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California requires a written home improvement contract for any work on a residential property totaling $500 or more, including both labor and materials (B&P §7159). Note: this $500 written-contract threshold is a DIFFERENT number from the $1,000 unlicensed minor-work threshold under §7048 — SB 517 amended §7159 for 2026 (subcontractor-disclosure rules), but left this $500 figure in place, so do not confuse the two.

The three-day right of rescission applies to contracts solicited and signed at the consumer's home. The homeowner has until midnight of the third business day to cancel without penalty.

B&P §7159(d)(1) requires the home improvement contract to carry the contractor's name, business address and license number; the rest of the (d) list adds the contract price, the description of the project and significant materials, the schedule of progress payments and the approximate start and completion dates. The statute does not ask for the license expiration date. Nor does it ask for an architect's stamp, which belongs to plan check; a roster of subcontractors, which stays in the contractor's own files; or a workers' compensation policy number, which the insurer's certificate carries.

B&P §7159(d) requires a home improvement contract and any change to it to be in writing and signed by the parties before the work covered by the change begins, and §7159(c)(5) says a change-order form becomes part of the contract only on those terms. An invoice sent afterwards documents a bill, not an agreement made in advance. The building department reviews code compliance and issues permits; it has no role in making a price change enforceable between owner and contractor. And no section requires change orders to be filed with CSLB, on a 10-day clock or any other.

A contractor may not demand or accept final payment until the project is substantially complete. Demanding payment before this point is a violation of California Contractors' Law.

Arbitration clauses are permitted in construction contracts but must be clearly disclosed, written in at least 10-point boldface type in home improvement contracts, and separately initialed by the homeowner.

Abandonment of a project without legal excuse is by itself a cause for disciplinary action under B&P §7107, so suspension or revocation is on the table; and a deposit taken for the work and spent elsewhere can be prosecuted under Penal Code §484b as diversion of construction funds, a misdemeanor at $2,350 or less and punishable more heavily above that. A fine that leaves the license untouched, a bare refund order, and a warning letter each stop short of the license discipline §7107 authorizes.

While permits can technically be pulled by the owner, it is the contractor's professional responsibility to ensure all required permits are obtained before work begins. Working without required permits is a license violation.

A force majeure clause excuses a party from performance when extraordinary events beyond their control (weather, acts of God, pandemics) prevent timely completion. It protects the contractor from delay damages.

Civil Code §1671(b) makes a liquidated damages provision valid unless the party attacking it establishes that the amount was unreasonable under the circumstances existing at the time the contract was made, so reasonableness is judged as of signing. An amount set high to deter or punish is the classic penalty that fails that test. Requiring proof of the exact actual damages defeats the purpose of liquidating them in advance. And initialing the clause or waiving arbitration has nothing to do with §1671.

Civil Code §8200 makes the preliminary notice a condition of lien rights: give it and the claimant may record a mechanics' lien if the bill goes unpaid; skip it and the lien is lost no matter what the work was worth. It is not a demand for payment and not a stop payment notice - that is the separate remedy served to freeze undisbursed construction funds. The building permit is issued by the building department for code compliance and has nothing to do with it. And the notice buys no time: the 90-day window to record a lien after completion runs on its own schedule under §8412.

A time-and-materials contract pays the contractor for the labour hours actually worked at an agreed rate, plus the actual cost of materials, plus an agreed markup or fee for overhead and profit; the total is not fixed in advance. A price fixed before work starts is a lump sum or stipulated sum contract, the opposite arrangement. Paying only for materials describes a supply-only purchase, not a construction contract. And an hourly rate with no material reimbursement is a labour-only or unit-rate deal, which leaves the contractor absorbing every material cost.

Under a fixed-price lump sum contract the contractor promises a finished result for one price, so every overrun - labor productivity, material escalation, rework - lands on the contractor. Cost-plus-a-fixed-fee reverses that: the owner reimburses actual costs and the fee is fixed, so the owner carries the overrun. Time and materials bills hours and materials as they are incurred, which again leaves the cost risk with whoever pays the invoices. A unit price contract fixes only the rate per unit installed; the quantity risk stays with the owner, and the contractor is exposed only on its own productivity per unit.

