The problem with taking these payments, from the licensing board’s point of view, is that it puts the homeowner at risk of not receiving value for the money given. Other contractors take the statutory $1,000 deposit, then charge a move-in fee of many thousands of dollars on the first day they arrive on the job. For example, it is a crime for a contractor to accept a deposit check from the homeowner to fund a window manufacturer’s requirement for a 50% down payment before fabrication begins. Many contractors stake illegal deposits, perhaps without even knowing it, in the form of payments up front for long-lead items, such as windows, doors and cabinets. Most contractors’ contracts do not comply with these rules, predominantly by failing to include required warnings, language, and formatting. If the homeowner voids the contract, the contractor is entitled to be paid the “reasonable value of the work,” which can be difficult for the contractor to prove. Importantly, the homeowner may void a noncompliant contract, in their sole discretion, thus tossing out a contract containing terms (including markup) that otherwise would be favorable to the contractor. The CSLB is authorized to and has started issuing citations, like traffic tickets, of up to $5000 for using a form of contract that fails to comply completely with the HIC laws. (§7159.6.)įailure to comply with these rules potentially subjects the contractor’s license to discipline and the contractor to criminal prosecution. So too, an HIC must also have a schedule of progress payments, and each progress payment “shall be stated in dollars and cents and specifically reference the amount of work or services to be performed and any materials or equipment to be supplied.” (§7159(d)(9)(B).)Ĭhange orders to HICs also must be on a fixed-price basis. (California Business and Professions Code section 7159(d)(5). Importantly, the contract price must be a fixed sum, stated in dollars and cents. These rules do not apply to subcontracts between the direct contractor and its subcontractors and suppliers. The rules delve into minutia such as requiring that certain headings and warnings be typed in 10 or 12-point boldface type certain warnings must be stated verbatim the signature must be on the first page notice of the consumer’s right to cancel must be located near the signature and notice of the consumer’s right to receive a signed copy of the contract must be stated. HICs between the owner (or tenant) and contractor for residential work of over $500 must comply with detailed laws specifying such things as contract price, contract start and end dates, description of the work, amount of deposit, required warnings, and disclosure of insurance information. The stakes are high, and contractors are advised to learn and comply with the HIC laws. Most contractors do not get it right, leaving themselves exposed to license discipline, misdemeanor criminal prosecution, and void contracts. At a minimum, it takes six pages of contract language for an HIC to comply with California law. They are also concerned about contractors who fail to comply with the Home Improvement Contract (“HIC”) laws. The Contractors State Licensing Board, (“CSLB”) is particularly concerned about contractors working without permits, contractors taking payment in excess of the value of the work complete–including deposits in excess of $1,000–and contractors refusing to complete projects. Home remodeling in California is governed by strict contracting laws intended to protect consumers.
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