price (whichever is less) as a down payment, or if you collect progress payments for work that has not been performed, then you likely do not meet the requirements and should seek an attorney to review your agreement and provide a professional opinion on how you can best comply with the law.