When a subcontractor defaults, the prime's contract remedy is to terminate that subcontract, have the scope finished by others, and recover the difference from the defaulting sub — or from its performance bond, if one was furnished. (a) CSLB discipline can suspend or revoke the sub's license, but the Registrar has no power to order the work completed or to make the prime whole; that is a court's or an arbitrator's job. (d) A change order moves the cost onto the owner, who neither caused the default nor agreed to pay twice for the same scope. (c) Walking off is worse than useless: abandoning a project without legal excuse is itself cause for discipline under B&P §7107, so the prime would trade a collection claim for a license problem.

On private works, owners must pay general contractors within 30 days of a proper undisputed invoice. On public works the period is 30 days from invoice or 39 days from billing, depending on the agency.

B&P §7108.5 gives the direct contractor 7 days from receipt of a progress payment to pass each subcontractor its share (b), and §7108.5(b) charges a 2%-per-month penalty plus attorney's fees on amounts wrongfully withheld. (c) 10 days is the separate deadline in Civil Code §8814 for releasing withheld RETENTION to a subcontractor once the owner releases it — a different payment under a different statute, which is why the stem names the progress payment. (a) 3 days and (d) 30 days appear in neither section; 30 days is the kind of term a private contract might try to impose, but §7108.5 cannot be bargained down to it.

California's Right to Repair Act (SB 800) establishes statutory warranties for new residential construction: 1 year for most components, 4 years for plumbing/electrical/mechanical, 10 years for structural defects.

California limits the down payment on a home improvement contract to $1,000 or 10% of the contract price, whichever is LESS. Here 10% would be $4,000, so the smaller cap of $1,000 controls.

The down payment may not exceed $1,000 or 10% of the contract price, whichever is less. Ten percent of $6,000 is $600, which is less than $1,000, so $600 is the legal maximum.

Home improvement contracts must state the work description, payment schedule, and start/completion dates, among other items. A homeowner's income is private financial information and is never a required contract term.

The contractor must furnish the buyer a fully completed and signed copy of the home improvement contract before any work begins, so the buyer can review terms and exercise cancellation rights.

Civil Code §1689.6(a)(2) gives the buyer of a home improvement contract until midnight of the third BUSINESS day after receiving a signed and dated copy of it. The clock runs from receipt, not from the stroke of the pen, and business days exclude Sundays and holidays - so counting three calendar days is the common error, and the next business day is no one's deadline. Seven business days is a real period, but §1689.6(c) attaches it to repairs after a declared disaster; five business days is the period for a buyer aged 65 or older.

B&P §7159.5(a)(5) forbids front-loading: the contractor may neither request nor accept payment that exceeds the value of the work performed or material delivered. The 10 percent figure belongs to the down payment in §7159.5(a)(3), which is $1,000 or 10 percent of the contract amount, whichever is less, and is not a ceiling on later payments. Billing for materials still sitting at the supplier is exactly what the section prohibits. Nothing in §7159.5 sends home improvement payments to escrow; what the contract must carry is a schedule of payments in dollars and cents under §7159.5(a)(4).

B&P §7191 requires the arbitration provision in a contract for residential work to be clearly titled ARBITRATION OF DISPUTES and set in at least 10-point roman boldface — or, in contrasting red print, at least 8-point roman boldface — with the prescribed notice immediately above the space where the parties initial their assent. Eight-point bold in ordinary black does not qualify: the smaller size is allowed only in contrasting red. The contract's standard type never qualifies. And typography alone is not enough — without the separate initials nothing records the parties' assent to arbitrate.

B&P §7159(c)(5) makes a change-order form part of a home improvement contract only if it is in writing AND signed by the parties before any work covered by it begins, and §7159(d) repeats that requirement for any change to the contract. An email confirmation is a writing but not a signed change order, which is where this goes wrong most often in the field. No provision requires a change order to be filed with CSLB, on a five-day clock or any other. And a lender's approval may govern the draw, but it is not what makes the change binding between owner and contractor.

