California proposal form includes new California laws/clauses mandating new notices, statements and new type size specifications on all types of home improvement contracts; back page includes "Notice of Cancellation for Non-Disaster" (3 Day Notice).

Did You Know? The Basic Requirements:

State statutes impose mandatory language in home improvement contracts, among other requirements, and if the contractor fails to comply with these statutes, the homeowner has an arsenal of remedies to right the wrong. This attorney opines that around one-third of home improvement contracts do not contain the required language, but perhaps ten percent of the homeowners under such contracts know their rights or do anything to assert them.

The fact of the matter is that many homeowners do not even realize that these statutes exist. Before you begin a construction project, or if one is going wrong, you should learn your rights.

First of all, make sure your contractor has a valid license. You can run a simple search on the California state website at www.cslb.ca.gov. If your contractor performs services and does not have a license, you have a several potential remedies, including the return of all monies paid to such contractor, and penalty damages. The contractor has no right to file a mechanics lien or stop notice. Depending on whether the contractor willfully and intentionally misled you as to the status of his or her license, you may have a cause of action for fraud and punitive damages.

If the contractor violates the obligations imposed by statute, the contractor may be disciplined by the State of California and may lose his or her license should you report them.

If the contractor is not licensed, the contractor also has no right to sue, in addition to the requirement to return all payments [B&P § 7031(a) & (b)].

California law also requires that certain language to be in all home improvement contracts. These obligations and requirements are codified at California Business and Professions Code Section 7159 et seq., and California Civil Code Section 1689 et seq.

The required language includes the following:

1. Right to Cancel: Notice of the right to cancel for a limited period of time after execution is required to be in a home improvement contract (CC § 1689.7). If the notice is not included, the owner can rescind contract at any time without paying any compensation. (CC § 1689.11(c)).

2. Limited Down Payment: The contractor is limited to a down payment of ten percent of the contract value, or $1,000, whichever is less (B&P § 7159(d)). The contractor can of course require a substantial payment shortly after signing.

3. Lien Releases: Upon payment for a particular phase of work, the contractor must give mechanic lien releases. (B&P 7159(e), (f)). Upon making payment on any completed phase of the project, and before making any further payments, require your contractor to provide you with unconditional "Waiver and Release" forms signed by each material supplier, subcontractor, and laborer involved in that portion of the work for which payment was made. The statutory lien releases are set forth in exact language in Section 3262 of the Civil Code.

4. Description of Work: A description, plan and job specifications are required to be in the contract. The statutory requirement is general, but it should include specifications and project milestones. (B&P § 7159(c)).

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