California Home Improvement Contracts: What General Contractors Must Include to Stay Compliant

What General Contractors in California Need to Know About Home Improvement Contracts

If you're a general contractor in California, performing home improvement work valued at over $500, the law requires that you enter into a written home improvement contract (HIC) with the homeowner. Failing to use the proper contract—or omitting required terms—can lead to license penalties, payment disputes, and even criminal charges.

In this article, we’ll cover:

• When a home improvement contract is required

• The mandatory terms and disclosures

• Sample required language

• The risks of not using a compliant HIC

When Is a Home Improvement Contract Required?

Under California Business & Professions Code § 7151.2, a home improvement contract is required when the total cost of the job exceeds $500, including labor and materials. This applies to projects such as:

• Kitchen and bathroom remodels

• Painting, roofing, or flooring

• HVAC installation

• Landscaping and fencing

• Window replacement

The contract must be in writing and signed by both the contractor and the homeowner before any work begins.

Required Language in California Home Improvement Contracts

The Contractors State License Board (CSLB) mandates that home improvement contracts include specific sections and disclosures to protect consumers and ensure transparency. These include:

✅ 1. Contract Heading

Must be labeled:
“Home Improvement Contract” in at least 10-point boldface type.

✅ 2. Contractor Information

• Contractor’s name, license number, and business address

• A statement that the contractor is licensed by the CSLB

• A valid telephone number

✅ 3. Description of Work

A detailed scope of work and description of the materials to be used.

✅ 4. Contract Price

The total price, and how and when payments will be made.

✅ 5. Schedule of Payments

Payments must be tied to progress milestones. Down payments may not exceed $1,000 or 10% of the contract price, whichever is less.

✅ 6. Approximate Start and Completion Dates

✅ 7. Notice of Right to Cancel

Homeowners have three business days to cancel the contract after signing. The contract must include this notice in at least 12-point bold type, along with a detachable cancellation form.

✅ 8. Mechanic’s Lien Warning

A required notice informing the homeowner that unpaid subcontractors or suppliers may file a lien against their home.

✅ 9. Insurance Disclosures

A statement indicating whether the contractor carries commercial general liability insurance and workers’ compensation coverage.

✅ 10. CSLB Contact Info

Must include a notice advising the homeowner they can contact the CSLB for questions or complaints, including the website and toll-free number.

Sample Language (Required by CSLB)

“You, the buyer, may cancel this transaction at any time prior to midnight of the third business day after the date of this transaction.”
(Include this cancellation notice and a detachable form.)

“Under California law, anyone who contracts to do construction work must be licensed by the Contractors State License Board...”
(Include CSLB website: www.cslb.ca.gov and phone: 1-800-321-CSLB)

Why a Compliant Contract Matters: Serious Consequences for Noncompliance

Failing to use a compliant home improvement contract can expose you to serious legal and financial consequences, including:

• Loss of payment: Courts may void contracts that do not meet statutory requirements, leaving you unable to collect payment—even if the work is complete.

• Disciplinary action: The CSLB can issue citations, suspend your license, or even revoke it.

• Fines and penalties: Administrative penalties can reach $5,000 per violation.

• Criminal charges: Intentionally contracting without a written agreement can lead to misdemeanor charges and jail time.

• Lawsuits: Homeowners may sue for breach of contract, fraud, or under the Contractors State License Law.

Using a fully compliant contract not only protects your business—it builds trust and professionalism with your clients.

Final Thoughts

As a general contractor in California, using a compliant home improvement contract isn’t just a best practice—it’s the law. Taking the time to include all required disclosures, notices, and legal terms protects both you and the homeowner, and helps ensure your business remains in good standing.

If you’re unsure whether your contract meets current requirements, consult with a construction attorney or download a model contract from the CSLB website.

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Please consult a licensed attorney for guidance specific to your business.

Pet Ownership Disputes in California: Legal Rights, Evidence, and How to Resolve Conflicts

Resolve Conflicts

Pet custody battles in California can be complex. Learn how to prove pet ownership, resolve disputes legally, and avoid future conflict through documentation or pet agreements.

Pet Ownership Disputes in California: What to Know and How to Resolve Them

In California, pets are beloved companions—but when relationships break down between roommates, friends, or romantic partners, the question arises: who legally owns the pet?

This issue—often referred to as a pet custody dispute—can become both emotional and legally challenging. While California law views pets as personal property, courts are increasingly considering the well-being of the animal and the actions of those claiming ownership.

Are Pets Property or Family in the Eyes of California Law?

