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Don’t Get Burned By an Unscrupulous Contractor

by | Nov 16, 2016 | Real Estate Law

If your home has been damaged or destroyed by fire, you will need a licensed contractor to make the repairs. California law has several safeguards to protect you from the charlatans who will undoubtedly surface. [nap_names id=”FIRM-NAME-3″], LLP is a construction law firm with seasoned lawyers who can protect you. Here are a few tips.

Make specific decisions about your budget and how you want the finished project to look. You should consult at least three reputable contractors. Be certain they quote prices on the same list of specifications and materials so you can perform a meaningful comparison of their bids. Ask each contractor for references, make every effort to see the contractor’s work and interview their previous clients. Contact the California Contractors State License Board (CSLB) ( to verify their contractor’s license information. The CSLB also can provide you the contractor’s license history and pending or prior legal actions against them, if any. If possible, obtain references from subcontractors, suppliers and financial institutions to determine whether the contractor is financially responsible.

Home Improvement Contract Requirements

California law requires all home improvement contracts to be in writing if the total price of the labor, materials and equipment exceeds $500. The contract must also include a number of provisions and disclosures. Listed below are some of those requirements.

  1. Information regarding the contractor.
    The contract must contain the name, business address and license number of the contractor. If a salesperson solicited or negotiated the contract, the salesperson’s name and registration number must also be listed.
  2. description of the work to be done and materials to be used.
    Make sure the description includes everything you think is important to the project. For example, if you want specific materials or equipment to be used, identify the manufacturers and model numbers. Verify that the contract describes who is responsible for obtaining permits and inspections and that the fees are included in the price. Any warranties on labor or materials should be described in the contract.
  3. Down payment and progress payments.
    The maximum down payment a contractor can require is $1,000 or 10% of the contract price, whichever is less. A contractor is not legally allowed to be paid for work that is not complete or materials that are not on the jobsite. If interim payments are required before the project is completed, those payments must be detailed in the contract. If a salesperson’s commission is to be paid out of a portion of the contract price, the commission can only be paid on a pro rata basis in the same proportion as the progress payments.
  4. Cancellation Period.
    If you negotiate or sign the contract at any place other than the contractor’s office, the contractor must inform you of your right to cancel the contract within 3 business days of signing the contract. The notice may be in the contract or attached to it. It must also have a Notice of Cancellation form that you may use to cancel the contract within the 3-business day period.
  5. Commercial General Liability and Workers’ Compensation Insurance.
    The contractor must state in the contract whether he or she has commercial general liability and workers’ compensation insurance. We always verify that the insurance policies contain specific coverages to provide maximum protection for our clients. If the contractor does not have insurance, you may be financially responsible for any damages to your property or to others caused by the contractor. Also, if the contractor has employees or hires non-licensed subcontractors and does not have workers’ compensation insurance, you will be financially responsible for any injuries they suffer while working on your project.

Before You Sign the Contract

Don’t sign any contract until you understand and agree with all of the terms. Make sure the contract includes everything that you and the contractor agreed upon. Be sure to ask questions until you fully understand the contract and what the finished project will be. Before signing anything, you may wish to discuss the proposed contract, plans and specifications with one of our attorneys. You can reach us at [email protected].