California Contract Requirements for Contractors

San Diego Attorney safeguards your involvement in projects large and small

If you are a contractor working in California, you need to be aware of the contract requirements that vary by the size and scope of a project. Failure to adhere to certain requirements can free other parties from their obligations, damaging your investment in the project but leaving you no recourse. The Law Office of Edward W. Freedman provides reliable advice and contract formation services for contractors in San Diego and throughout southern California. With more than 15 years of experience, I have the practical, industry-specific knowledge you need to protect your rights and your investment.

Required provisions for California construction contracts

The California Business and Professions Code (BPC) governs contract requirements for contractors. The only universal requirement for all construction contracts is that the contractor must include the California contractor’s license number. If you are performing as a prime contractor on a project other than a home improvement, your contract must also include this statement in no less than 10-point type:

Contractors are required by law to be licensed and regulated by the Contractors’ State License Board which has jurisdiction to investigate complaints against contractors if a complaint regarding a patent act or omission is filed within four years of the date of the alleged violation. A complaint regarding a latent act or omission pertaining to structural defects must be filed within 10 years of the date of the alleged violation. Any questions concerning a contractor may be referred to the Registrar, Contractors’ State License Board, P.O. Box 26000, Sacramento, CA 95826.

Contracts for public works projects must also comply with the California Labor Code’s requirement that the contract include copies of Labor Codes §§ 1771, 1775, 1776, 1777.5, 1813 and 1815.

Contract rules for California home improvement projects

Article 10 of the BPC controls contract requirements within the home improvement business. Requirements differ based on the value of the contract. Section 7159 covers home improvement contracts generally, and contains a number of requirements, such as:

• Contract price
• Finance charge for late payments
• Description of the project and materials to be used
• Limit on down payment set at $1,000 or 10 percent of the contract price, whichever is less
• Schedule of progress payments with notice that it is illegal for a contractor to collect payment, other than a down payment, for work not yet completed
• Approximate start and completion dates
• Instructions for extra work and change orders
• Mechanic’s lien warning
• Consumer’s three-day right to cancel
• Consumer’s seven-day right to cancel work necessitated by sudden property damage

By contrast, § 7159.10 covers contracts for less than $750, and imposes these specific requirements:

• No payment due until work is completed
• Contract in the same language as generally used in oral sales
• Notice concerning general liability insurance
• Notice concerning workers’ compensation insurance
• Consumer’s right to cancel before work starts

While these lists don’t address all requirements or how to fulfill them, what you as a contractor must understand is that your ability to complete the work and collect payment depends on adhering to these BPC rules. The law provides many homeowners’ rights and remedies, so you could find yourself in a situation where you substantially perform but the consumer has the right to rescind the contract. If you don’t understand these rules, or you are not certain the template contract you use fully conforms to these rules, you should seek legal advice from a knowledgeable attorney.

Contact an experienced San Diego construction lawyer for contract guidance

The Law Office of Edward W. Freedman provides reliable guidance to contractors on everything from major construction projects to home repairs. Call me today at 858-223-7259 or contact me online to schedule a free consultation. My office is located at 4540 Kearny Villa Road, just off Route 163 at the Balboa Avenue exit.