By: Kelly Cheung MacDonald
When considering remodeling or repairing your home, or if you are a contractor offering your goods and services, being informed of your rights is essential to protecting yourself from losing precious time and money if things go wrong.
Nationwide home improvement and repair spending increases annually and is forecasted to reach $580 billion in 2023.[1] Mirroring this is the growth of disputes that increased 19 percent in 2022 from the previous year in California.[2] To prevent a delay or halt to your project and substantial loss in your investment, these are a few things you should consider before starting a project:
LICENSED, BONDED, AND INSURED CONTRACTORS ONLY
Working with unlicensed contractors on a project, no matter the size, can have enormous consequences, especially if the project does not go as planned. The Contractors State License Board (“CSLB”) holds contractors accountable, and if a contractor is caught defying the rules, this leads to serious penalties or even prison time. This year, an unlicensed contractor was sentenced to seven years in state prison for multiple counts of felonies and misdemeanors involving unlicensed contracting and failing to have workers’ compensation insurance.[3] The $25,000 minimum bond provides some buffer from being personally liable as a contractor for a project that does not go as planned.[4] As a homeowner, you will want to ensure proper insurance coverage exists to manage the risk of claims filed against you for third-party injuries or property damages as a result of the project or employee-related injuries while on the project.
GET IT IN WRITING
The law requires specific details go into a written home improvement contract. [5] Everyone is best served by putting it in writing. A roadmap of the terms and payments makes it clear, and if there is a dispute, the writing creates a clearer path towards resolution when someone fails to follow through on their part.
THERE IS A MAXIMUM DOWN PAYMENT ALLOWED IN MOST CASES
Only about a dozen licensed contractors qualify for an exception to the 10% or $1,000 maximum down payment allowed for down payments to a contract.[6] Whenever working with a contractor, look them up on the CSLB website to verify license and bond status. Progress payments for work or materials already completed or provided must be written down in a payment schedule.
THREE OR FIVE-DAY RIGHT TO CANCEL
The purchaser of the contract can cancel within 3 days (or 5 if a senior citizen) by giving written notice to the contractor. Any materials delivered under the contract do need to be returned, or the purchaser could wind up being on the hook for the contract.
California laws and regulations exist to protect your rights involving a home construction project. Understand these requirements, but also seek out resources when in doubt. Despite the best intentions, this growing industry inevitably leads to disputes. Working with the CSLB or consulting with an experienced real estate attorney before, during, or after a project can prevent loss and frustration and help to find a resolution that works in everyone’s best interests. At Odom Law Group, we focus on assisting clients by building an active foundation of information, insight, and legal expertise to protect your hard-earned investments and rights.
[1] Joint Center for Housing Studies of Harvard University, Improving America’s Housing 2023.
[2] Accomplishments and Activities 2022, CSLB publication.
[3] Press Release, Repeat Unlicensed Contractor Sentenced to Seven Years in Prison, CSLB.
[4] CSLB Bond Requirements.
[5] California Business and Professions Code Section 7159.
[6] California Business and Professions Code Section 7159.5; CSLB’s 10 Tips Make Sure Your Contractor Measures Up.