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.