Browse all questions

Once the general contractor receives retention from the owner, it must release each subcontractor's share of that retention within 10 days on a private works project.

A schedule of values divides the contract sum among the parts of the work — earthwork, framing, roofing, finishes — so each progress billing can be tested against the percentage of each line item actually in place. It is what a lender's draw process and a standard payment application run on. (b) describes certified payroll, the wage record Labor Code §1776 requires on public works. (c) describes an internal overhead allocation, an accounting exercise that never appears in a payment application. (d) reads 'schedule' as a calendar; in this term it means an itemized list, and the calendar is the project schedule, a different document.

Framing's total value is 18% x $500,000 = $90,000. At 50% complete the contractor may bill 50% x $90,000 = $45,000 for that line item this period.

Retention = 5% x $80,000 = $4,000, so the current payment is $80,000 - $4,000 = $76,000 (d); the $4,000 is paid later when retention is released. Civil Code §8811 caps private-works retention at 5% for contracts entered into on or after January 1, 2026. (a) $80,000 forgets the retention entirely. (b) $4,000 reports the amount withheld rather than the amount paid. (c) $84,000 adds the retention instead of subtracting it.

Job costing posts actual labor, material, subcontract and equipment costs against the estimate line by line while the job is still running, so an overrun surfaces in time to be corrected. Taxable income is computed from the year's books, not from one job's cost report. Wage rates come from the market or the applicable wage determination, not from the last job's costs. And no cost report substitutes for the written change order that documents extra work.

Actual labor above the estimate is a cost overrun, also called an unfavorable variance; job costing surfaces it so the contractor can find the cause. A contingency allowance is money carried in the bid before the work starts, not a difference discovered after it. Retention is a percentage the owner holds back from progress payments until the work is accepted. Liquidated damages are a per-day sum the contract fixes for late completion.

When a general reasonably and foreseeably relies on a sub's bid in submitting its own, Drennan v. Star Paving holds the sub to that bid under promissory estoppel, even with nothing signed. Free withdrawal after award is exactly what the doctrine prevents, because the general is already committed at its own bid price. A signed subcontract is not the trigger — reliance is, which is the whole point of the doctrine. And no fixed ten-day acceptance window exists at common law; what matters is whether the general relied within a reasonable time.

Bid shopping is using one subcontractor's quoted price to push the others lower after bids are in. Value engineering is redesigning to cut cost without giving up function, and is legitimate. A scope review compares what work each bid actually covers, to find gaps and overlaps. Prequalification screens a bidder's capacity and finances before bidding opens. Only the first uses someone else's number as leverage; it is widely viewed as unethical and is restricted on public works to protect competitive bidding.

Civil Code §1586 lets a proposal be revoked at any time before its acceptance is communicated to the proposer. An hour after submission, with nothing signed, the bid is still an open offer — so prompt written notice of the arithmetic error and a request to withdraw or correct it is both available and the honest route. Signing and swallowing $20,000 is a business choice, not the best course, and it is the one the statute makes unnecessary. Substituting cheaper materials to claw the money back is a departure from the plans and specifications and grounds for discipline. And the claim that a submitted bid can never be withdrawn is simply not the rule before acceptance.

The scope of work spells out the specific work the contractor will perform. A clear scope prevents disputes over whether a task is included in the contract price or is extra work requiring a change order.

A punch list itemises the minor incomplete or corrective work the contractor must finish before the owner's final acceptance, which is what releases final payment and the retention. A materials list is a procurement or submittal log, not an acceptance document. Certified payroll records are the weekly public works reporting duty under Labor Code §1776. And outstanding change orders are priced and signed by both parties under B&P §7159(c)(5) before that work begins; they are not punch-list items.

Substantial completion is the point where the work is complete enough for the owner to occupy or use the project for its intended purpose, even with minor punch-list items still open. Clearing every punch-list item is final completion, which comes later. Recording a notice of completion is an owner's filing that starts the lien and stop-payment clocks; it does not measure how finished the work is. And no payment percentage defines the term - 90% paid usually just means retention is still being held.

Civil Code §1671(b) makes a liquidated damages provision valid unless the party challenging it proves the provision was unreasonable under the circumstances existing at the time the contract was made. A figure set to punish, unrelated to any harm the parties could foresee, is exactly that. The other three cut the other way: a reasonable forecast of the owner's loss is what the statute asks for, damages that were hard to quantify at signing are the classic reason to liquidate them in advance, and arm's-length bargaining with counsel makes the clause harder to attack, not easier.

