Use this checklist before starting your next home renovation project to help safeguard yourself from potential future liability:
1. Ensure your contractor is licensed with the California State License Board (CSLB)
Any contractor who engages in the home improvement business or provides home improvement goods or services on and after July 1, 2000, must be certified as a home improvement contractor by the Contractors State License Board.
2. If you’re working with someone who solicits, sells, negotiates, or executes the construction contract on your project, make sure they are registered with the CSLB unless they fall under one of the exceptions listed in Business & Profession Code § 7152(c) or § 7068
A home improvement salesperson must register with the Contractors State License Board in order to engage in the business of, or act in the capacity of, a home improvement salesperson. Failure to have, at the time of the sales transaction, a current and valid home improvement salesperson registration is a misdemeanor and may subject both the salesperson and the contractor to penalty and disciplinary action.
3. Ensure your contract is in writing
4. Ensure your contract meets the following specific criteria:
Contractor’s name, business address, and license number.
If applicable, the name and registration number of any home improvement salesperson that solicited or negotiated the contract.
The heading “Home Improvement” in at least 10-point boldface type.
A 12-point boldface statement informing the buyer that he or she is entitled to a completely filled-in and signed copy of the contract before work may be started.
The heading “Contract Price” followed by the amount of the contract.
If applicable, the heading “Finance Charge” followed by the amount of the charge.
The heading “Description of the Project and Description of the Significant Materials to be Used and Equipment to be Installed” followed by that information, including if relevant, a plan and scale drawing of any swimming pool to be installed including the construction and equipment specifications.
If a down payment will be charged, it may not exceed the lesser of $1,000 or 10 percent of the contract price and its details must be set forth in a statutory format.
If any progress payments are to be made, the contract must include (a) a schedule of those payments with specific reference to the amount of each payment and the amount of work or services to be performed and any materials and equipment to be supplied in connection with each payment, and (b) a statutorily prescribed statement informing the buyer about the nature of the schedule with a notice that, while a contractor may require a down payment, it is unlawful for the contractor to collect payment for work not completed or materials not yet delivered.
The heading “Approximate Start Date” followed by a statement describing what constitutes substantial commencement of work and an approximate date for that commencement.
The heading “Approximate Completion Date” followed by that date.
If applicable, the heading “List of Documents to be Incorporated into the Contract” followed by that list.
The heading “Note about Extra Work and Change Orders” followed by a statutorily-prescribed statement informing the buyer of the nature and effect of change orders.
5. Ensure your contract meets all the following general criteria:
The entirety of the contract must be legible, or if printed, readable in at least 10-point typeface with 10-point boldface headings.
Before work is commenced, the contractor must give the buyer a copy of the contract signed and dated by both parties.
First page must include the date the buyer signed the contract along with the contractor’s name and address to which a Notice of Cancellation must be mailed.
A statement that, on satisfactory pay
ment being made for any portion of the work performed, the contractor must, before any further payment is made, furnish to the person contracting for the home improvement a full and unconditional release from any potential lien claimant or authorized mechanics lien for that portion of the work for which payment has been made
A change-order form for changes or extra work must be incorporated into and become part of the contract only if it is in writing and signed by the parties before any work covered by the change order has begun.
In close proximity to the parties’ signatures there must be a notice stating that the owner or tenant has the right to require the contractor to have a performance and payment bond
6. Ensure all necessary notices have been given.
Notices concerning the following subject matter must be either included as part of the contract form, or, if otherwise specified, provided as an attachment to the form:
Commercial general liability insurance.
Workers’ compensation insurance.
Information concerning the performance of extra or change-order work.
A mechanics lien warning the wording of which is prescribed by statute.
A contractor who furnishes a payment and performance bond, lien and completion bond, or a bond equivalent or joint control approved by the registrar covering full performance and payment need not include the mechanics lien warning
Information about the role of the Contractors State License Board, including how to contact the Board.
If applicable, a notice informing the buyer that he or she has three days, or five days if the buyer is senior citizen, within which to cancel the contract the effect of which would be to place the parties in their pre-contract positions. The three-day or five-day notice is required unless
(1) the contract is negotiated in the contractor’s place of business,
(2) the contract is to repair or restore residential premises damaged by a sudden or catastrophic event, or
(3) the contractor is subject to licensure under the Alarm Company Act.
If the contract involves repairing or restoring a residence damaged or destroyed by a sudden or catastrophic event for which a state of emergency has been declared, a notice informing the buyer that he or she has seven days within which to cancel the contract the effect of which would be to place the parties in their pre-contract positions.
If you're about to start a home renovation project and want our help reviewing the contract, call us toll-free at +1 (800) 233 - 8521. There are many ways to safeguard your potential liability up front so that you are not paying more on the back end.