Under California civil law, pets are classified as personal property. This means that, legally speaking, disputes over pets are similar to disagreements over other jointly held items like cars or furniture.

However, courts may take into account factors that recognize the pet as more than mere property—especially when emotional attachment and caregiving responsibilities come into play.

Top Causes of Pet Ownership Disputes in California

Pet disputes commonly arise in these situations:
- Breakups between unmarried couples
- Roommates moving out
- One party claims the pet was a gift or a joint adoption
- Disagreements over who has been the primary caregiver
- Conflicting verbal agreements about ownership

How to Prove Pet Ownership in California

If you're facing a dispute over a dog, cat, or other pet, California courts will look at several forms of ownership evidence to make a decision.

Key factors include:
- Adoption or purchase paperwork
- Veterinary records
- Pet microchip registration
- City or county pet licenses
- Proof of daily care
- Witness testimony

Legal Ways to Resolve Pet Disputes in California

1. Pet Co-Ownership Agreements
A written pet agreement is the best preventive tool. It can outline:
- Legal ownership
- Visitation rights or shared time
- Financial responsibility for pet care
- What happens if one party moves or circumstances change

2. Mediation for Pet Disputes
When emotions run high, mediation offers a neutral setting where both parties can express their needs and work toward a fair solution. Mediation is quicker and less costly than litigation.

3. Small Claims or Civil Court
If an agreement can’t be reached, a civil lawsuit may be necessary. The judge will assess documentation and determine legal ownership.

How to Avoid Pet Ownership Disputes

If you're adopting or co-owning a pet, these steps can help avoid future legal conflict:
- Register the pet’s microchip and license in one party’s name
- Keep all receipts, vet records, and adoption forms
- Avoid verbal promises—get everything in writing
- Decide upfront how costs and responsibilities will be shared

Final Thoughts: Protect Yourself and Your Pet

Pet ownership disputes in California often arise when expectations aren't clearly defined or documented. While pets are legally considered property, the courts may consider who truly cares for the animal and acts in its best interest.

Whether you're currently sharing a pet or thinking about adopting one with someone else, take time to create a clear agreement and maintain solid records. And if you're already facing a dispute, consult with an attorney to understand your rights and options.

Disclaimer

This article is for informational purposes only and does not constitute legal advice. Please consult a licensed attorney for advice specific to your situation.

Unlocking Tax Savings: The Benefits of Making an S-Corporation Election in California—With a Focus on the Pass-Through Entity Tax (PTET)

Introduction: S-Corporation + PTET = Strategic Tax Savings in California

For California business owners, effective tax planning can dramatically increase retained earnings. Electing S-Corporation status and leveraging California’s Pass-Through Entity Tax (PTET) are two powerful tools that reduce federal taxable income and offer a workaround to the federal SALT deduction cap.

In this article, we'll break down:

• What an S-Corporation is

• The top S-Corp tax benefits in California

• How the PTET election creates federal tax deductions

• Why this strategy is especially valuable in high-tax states like California

What Is an S-Corporation? (And Why It Matters in California)

An S-Corporation, or S-Corp, is a tax election that allows qualifying LLCs and corporations to pass income, losses, deductions, and credits directly to shareholders. These earnings are then taxed at individual income tax rates—eliminating double taxation at the corporate level.

Key S-Corp Advantages in California:

• Pass-through taxation

• Payroll tax savings on distributions

• Simplified accounting compared to C-Corps

• Eligibility for PTET, which can significantly reduce net federal tax exposure

California’s Pass-Through Entity Tax (PTET): A SALT Deduction Workaround

The California PTET, introduced by Assembly Bill 150 (AB 150) and enhanced by Senate Bill 113 (SB 113), allows eligible pass-through entities (PTEs) like S-Corps and partnerships to pay tax at the entity level—creating a federal deduction and bypassing the $10,000 SALT deduction limit under the 2017 Tax Cuts and Jobs Act.

How PTET Works:

• Electing entities pay a 9.3% tax on qualified net income.

• The business deducts that amount on its federal tax return.

• Shareholders receive a California tax credit for their share of the PTET paid.

This mechanism turns state tax payments into federally deductible business expenses.

Example: S-Corp with PTET Election Saves Big

Assume a California S-Corp earns $1 million in distributable net income:

• PTET Paid: $93,000 (9.3%)

• This amount is deductible federally by the S-Corp.

• Shareholders each get a dollar-for-dollar California income tax credit based on their ownership share.

• Net result: Lower federal taxable income and preserved California credits.

