Contracts & ExecutionQuestion 650 of 1605
Under Bus. & Prof. Code §7191, a residential construction contract that contains a binding arbitration clause must:
a.Be filed with CSLB before signing
b.Be limited to disputes of $10,000 or less
c.Require the AAA construction rules; no other forum is permitted
d.Contain the arbitration clause in at least 10-point boldface type, capitalized, and include the specific statutory disclosure language stating that the owner is giving up the right to a court trial; the owner must separately initial the clause
Explanation
Bus. & Prof. Code §7191 requires that any arbitration provision in a residential construction contract be disclosed in at least 10-point boldface, capitalized, immediately before the signature line, with statutory language warning that the owner is waiving the right to a jury or court trial, and the provision must be initialed separately by the owner. Failure to comply makes the arbitration clause unenforceable. CSLB does not pre-file contracts. There is no $10,000 cap, and §7191 does not require any specific arbitral forum, though AAA Construction Rules are commonly chosen by contract.
Law Reference: Bus. & Prof. Code §7191Practice all 1605 questions free — no signup required.
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