What Does California Law Require in a Home Improvement Contract?
When does California require a written home improvement contract?
Whenever the total price of a home improvement job, labor and materials combined, is over $500. The rules live in Business and Professions Code Section 7159 and are enforced by the Contractors State License Board (CSLB). They cover the kitchen in your Sunnyvale Eichler, the bathroom in your Daly City row house, and most projects in between.
A separate threshold applies to licensing. CSLB says a license is required for home improvement work of $1,000 or more in labor and materials, and for any project that needs a permit. Before signing anything, check the contractor's license on the CSLB website.
What must the contract include?
Section 7159 lists specific contents. Among them:
- The contractor's name, business address and license number, and a salesperson's name and registration number if one was involved.
- The heading "Home Improvement" and the contract price, with any finance charge stated separately.
- A description of the work and the significant materials and equipment.
- The down payment, if any, and a "Schedule of Progress Payments."
- An approximate start date, an approximate completion date, and what counts as substantial commencement of work.
- A "Note About Extra Work and Change Orders."
- Notices about commercial general liability insurance, workers' compensation, the Mechanics Lien Warning, CSLB, and your right to require a performance and payment bond.
- Recent amendments may add items; for example, the version of Section 7159 we reviewed also asks whether a subcontractor will be used. Check the current statute or CSLB guidance.
Before work starts, you must get a copy of the contract signed and dated by both of you. CSLB also suggests spelling out brand, model, color and size where it matters, plus cleanup and debris removal.
How much can a contractor ask for up front?
Not much, by design. The down payment may not exceed $1,000 or 10 percent of the contract price, whichever is less, and the contract has to say so in bold type.
| Contract price | 10 percent | Maximum down payment |
|---|---|---|
| $6,000 | $600 | $600 |
| $10,000 | $1,000 | $1,000 |
| $45,000 | $4,500 | $1,000 |
| $120,000 | $12,000 | $1,000 |
The exception is a contractor with a blanket performance and payment bond on file with CSLB. CSLB says these are rare, and you can see bond status in the license lookup.
How do progress payments work?
After the down payment, payments follow the work. Each progress payment must be stated in dollars and cents and tied to the specific work or materials it covers. The law puts it plainly: it is against the law for a contractor to collect payment for work not yet completed or for materials not yet delivered. CSLB's advice is to keep payments from getting ahead of the work, avoid paying in cash and keep a job file of the contract, payments and photos.
How does the right to cancel work?
You can cancel within 3 business days after receiving a signed, dated copy of the contract with the cancellation notice. If you are 65 or older, it's 5 business days. Cancel in writing. CSLB says the contractor must refund payments within 10 days, and suggests not letting work start or permits get pulled during the cancellation window. For repairs of property damaged in a declared emergency, CSLB describes a 7-day right to cancel.
That pause also helps the schedule more than it hurts. See our kitchen remodel timeline guide for how it fits in.
What is the Mechanics Lien Warning?
Every contract must carry it. It explains that subcontractors, suppliers and workers who aren't paid can record a mechanics lien on your property, even if you paid your contractor in full. Subcontractors and suppliers generally send a 20-day Preliminary Notice to tell you they're on the job. CSLB suggests asking for a list of subs and suppliers, getting lien releases as each portion is paid, and considering joint checks.
What about changes during the job?
Changes happen, especially when an older Willow Glen wall turns out to be hiding something. Under Section 7159, a change order becomes part of the contract once it is written and signed by both parties before the new work starts. It should describe the work, the price change and any effect on the payment schedule or completion date. A handshake by the coffee maker doesn't count, however friendly the conversation.
Working with ProRock in the Bay Area
ProRock Remodeling is a licensed general contractor (California CSLB #1154078) with more than 20 years in business, $1M general liability insurance and a 2-year workmanship warranty. We focus on kitchen and bathroom remodels for homeowners from San Jose to South San Francisco, and you can see examples in our project gallery. Call (408) 991-4744 or request a free estimate.
Frequently asked questions
What is the maximum down payment for a home improvement contract in California?
The down payment may not exceed $1,000 or 10 percent of the contract price, whichever is less. The exception is a contractor with a blanket performance and payment bond on file with CSLB.
How long do I have to cancel a home improvement contract in California?
Three business days after you receive a signed, dated copy of the contract with the cancellation notice, or five business days if you are 65 or older. Cancel in writing.
Can a contractor charge for materials before they're delivered?
No. Section 7159 states it is against the law for a contractor to collect payment for work not yet completed or materials not yet delivered, apart from the allowed down payment.
Does a small job need a written contract?
California requires a written home improvement contract when labor and materials total more than $500. A contractor's license is required for jobs of $1,000 or more, or any job that needs a permit.
Can a subcontractor put a lien on my house if I paid my contractor?
Yes. Unpaid subcontractors, suppliers and workers can record a mechanics lien even if you paid the contractor in full. Lien releases and joint checks help protect you.
Planning a remodel in the Bay Area?
ProRock Remodeling is a licensed general contractor (CSLB #1154078) working from San Jose to South San Francisco, with $1M liability coverage and a 2-year workmanship warranty. Call (408) 991-4744 or request a free estimate.