Why S-Corporations Are the Ideal PTET Vehicle

While both partnerships and S-Corps can elect PTET, S-Corps are often the better choice for several reasons:

• Streamlined ownership and compensation structures

• Simplified tax reporting

• Reduced exposure to self-employment tax

• More straightforward cash flow forecasting for the June 15 PTET prepayment deadline

Who Qualifies for the PTET Election in California?

PTET Eligibility Checklist:

• Must be a qualified pass-through entity (S-Corp or partnership)

• All shareholders must be eligible individuals, trusts, or estates

• Election must be made annually and irrevocably for that year

• First prepayment is due June 15 of the current tax year

Key Tax Deadlines and Filing Tips for California PTET

To fully benefit, timing and compliance are essential:

• June 15: First PTET installment (50% of prior-year PTET or current-year estimate)

• March 15 (following year): PTET election and final payment via Form 3893

• Use Schedule K-1 to report PTET credits to shareholders

• Work closely with your CPA or tax attorney to avoid eligibility pitfalls

Final Thoughts: Should You Elect S-Corp Status and File for PTET?

If your California business is profitable and has eligible owners, the combination of S-Corporation status and the Pass-Through Entity Tax election could unlock thousands—if not tens of thousands—in annual tax savings.

It’s one of the most effective tools available to:

• Lower your federal taxable income

• Preserve California income tax credits

• Avoid the impact of the SALT deduction cap

Ready to Elect S-Corp Status in California?

Consult your tax and legal advisors to determine if this strategy fits your business goals. Making the right election today can dramatically reduce your future tax burden.

Disclaimer: This blog post is for informational purposes only and does not constitute legal or tax advice. Always consult with a qualified tax professional regarding your unique business circumstances.

Consumers in California are Entitled to a Refund if an Event is Canceled, Postponed, or Rescheduled

Yes, California Law Requires Refunds for Canceled, Postponed, or Rescheduled Events.

Introduction

This post is inspired by a recent incident involving a transaction dispute with ShowClix concerning a refund for a rescheduled event. I purchased a ticket to see a musical event in Hillcrest. The venue notified me on the day of the event that the show was moved due to COVID-19 travel restrictions. I promptly requested a refund from ShowClix. Within two weeks, I did not hear back and I submitted a chargeback claim with my credit card company. ShowClix asked me to cancel my dispute and responded that tickets are “non-refundable” per their Terms of Service.

Who is a “Ticket Seller?”

There is a section of the California Business and Professions Code reserved for “Ticket Sellers.” To determine whether or not the law applies in your particular transaction, it is first important to decipher the statutory definition of “Ticket Sellers.”

Definition of Ticket Seller

A ticket seller is any person (e.g., natural person, corporation, llc) who for compensation, commission, or otherwise sells admission tickets to sporting, musical, theatre, or any other entertainment event. (Business and Professions Code, section 22503.) The definition of a ticket seller excludes the following:

1. Primary contractor (person responsible for event for which tickets are sold).

2. Seller of tickets for the primary contractor operating under a written agreement. While this second exception is a bit confusing, I believe the law is exempting event promoters.

3. Agent of air, ocean, or motor coach carrier who sells tickets as a “tour package.” Think about a ticket seller promoting a travel package to Tomorrowland or a Disney Cruise.

4. Someone who sells six tickets or less to any single event (for example, John Doe who buys a couple of tickets and later decides to resell them).

When Does the Law Require a Refund?

If you determine that you purchased a ticket from a “Ticket Seller” as defined above and you request a refund, you are entitled to a full refund if the event is (1) canceled, (2) postponed, or (3) rescheduled. (Business and Professions Code, Section 22507.)

What if the Terms of Service Conflict with the Law?

Generally, if a contractual provision conflicts with state law, it is unenforceable. If you feel a ticket seller violated state law, please contact our office.

Sample Email to Ticket Seller

Dear [Ticket Seller]:

I purchased a ticket from you [Stubhub, ShowClix, TicketMaster] to attend [insert event]. I received a notification that the event was [canceled, postponed, rescheduled]. I am requesting a full refund for the event. A full refund is required under California state law. Please see California Business and Professions Code, section 22507.

Thank you,

City of San Diego Freezes Evictions Until May 31, 2020

On March 25, 2020, the City Council adopted an emergency ordinance (O-21177) temporarily freezing evictions due to the nonpayment of rent for residential and commercial tenants. I will discuss the requirements for residential tenants only. In order to be protected, YOU must take affirmative action immediately.