Liquidated damages accrue per day of delay: $400 x 12 days = $4,800. An enforceable clause fixes this amount in advance so actual damages need not be separately proven.

SB 800 establishes tiered standards: most function/finish items 1 year, plumbing and electrical systems generally 4 years, and structural/major defects up to 10 years from close of escrow.

The structural standards carry the longest reach: Civil Code §941(a) allows an action up to 10 years after substantial completion for a violation of those standards. Paint finishes, interior trim and cabinets are fit-and-finish items, and Civil Code §900 gives them a one-year express written warranty instead, so none of the finish categories can be the longest period.

Civil Code §910 opens a prelitigation process: the claimant serves written notice - certified mail, overnight mail or personal delivery - describing the claimed violation in reasonable detail, and the builder may then inspect and offer to repair before suit. A CSLB complaint is licence discipline and does not satisfy §910. No engineer's report is a precondition; §910 asks for notice of the claim, not proof of it. The ten years in Civil Code §941 is the outside deadline for filing, not a period to wait out.

B&P §7159(d)(5) requires the home improvement contract to carry the heading 'Contract Price' followed by the amount of the contract in dollars and cents, so a price left 'to be determined' fails a required term on the face of the contract. A homeowner's signature cannot supply a disclosure the statute requires. There is no emergency-repair exception to the price term. And the licence bond answers for damages; it does not fill in a missing contract price.

Under cost-plus, the contractor is reimbursed for actual costs plus a fee, so cost increases are passed through to the owner. The owner therefore bears the bulk of the cost-overrun risk.

B&P §7159 requires a written home improvement contract whenever the aggregate price of labor, services and materials exceeds $500, so a $700 repair must be in writing. The $1,000 figure belongs to the §7159.5(a)(3) downpayment cap ($1,000 or 10 percent, whichever is less), not to the writing threshold. Above $500 the parties cannot agree their way into a verbal deal, and the requirement turns on the price — not on the owner's age and not on whether a home improvement salesperson was involved.

The amount above direct cost is $90,000 - $54,000 = $36,000. As a percentage of the bid: $36,000 / $90,000 = 40%, which covers both overhead and profit.

Estimated labor cost equals hours times the burdened hourly rate: 320 x $55 = $17,600. The burdened rate already includes payroll taxes, insurance, and benefits.

Competitive bidding awards the contract to the lowest responsible and responsive bidder. Among $182,000, $176,500, and $189,300, the lowest is $176,500.

The critical path is the longest chain of dependent activities in the schedule, so its length is the shortest time the project can take and it fixes the completion date; finding that chain is what a CPM schedule is built for. Spreading overhead across cost codes and comparing actual hours to the bid are job-costing exercises done from the accounting records, not from the schedule network. The retention percentage comes from the contract, not from any schedule calculation.

In a fixed-price contract the price is locked. With costs of $112,000 and revenue of $100,000, the contractor absorbs a $12,000 loss; cost-risk falls entirely on the contractor.

A home improvement contract that is missing or noncompliant is grounds for CSLB discipline under B&P §7159, and it leaves the contractor arguing an unenforceable or unprovable bargain when it tries to collect. Nothing converts a private remodel into a public works contract - that turns on public funds and the prevailing wage statutes, not on paperwork. No statute doubles the price for the owner; the doubling idea comes from §7031(a), which runs the other way by barring an unlicensed contractor from collecting at all. And the CSLB issues classifications on examination and experience, never as a consequence of a defective contract.

On a home improvement contract, B&P §7159(c)(5) makes a change order part of the contract only if it is in writing and signed by the parties before any work covered by it begins, and §7159(d) says the same of any change to the contract. Doing the work first and adding it to the final invoice leaves the contractor arguing over an unauthorized extra. A verbal go-ahead with a log entry is not a signed writing, however contemporaneous the note. Calling the extra an allowance at closeout relabels the billing without supplying the signature the statute requires.

Prompt payment statutes do one thing: they put deadlines on money moving down the contracting chain, with penalties for missing them. Civil Code §8800 gives a private owner 30 days after a demand for payment under the contract to pay the direct contractor, at a 2% per month penalty on anything wrongfully withheld; B&P §7108.5 gives a direct contractor 7 days from a progress payment to pay each subcontractor; Civil Code §8814 gives 10 days for passing retention through. Prevailing wage rates are set by the DIR, the award of a bid turns on the bidding statutes, and the 5% retention cap is Civil Code §8811 - none of those are prompt-payment rules.

