CSLB Contract Requirements & Execution Practice Questions

1. Under California law, a home improvement contract is required for residential work when the total contract price (labor AND materials) is at least:

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.

2. A homeowner can cancel a home improvement contract that was solicited at their home within:

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.

3. Which of the following MUST be included in a California home improvement contract?

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.

4. A contractor and homeowner agree to change the scope of work during a project. This agreement must be:

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.

5. A contractor may demand final payment from the homeowner:

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.

6. Which statement about arbitration clauses in construction contracts is TRUE?

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.

7. A contractor abandons a job without justification after receiving a substantial deposit. The contractor may face:

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.

8. Who is primarily responsible for obtaining building permits on a construction project?

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.