What a California Home Improvement Contract Must Say
In California, home improvement work over $500 needs a written contract with set headings and notices.1 The down payment may not exceed $1,000 or 10 percent of the price, whichever is less.2
Which contracts the rules cover
Business and Professions Code section 7159 covers agreements between a contractor and an owner or tenant for home improvement work.1 It applies when the total price for labor, services and materials exceeds $500.1 The contract and every change to it must be in writing and signed before the covered work starts.1
Printed text must be at least 10-point type. Several warnings must be in at least 12-point bold type.1 Before work starts, the contractor must give you a copy signed and dated by both sides.1
Small repair jobs can use a shorter form, the service and repair contract. Its rules are further down this page.3
Required clauses at a glance
| Clause | What it must say | Why it matters |
|---|---|---|
| Contractor identity | Name, business address and license number of the contractor.1 If a salesperson sold the job, their name and registration number.1 | You can look up the license and see who is responsible. See reading a CSLB license record. |
| Contract type | The heading "Home Improvement" in at least 10-point bold type.1 | It tells you which set of legal rules applies. |
| Contract price | The heading "Contract Price" and the amount in dollars and cents. Any finance charge appears separately.1 | The price must include profit, labor and materials, but not finance charges.2 |
| Description of work | A description of the project and of the significant materials and equipment.1 | CSLB advises naming size, color, model number and who does what work.8 |
| Downpayment | The amount, plus a bold statement that it may not exceed $1,000 or 10 percent of the price, whichever is less.1 | The cap is the law, not a guideline.2 CSLB says there is no exception for special-order materials.8 |
| Schedule of progress payments | Each payment in dollars and cents, tied to a phase of work or materials delivered.1 | The contractor may not collect for work not yet done or materials not yet delivered.2 |
| Start and completion | "Approximate Start Date", "Approximate Completion Date", and what counts as substantial start of work.1 | Dates give you a fixed reference if the job stalls. |
| Change orders | Extra work becomes part of the contract only when written and signed before that work starts.1 | The order must state the scope, the cost change and the effect on payments.1 |
| Subcontractors | A Yes / No box saying whether subcontractors will be used.1 | If Yes, you can ask for their names, license numbers and classifications.1 |
| Insurance notices | Whether the contractor carries commercial general liability insurance, and a workers' compensation statement.1 | The workers' compensation line must say either "no employees and exempt" or "carries workers' compensation insurance for all employees".1 See workers' comp on a license. |
| Bond notice | Near the signatures: you have the right to require a performance and payment bond.1 | This bond is separate from the license bond. See contractor bonds. |
| Mechanics Lien Warning | A fixed text explaining liens, Preliminary Notices and joint checks.1 | Unpaid subcontractors and suppliers can lien your home even if you paid the contractor.1 |
| CSLB information | A notice in at least 12-point type describing CSLB and how to contact it.1 | It tells you where to complain, usually within four years.1 |
| Right to cancel | A "Three-Day Right to Cancel" notice, or "Five-Day" for a senior citizen, with a detachable Notice of Cancellation form in duplicate.1 | If the Notice of Cancellation is missing, you may file a complaint with CSLB.1 |
Down payment limit
If a down payment is charged, it may not exceed $1,000 or 10 percent of the contract amount, whichever is less.2 On a $6,000 job, that means $600. On a $25,000 job, it means $1,000.
There is one exception. A contractor with an approved performance and payment bond, or approved joint control, may take payment before completion.2 CSLB says this bond is rare and is shown on the license record.12
Taking a down payment above the cap is a misdemeanor. The fine ranges from $100 to $5,000, with up to one year in county jail.2
Progress payments
Apart from the down payment, a contractor may not request or accept more than the value of work performed or material delivered.2 The same ban covers advance payments from a lender.2
The contract must print this sentence in bold capitals: "IT IS AGAINST THE LAW FOR A CONTRACTOR TO COLLECT PAYMENT FOR WORK NOT YET COMPLETED, OR FOR MATERIALS NOT YET DELIVERED."1
After each payment, you can ask for an unconditional lien release for the work you paid for. You may withhold further payments until you receive it.2
Your right to cancel
For most home improvement contracts signed away from the contractor's business, you can cancel within three business days.4 The clock starts when you receive a signed and dated copy of the contract.1,4
- Age 65 or older: five business days instead of three.4,5 This applies to contracts signed on or after January 1, 2021.1
- Business day: every calendar day except Sundays and nine listed holidays. Saturday counts.5
- Disaster repairs: seven business days for repairs after a declared state or local emergency.1
- No right to cancel: if you negotiated the contract at the contractor's place of business.1
Cancel in writing. You may email, mail, fax or deliver the notice to the address on the contract.1 A mailed notice counts when you post it with correct postage.4 Any wording works if it shows you do not want to be bound.4
