California Contractor Guide: Home Improvement Contract Requirements (§ 7159)

Jan 12

For contractors such as roofers and plumbers in California, a well-crafted home improvement contract is essential. Under California Business and Professions Code § 7159, any agreement for home improvement services exceeding $500 in labor and materials must comply with specific legal requirements. The quality of your contract can make the difference between having a powerful legal safeguard that ensures payment and compliance or a serious liability when a homeowner complains.

Who Needs to Comply with Business and Professions Code § 7159:

Pursuant to Business and Professions Code § 7159(b) any “oral or written [agreement] between a contractor and an owner or between a contractor and a tenant [where] work is to be performed … and includes all labor, services, and materials to be furnished and performed thereunder, if the aggregate contract price specified in one or more improvement contracts, including all labor, services, and materials to be furnished by the contractor, exceeds five hundred dollars ($500).”

For licensed contractors, the consequences of doing business with an agreement that fails to comply with the requirements can be severe. The contractor may be penalized by fines from the Contractors State License Board, and may have their license suspended or revoked. An improper Home Improvement Contract may also jeopardize a contractor’s right to receive full compensation for the work performed. To help contractors avoid the risks of non-compliance, this guide points out key legal requirements that contractors will want to include in home improvement service contracts.

Foundational Requirements of Each Home Improvement Agreement

Generally, the agreement and all subsequent changes must be documented in writing to include the contractor's name, business address, and the contractor’s license. If a salesperson is involved in negotiating the contract, include the name and registration number of the salesperson. To satisfy the statute, use headings like “Home Improvement” in at least 10-point boldface type and any language in the contract should be at least 10-point typeface.

Some of the provisions that your Home Improvement Contract must include are:

Project Description: Provide a detailed description of the work, including specific measurements, brand and model of materials, and any applicable plans or specifications.
Start and Completion Dates: Specify the approximate start date and completion date of the project.
Documents Incorporated: Explicitly list any documents (e.g., plans, specifications) that are incorporated into the contract.
Contract Price: Clearly state the total contract price under the heading “Contract Price.” If applicable, list the “Finance Charge” separately from the contract amount.