B&P §7164(a) applies to every contract, and any change to a contract, between an owner and a contractor for the construction of a single-family dwelling to be retained by the owner for at least one year. Remodel or repair of an existing dwelling is a home improvement contract under §7159. A service and repair contract of $750 or less is governed by §7159.10, and §7159.10(b) applies §7159 anyway if any conforming requirement fails. And $500 is the price at which work becomes home improvement, not the trigger for §7164.

The law requires the contract to bear a clear heading identifying it as a "Home Improvement" contract so the consumer knows which set of protective rules applies to the agreement.

B&P §7153 requires a current and valid home improvement salesperson registration from the registrar before a person works as a salesperson for one or more home improvement contractors, and §7152 defines that role; officers, members and managers of the licensed entity and the qualifying person under §7025 are outside the definition, as are retail salespeople at a fixed location whose dealings the customer initiates. No contractor licence is needed - registration is the alternative to one. The $100,000 bond is the LLC employee wage and benefit bond of §7071.6.5. And the qualifying individual under §7068 is the person whose experience qualifies the licence, a different role entirely.

B&P §7030 requires a home improvement contract to carry a notice about the Contractors State License Board: the agency that licenses and regulates contractors, discloses complaints, disciplinary actions and civil judgments, and takes consumer complaints, with CSLB's website, telephone number and address. The Department of Industrial Relations and the Labor Commissioner handle wage claims and labor standards, not license verification, and unlicensed activity is also reported to CSLB. The bond number and the surety's address are not part of the §7030 notice.

Civil Code §1689.7 requires the seller to give the buyer the contract accompanied by a completed Notice of Cancellation form in duplicate, in type of at least 10 point, attached to the agreement and easily detachable so the buyer can tear it off and mail it. One copy in 8-point type is not that form: 8-point is the allowance B&P §7191(a) makes for service and repair contracts, and only in contrasting red. Nor is the right paperwork-free - delivering the form is part of the seller's duty - and the license and bond figures belong elsewhere in the contract, not in place of the notice.

The seven business days come from the disaster-repair rule, not from the buyer's age. Under Civil Code §1689.6(c), a home solicitation contract to repair or restore residential premises damaged by a disaster may be cancelled until midnight of the seventh business day after the buyer signs and dates it, whatever the buyer's age. The ordinary home solicitation window is three business days, and a senior citizen (65 or older) gets five business days, not seven (Civil Code §1689.6(a); B&P §7159(e)(6)(B)(ii) changes 'three' and 'third' to 'five' and 'fifth' in the required notice). One trap goes with it: under Civil Code §1689.14(a) a disaster-repair contract signed within seven business days of the disaster is void outright unless the buyer solicited it at the seller's place of business.

Civil Code §1689.10 gives the seller 10 days after a home solicitation contract is cancelled to tender back every payment the buyer made and any note or other evidence of indebtedness. Thirty days is not a deadline anywhere in the home solicitation statutes. A restocking or contract-preparation fee is exactly what a properly cancelled contract forbids the contractor to keep. And the refund does not wait on the goods: until the seller tenders the money, the buyer may keep possession of what was delivered and holds a lien on it for the amount owed.

B&P §7159(a) requires a home improvement contract, and any change to it, to be in writing and signed by the parties before the work it covers begins, once the aggregate price exceeds $500. A $15,000 remodel on a handshake is unenforceable by the contractor and is cause for discipline, so the size of the job is no reason to start. Taking the deposit first fails twice over: the contract must come first, and §7159.5 caps the down payment at $1,000 or 10% of the price, whichever is less - here $1,000, not the $1,500 that 10% would give. And papering the contract later, whether at the first billing or at the end, does not cure work that began without one.

B&P §7159.5(a)(5) is explicit: on a home improvement contract the contractor shall neither request nor accept payment that exceeds the value of the work performed or material delivered. Front-loading the money is the violation. Progress payments tied to completed phases are exactly how the statute expects payment to be staged; the license number and the CSLB notice are required contract contents; and a written warranty is a protection a contractor may always offer. Keep this apart from §7159.5(a)(3), which caps the down payment itself at $1,000 or 10% of the contract price, whichever is less.

Willfully departing from or disregarding plans or stopping work without legal excuse and without the owner's consent is abandonment, a cause for license discipline under B&P §7107.