B&P §7159.5(a)(3) caps the downpayment at $1,000 or 10 percent of the contract amount, whichever is less, and §7159.5(a)(8) exempts from that cap a contractor who provides a performance and payment bond or joint control approved by the registrar - that, not a bigger deposit, is how a special-order purchase gets funded, with any finance charge set out separately from the contract amount. The cap is a consumer protection the homeowner cannot waive. Relabelling an oversized deposit does not make it lawful. And §7159.5(a)(5) bars requesting or accepting payment beyond the value of work performed or material delivered.

Overhead is the indirect cost of running the business - office rent, insurance, licenses, administrative salaries - that no single job carries and that has to be recovered through markup on direct costs. Labor and material charged to one job are direct job costs. The markup is how overhead is recovered, not the overhead itself. And retention is money the owner holds back from a payment, not a cost of doing business.

B&P §7159(d)(10) requires an 'Approximate Start Date' heading with a statement of what counts as substantial commencement of work, and §7159(d)(11) requires an 'Approximate Completion Date'. Together they give the homeowner a timeline she can hold the contractor to, and they are how a delay becomes measurable as abandonment. The price is set by the contract's price and payment-schedule terms, not by the dates. The buyer's three business days to cancel run from receipt of a signed and dated copy of the contract, not from the start date. And retention is a payment term; the date provisions do not control when it comes due.

A direct (job) cost is traceable to one job — the lumber that goes into that framing job, the labour on that site, the equipment rented for it. The office telephone, the annual liability premium and the bookkeeper's salary are all incurred to run the company rather than to build any one job, so they are indirect overhead recovered through a markup spread across all jobs. The test is not whether the cost is large or recurring; it is whether you can point to the job that consumed it.

Markup amount equals direct cost times the markup rate: $14,000 = cost x 0.35, so cost = $14,000 / 0.35 = $40,000. The selling price would be $54,000.

A unit-price contract pays the unit price times the measured quantity: $3.20 x 9,500 sq ft = $30,400. $28,500 is the same quantity at $3.00, a rounded-down unit price. $304,000 comes from reading the rate as $32.00 per square foot, and $3,040 from $0.32 — both are decimal-point slips of one place in opposite directions.

With no good faith dispute, the owner must release retention within 45 days after completion (Civil Code §8812) and owes 2 percent per month on what is wrongfully withheld, plus attorney's fees (§8818); a written demand documents that claim while the 90-day lien deadline of §8412 runs. Re-entering to strip out installed work is unlawful self-help. The CSLB disciplines licensees but does not collect money owed to a contractor. And a stop payment notice under §8520 belongs to claimants other than the direct contractor, so the prime cannot use one against the owner.

The G702 application and certificate for payment, with its G703 continuation sheet, itemizes the schedule of values and the percentage of each line item completed — that is how a progress payment is requested and certified. Substantial completion is certified on a separate form and does not by itself release retention. Subcontractor and supplier listings belong to the bid documents, not the payment application. And a mechanics' lien is a statutory claim recorded with the county, not an AIA payment form.

If progress and spending track together, spending at 60% complete should be about 60% of the $250,000 budget: 0.60 x $250,000 = $150,000. Spending much above this signals a possible overrun.

What B&P §7159 requires inside a home improvement contract does not depend on where it is signed: a job over $500 needs the same signed writing sold in a kitchen or in a showroom, and the §7159.5(a)(3) down payment cap of $1,000 or 10% of the price, whichever is less, applies the same way. What does depend on the setting is the cancellation notice - §7159 excuses the Three-Day Right to Cancel notice where the contract is negotiated at the contractor's place of business, because those three business days come from the home solicitation rules of Civil Code §1689.5 and §1689.6, which reach contracts made away from the seller's trade premises.

A no-damage-for-delay clause leaves added time as the contractor's only remedy for the delays it covers, so extended overhead and idle-equipment costs stay with the contractor. Owner payment of delay costs is what a compensable-delay or changes clause does — the opposite result. A daily amount owed for finishing late is liquidated damages, which runs against the contractor rather than limiting its remedy. And the clause does not excuse the completion date: the schedule stays, only the money claim goes. On public work, Public Contract Code §7102 stops an agency from enforcing such a clause for delay the agency itself caused.