After you cancel, the contractor must return what you paid within 10 days.1 CSLB advises seniors not to let work start or permits be pulled during the cancellation period.11
Mechanics liens and Preliminary Notices
A mechanics lien is a claim against your property, recorded with the county recorder.1 If a court finds it valid, you could pay twice or face a forced sale of your home.1
Subcontractors and material suppliers must send you a Preliminary Notice to keep their lien rights.1 It is due within 20 days after they first furnish work.7 A late notice covers only work from the 20 days before it was served, and after.7
The notice must describe the work, estimate its price and carry a bold "NOTICE TO PROPERTY OWNER".6 A Preliminary Notice is not a lien.1 You will not get one from the prime contractor or from laborers.1
The contract's lien warning names two protections: a list of subcontractors and suppliers, and joint checks.1 CSLB also describes conditional and unconditional lien releases for each payment.10
Service and repair contracts (small jobs)
Section 7159.10 allows a shorter contract for small repairs. It qualifies only if all four conditions are met:3
- The price is $750 or less.3
- You contacted the contractor to request the work.3
- The contractor sells nothing beyond what the original problem reasonably needs.3
- No payment is due or accepted until the work is completed.3 Completed means the problem is fully corrected and, if applicable, the building department has approved the work.3
A small electrical repair you requested, such as fixing one failed circuit, can use this form if all four conditions hold. If any condition fails, the full section 7159 rules apply, whatever the price.3
The form must still show the license number, insurance notices and the heading "Service and Repair".3 It must offer you the replaced parts. Only one service charge is allowed, including any trip or inspection fee.3
On a time and materials job, the actual price may not exceed the written estimate without your written authorization.3
Your right to cancel ends once you have a signed copy and work starts.3 If one of the four conditions was broken, you can still cancel within three business days, or five if you are 65 or older.3
CSLB's consumer page says a service and repair price must be "under $750".9 The statute says "$750 or less".3 We follow the statute. Section 7159 was last amended effective January 1, 2026. Its current text asks for the contractor's email address on the first page, for a Notice of Cancellation.1
Problems CSLB sees in contracts
CSLB's contractor guide lists 13 common problems with home improvement contracts. It does not rank them.10 The list includes an excessive down payment, a missing lien notice, a missing right-to-cancel notice and no payment schedule.10 Each of these is a clause in the table above.
Before you sign, compare the contract with the table. Then check the license, the bond and workers' compensation on the CSLB record. For electrical work, see before you hire an electrician. For work by someone without a license, see unlicensed contracting.
Sources
- California Legislature, Business and Professions Code section 7159 (amended by Stats. 2025, Ch. 585, effective Jan 1, 2026), https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=BPC§ionNum=7159, accessed Oct 7, 2026.
- California Legislature, Business and Professions Code section 7159.5 (amended by Stats. 2023, Ch. 403, effective Jan 1, 2024), https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=BPC§ionNum=7159.5, accessed Oct 7, 2026.
- California Legislature, Business and Professions Code section 7159.10 (amended by Stats. 2020, Ch. 158, effective Jan 1, 2021), https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=BPC§ionNum=7159.10, accessed Oct 7, 2026.
- California Legislature, Civil Code section 1689.6 (amended by Stats. 2025, Ch. 348, effective Jan 1, 2026), https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV§ionNum=1689.6, accessed Oct 7, 2026.
- California Legislature, Civil Code section 1689.5, definitions of "business day" and "senior citizen", https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV§ionNum=1689.5, accessed Oct 7, 2026.
- California Legislature, Civil Code section 8202, contents of a preliminary notice, https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV§ionNum=8202, accessed Oct 7, 2026.
- California Legislature, Civil Code section 8204, timing of a preliminary notice, https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV§ionNum=8204, accessed Oct 7, 2026.
- Contractors State License Board, "What is a Contract?", https://www.cslb.ca.gov/Consumers/Hire_A_Contractor/Home_Improvement_Contracts/What_Is_A_Contract.aspx, accessed Oct 7, 2026.
- Contractors State License Board, "Step 2: Warnings and Exceptions", https://www.cslb.ca.gov/Consumers/Hire_A_Contractor/Home_Improvement_Contracts/Warnings_And_Exceptions.aspx, accessed Oct 7, 2026.
- Contractors State License Board, "Contracting for Success: A Contractor's Guide to Home Improvement Contracts" (PDF), https://www.cslb.ca.gov/Resources/GuidesAndPublications/ContractingForSuccess.pdf, accessed Oct 7, 2026.
- Contractors State License Board, "What Seniors Should Know Before Hiring a Contractor" (PDF, 13P-066/0125), https://www.cslb.ca.gov/Resources/GuidesAndPublications/WSSK_ENG0125_ADA.pdf, accessed Oct 7, 2026.
- Contractors State License Board, "What Should I Look for in a Contract and Binding Agreements?", https://www.cslb.ca.gov/Consumers/Hire_A_Contractor/Contracts_And_Binding_Agreements.aspx, accessed Oct 7, 2026.