California Business and Professions Code 7159, first enacted in 2004, was intended as a consumer protection measure to protect homeowners hiring contractors for home improvement work. The legislation sought to meet this laudable goal by dictating the terms to be used in home improvement contracts. covering everything from mandatory contractual language, lists of documents to be included, legal warnings to be provided, dispute resolution procedures, dictating where to initial, where to sign and even font size.
The legislation unfortunately made it impossible to provide a homeowner with anything more than a complex multi-page legal document which many homeowners viewed with suspicion. The unintended consequence is that those contractors who violate the law and use a short but simple one or two-page, but illegal contract end up obtaining work. Those who follow the law and use the multi-page legally mandated contract end up losing customers because the contract is long, complex and frightening.
With the foregoing background, we regret to announce that through California Senate Bill 517 and Assembly Bill 1327 the State of California is adding yet further mandatory terms which must be included in the home improvement contract, beginning on January 1, 2026. Although I will briefly describe the new requirements below, the requirements of the new legislation can be reviewed at the following two links (note highlighted text for changes). Those who do not amend their home improvement contracts for 2026 can be found to be in violation of contractors’ license law, exposing themselves to discipline by the California Contractors State License Board and placing their CSLB licenses at risk. Please make changes to your home improvement contract or have your legal counsel do so to avoid difficulties with the CSLB. Here are links to the new statutes:
SB 517:
AB 1327:
https://legiscan.com/CA/text/AB1327/id/3267676
The two above bills are similar and overlapping. While there are many new changes to the existing language of B&P 7159, the most significant are the following:
Subcontractor Identification:
Contractors must now advise homeowners in writing as to whether they will or will not be using subcontractors on the project. If subcontractors will be used on the project, then “a list of subcontractors is required to be provided, upon request, along with the names, contact information, license number, and classification of those subcontractors.” Language notifying the homeowner of this right must be included in the contract as well as in change order forms. Specific language is mandated.
Telephone and Email Information:
The contract is also now required to include the phone number and email address for the contractor as well as the phone number for the contractor’s commercial general liability insurance carrier. The “notice of cancellation” document which is required to be included with the contract must include the email address of the contractor.
Language of Three-Day and Five-Day Right to Cancel is Amended:
The language of the three-day and five-day right to cancel notices, which depend on whether the homeowner is 65 years of age or older, is amended to include email information. This also results in changes to the rules regarding telephone and home solicitation and seminar solicitation contracts (Business and Professions Code 17511.5 and Civil Code 1689.6-1689.7, 1689.20 and 1689.21).
More Unintended Consequences:
The most significant concern may be the fact that the legislation will require, on request, that the contractor provide the owner with the names, contact information, license number, and classifications of its subcontractors. Without a doubt, some homeowners will take this information as license to go around the contractor and contact subcontractors directly and seek to instruct them contrary to the terms of the subcontract between the contractor and subcontractor. Some homeowners will seek to cut out the contractor and contract directly with subcontractors to avoid contractor markup. This will of course result in significant problems for all concerned. It is therefore important that contractors add additional terms to their home improvement contract to prevent this from happening and impose a consequence when it does. Consult with your legal representative for the best language to achieve this protective goal.
While changes in legislation are a fact of life in construction, every contractor must remain vigilant and adjust to changes when they arise. Please be sure to read the new statutes in detail and make changes to your contract to keep yourself out of trouble with your customers and the CSLB.
Article written by William L. Porter, Esq. in 2025. Mr. Porter is a principal in Porter Law Group, Inc. in Sacramento, California. He can be reached by phone at (916) 381-7868. Visit the firm’s website at www.porterlaw.com.