What the ordinance means in plain English: Your landlord cannot take action to evict you for not timely paying rent that was due on or after March 12, 2020, if you are able to show that you were unable to pay rent related to financial impacts of COVID-19.

Who Qualifies? Renters who are unable to pay rent due to financial impacts caused by COVID-19.

The ordinance defines "financial impact" as a substantial decrease in household income due to business closure, loss of hours, wages, layoffs, or hospitalization related to COVID-19. A financial impact is "related to" COVID-19 if it is caused by the pandemic itself or any governmental response. Yes, this includes ordered shutdowns of non-essential businesses such as restaurants, breweries, gyms, etc.

What is a substantial decrease in income? The City Manager is expected to define what a substantial decrease is, however, the City Manager does not have the authority to define the substantial loss of income to exceed a 30% reduction.

Is my Rent Forgiven? Unfortunately, no. You will have six months from the date of the ordinance is effective to repay your landlord or withdrawal of Governor Newsome's executive order on rent freeze, whichever is sooner.

How long is this ordinance in effect? Through May 31, 2020.

How to be Protected:

(1) Notify your landlord/property management by written notice (email, text, letter) on or before the date your rent is due that you are unable to pay because of COVID-19.

This step is extremely important. You need to take affirmative action to notify your landlord/property management by written notice ON OR BEFORE the date your rent is due. April rent will be due for most renters before April 3.

(2) Within one week from sending your notice, you need to provide documentation to your landlord/property manager that you are unable to pay rent because of COVID-19. Such documentation may include a lay off notice or other documentation supporting your loss of income. Perhaps, even your eligibility for unemployment benefits.

If you do not provide proof of financial impact, your landlord will be able to proceed with the eviction.

If you take these steps, the landlord cannot do any of the following:

• charge or collect any late fees for rent,

• send the statutory notice to begin the eviction process,

• file/prosecute unlawful detainer against you.

Final Ordinance:

Ordinance 21177

If you are a residential or commercial tenant concerned about eviction, please contact our office.

What is Price Gouging and What Can I do About it?

On March 4, 2019, Governor Newsom declared a state of emergency in the State of California due to the COVID-19 pandemic. During the past month, panic buying engulfed California as people went out buying unnecessary amounts of canned goods, cleaning supplies, hand sanitizer, and toilet paper. While there are many out there helping those in need, others choose to take this opportunity to profit by engaging in price gouging.

There are lots of different definitions of price gouging floating around on the internet and circulating in news publications. Some people perceive price gouging as merely “high prices for certain goods.”

Price gouging is outlawed and carefully defined in California Penal Code Section 396.

What is Price Gouging?

Price gouging is a price increase of 10% or greater for a particular good or service following a declaration of a state of emergency. For example, if prior to March 4, 2020, a market charged $10.00 for a pack of toilet paper and following the declaration, increased its price to $11.50, the marginal price increase would still constitute price gouging.

What types of Goods and Services are Protected from Price Gouging?

While the list is exhaustive, here is a list as it relates to COVID-19:

• Consumer food items or goods (anything used or intended for use for food, drink, confection, or condiment by person or animal) (e.g., canned goods, non-perishables, toilet paper, disinfectants, diapers, baby wipes, dog food)

• Emergency supplies (e.g., propane, flashlights, batteries, candles, soaps, diapers, water)

• Medical supplies (e.g., hand sanitizer, flu medicine, latex gloves)

• Transportation services (e.g., delivery services/ charges)

Who Can be Guilty of Price Gouging?

Price gouging is not limited to only businesses. A single person can be guilty of price gouging.

What are the Exceptions?

There are exceptions. Typically, a price increase is only justified if the seller can prove the increase in price is attributable to the increase of cost needed to provide the good or service. For those businesses impacted by supplier cost increases, customer disclosure is advised.

How Long are Price Gouging Laws in Effect?

Price gouging is illegal for a period of 30 days following the declaration of emergency. State or local governments may extend this period for additional 30 day periods if needed.

Currently, the State of California has made price gouging illegal in the State of California until September 4, 2020.

What are the Penalties?

Price gouging is a misdemeanor punishable by imprisonment for a period not to exceed one year or fine of not more than $10,000 dollars or a combination of both.

How Should I Report Price Gouging?

Locally, you may report it to the Affirmative Civil Enforcement Unit of the City Attorney’s Office at (619) 533-5800. You may also file a complaint online by clicking here.

The State of California asks citizens to report price gouging by going to the Attorney General’s website or by calling (800) 952-5225.