One total price for the whole scope, whatever the work actually costs, is the fixed-price or lump sum contract: the contractor keeps the saving if costs come in low and absorbs the loss if they run high. Cost-plus-a-fixed-fee is the opposite arrangement - the owner reimburses actual costs and pays a set fee, so the overrun is the owner's. Time and materials is also open-ended: hours and materials are billed as they are incurred. A unit price contract fixes the rate for each unit installed but not how many units the job will need, so the quantity risk stays with the owner.

In a cost-plus-percentage contract the contractor is reimbursed actual costs and earns a fee equal to an agreed percentage of them, so the fee rises as costs rise and the owner carries most of the cost risk. A fixed dollar amount settled in advance is the cost-plus-fixed-fee variant, which is how an owner caps that exposure. An hourly rate for the owner's representative is a reimbursable cost, not the contractor's fee. A per-day deduction for finishing late is liquidated damages and has nothing to do with how the fee is computed.

A unit-price contract sets a price per unit of work (per cubic yard, per linear foot, etc.). The total contract value depends on the actual measured quantities completed.

A guaranteed maximum price reimburses cost up to a negotiated ceiling and the contractor absorbs anything above it, which is exactly what caps the owner's exposure. A lump sum paid regardless of what the costs run is a stipulated-sum contract, a different form with a different split of risk. Cost plus a fee with no ceiling is the open cost-plus arrangement a GMP exists to cap. And an underrun below the ceiling belongs to the owner unless a shared-savings clause says otherwise, so treating the savings as the contractor's reverses the deal.

Margin is gross profit divided by the selling price. Profit is $100,000 - $80,000 = $20,000; $20,000 / $100,000 = 20% margin. (Markup, by contrast, divides profit by cost: $20,000 / $80,000 = 25%.)

Markup is added to cost: selling price = cost x (1 + markup) = $50,000 x 1.30 = $65,000. The $15,000 difference is the gross profit on the job.

To find the price for a desired margin, divide cost by (1 - margin): $30,000 / (1 - 0.25) = $30,000 / 0.75 = $40,000. The $10,000 profit is 25% of the $40,000 price.

The bid price equals direct costs plus overhead plus profit: $60,000 + $12,000 + $8,000 = $80,000. Overhead and profit must both be added on top of direct job costs.

The overhead rate is total overhead divided by total direct costs: $120,000 / $600,000 = 0.20, or 20%. Each job is marked up 20% of its direct costs to recover overhead.

Break-even sales = fixed overhead divided by gross margin: $90,000 / 0.30 = $300,000. At $300,000 in sales, the 30% margin produces exactly $90,000 to cover overhead.

A contingency is a percentage of estimated cost set aside for unforeseen conditions: 5% x $200,000 = $10,000. It cushions the budget against surprises without inflating the base estimate.

Retention accrues on the work billed to date, not on the contract total: 5% x $150,000 = $7,500 (c). Civil Code §8811 caps private-works retention at 5% for contracts entered into on or after January 1, 2026, and Public Contract Code §7201 has capped most public works at the same figure for years. (b) $12,500 applies the correct 5% to the wrong base, the full $250,000 contract, which is what will have been withheld only once everything is billed. (d) $15,000 is 10% of the billed amount — the superseded private-works custom. (a) $750 slips a decimal.

Under California prompt payment law, a direct contractor on a private project must pay each subcontractor its portion within 7 days of receiving a progress payment from the owner.

Civil Code §8800(a) makes the owner pay a progress payment as to which there is no good faith dispute within 30 days after notice demanding payment; §8800(b) lets the owner withhold up to 150 percent of a disputed amount; and §8800(c) sets the sanction at 2 percent per month on the amount wrongfully withheld, in place of any interest otherwise due, with costs and a reasonable attorney's fee to the prevailing party. 1.5 percent a month is not the statutory rate, and the 10 percent annual legal rate is what applies to ordinary contract judgments, which is precisely what §8800(c) displaces. The idea that only the principal is recoverable is the rule §8800(c) was enacted to change.

On private works, an owner must release retention proceeds withheld from a direct contractor within 45 days after completion of the work of improvement.