Trouble Ahead for Licensed Home Improvement Contractors - Review Your Home Improvement Contracts

A contractor walks into my office and has the dreaded citation from the Contractor State License Board or California Department of Justice stating that they are in violation of various Business and Profession code sections, and that they are subject to discipline because their Home Improvement Contracts are either non-existent or fail to conform to the required standards of Business and Professions Code section 7159. The Department of Justice then sets a hearing against the Contractor for various violations -- all because the Contractor is using an inadequate contract, or the Contractor did work on a handshake or through an oral agreement.

Fortunately, at Barron & Associates, we can quickly and thoroughly review your Home Improvement Contract to ensure that it complies with California law so that you can avoid any confusion with your clients, as well as avoid potential problems with the Contractor State License Board.

At a minimum, the Home Improvement Contract needs the necessary and statutory requirements such as:

• Description of the work, and materials and equipment.

• Contract Price, and work schedule.

• Start and Completion Dates.

• Before any work is started, give the buyer a copy of the contract signed and dated by both the contractor and the buyer.

• Provide the buyer with a notice of right to cancel.

• The buyer's receipt of the copy of the contract initiates the buyer's rights to cancel the contract.

• Provide the updated Notice of Mechanic's Lien Language.

• Provide the updated Change Order Language

• Provide the appropriate Notice regarding Performance and Payment Bonds

• Provide the required language regarding Down Payments

• Provide the necessary notices regarding General Liability and Worker's Compensation

• Provide the required information about the Contractor State License Board.

However, not only should the Home Improvement Contract provide the above statutory requirements, but each contract should include customized terms and specifications for the Contractor's business. One size fits all Contracts do not work for every contractor given the different types of work that contractors perform.

These are just some examples of the issues that should be considered when drafting a home improvement contract. By making the effort to have a clear understanding of how the project is going to work, both contractors and homeowners can prevent disputes. The contract can also provide a guide for how to handle disputes if they occur.

When one considers the amount of money and effort that goes into a home renovation, the incremental cost of having an attorney review the contract is well worth it. In addition, that lawyer can serve as a resource if problems occur during the project.