An indemnity (hold harmless) clause allocates risk: one party agrees to protect, defend, or reimburse the other against specified claims arising from the work. Capping damages at the contract price is a limitation-of-liability clause. Being named an additional insured is an insurance endorsement, which moves the cost to a carrier rather than between the parties. Sending disputes to an arbitrator is a dispute-resolution clause. Civil Code §2782(a) sets the outer limit: a construction indemnity reaching the promisee's sole negligence or willful misconduct is void.

The license number is how the homeowner reaches the CSLB record: whether the license is active, what classification it covers, the bond and workers' compensation on file, and any disciplinary or complaint history — all checkable before work starts. It says nothing about the contractor's tax liability or profit margin, which live in the contractor's own books. And a permit is pulled by the licensed contractor or by the owner as owner-builder; a homeowner cannot apply in the contractor's name just because the number appears in the contract.

A precise scope prevents gaps and overlaps, making clear which work the subcontract price already covers and which is extra work that needs a change order. What a change order costs is set by the contract's pricing terms, not by the scope. Permit responsibility is its own provision. And license classification is a legal requirement that the parties cannot assign to each other in a scope clause.

A binding contract requires an offer and an acceptance of that offer's terms, supported by consideration. Accepting a written bid as offered creates the contract through offer and acceptance.

A pre-printed clause that strips the homeowner of what B&P §7159 grants is unenforceable: Civil Code §3513 says a law established for a public reason cannot be contravened by private agreement. The other three belong in the file. Progress payments tied to work already completed are how §7159.5(a)(5) expects payment to be staged, and a start date with an approximate completion date is required contract content. Civil Code §1689.13 does allow one narrow waiver of the cancellation right - but only by a separate dated, signed statement describing the situation that needs immediate remedy, never by a clause in the contract.

A bid bond guarantees only that a bidder who is awarded the contract will enter into that contract and furnish the required performance and payment bonds; if the bidder walks away, the bond answers for the cost of reletting the work. Completing the work for the contract price is what a performance bond guarantees. Paying subcontractors and suppliers is the payment bond. And a ten-year defect guarantee is a warranty or maintenance bond.

A timely cancellation must be honored. The Notice of Cancellation required by B&P §7159, and Civil Code §1689.10, give the contractor 10 days from receipt of the notice to return every payment; the buyer need only make delivered goods available at their own residence, and if the contractor does not pick them up within 20 days the buyer may keep them without further obligation. No cancellation fee is authorized - the $1,000 figure is the §7159.5 down-payment cap, not money the contractor may retain. Materials delivered before the notice cannot be billed, and the refund cannot be held hostage to their return: the 10-day refund duty does not wait on the 20-day pickup window.

Net profit equals the profit rate times sales: 8% x $800,000 = $64,000. Overhead recovery ($96,000) is separate; profit is what remains after both direct costs and overhead are covered.

B&P §7107 makes abandonment - leaving a project without legal excuse - a cause for discipline, so a stoppage the owner's own failure to pay a clearly due, undisputed amount justifies is a suspension rather than abandonment. The reason for leaving is exactly what §7107 turns on, so 'whatever the reason' misreads it. Discipline is never automatic: the Registrar must proceed by accusation. And no statute conditions a justified suspension on 10 days' written notice.

A detailed estimate is built from a quantity takeoff: every material and labour item is measured off the plans and priced, item by item. A square-foot or conceptual estimate skips that and multiplies area by a historical rate, which is why it is used early and is far less accurate. An assembly or systems estimate sits between the two, pricing whole assemblies rather than individual quantities. A schedule of values is not an estimate at all — it is the breakdown of the agreed price used to support progress billings.

Civil Code §1689.5(a) defines a home solicitation contract as one for the sale, lease or rental of goods or services 'in an amount of twenty-five dollars ($25) or more' made at other than appropriate trade premises, and §1689.5(b) defines those premises as where the seller normally carries on business. The PLACE of the transaction plus a very low dollar floor is what triggers the three-business-day right under §1689.6 — not the size of the job. (a) states the exception rather than the rule: a contract negotiated and signed at the contractor's own office is made at appropriate trade premises and carries no §1689.6 cancellation right. (c) inflates the $25 floor to $500 and drops the place element, which is the operative one. (b) is not a consumer transaction at all; §1689.5(c) limits 'goods' to things bought primarily for personal, family or household purposes.