By Scott Cohen, CSLB Industry Expert Since 2002
California contractors using home improvement contracts must now disclose whether subcontractors will perform any portion of the project. Effective January 1, 2026, Senate Bill 517 amended Business and Professions Code section 7159 to add this requirement to California’s already detailed home improvement contract laws.
This change may appear minor, but contractors who continue using older contract templates may unknowingly be working with documents that no longer comply with current requirements.
What Must the Contract Say?
Under Business and Professions Code section 7159(c)(7), a home improvement contract must contain a statement identifying whether subcontractors will be used on the project. The contract must provide separate boxes allowing the contractor to check:
Will subcontractors be used on this project?
When “Yes” is checked, the contract must also advise the homeowner that a list of subcontractors will be provided upon request. That list must include each subcontractor’s:
- Name
- Contact information
- Contractor’s license number
- License classification
When subcontractors will be used, the required disclosure must also appear on each subsequent change order.
A general contract clause stating that the contractor “may use subcontractors” should not be treated as a substitute for the statutory disclosure. The law specifically requires a statement regarding subcontractor use, Yes-or-No checkboxes, and an additional disclosure when the answer is “Yes.”
Why Does This Matter to Homeowners?
Most substantial construction projects require several specialty trades. A swimming pool and landscape project may involve excavation, structural steel, shotcrete, plumbing, electrical work, masonry, concrete, plaster, roofing, carpentry, outdoor kitchens, patio covers, and landscape installation.
There is nothing improper about using qualified subcontractors. In fact, specialty subcontractors often bring valuable expertise to a project. The purpose of the new disclosure is transparency. Homeowners are entitled to know whether portions of their project will be performed by companies other than the contractor whose name appears on the agreement.
The subcontractor list also allows homeowners and their representatives to verify license numbers and confirm whether each subcontractor holds the proper license classification for the work being performed.
The Prime Contractor Remains Responsible
The new law also clarifies that the prime or direct contractor remains responsible, for CSLB administrative-discipline purposes, for completing the project in accordance with the home improvement contract, plans, and specifications.
A prime contractor cannot avoid responsibility by blaming a subcontractor for incomplete, defective, or nonconforming work. At the same time, the law preserves the CSLB’s authority to discipline an individual subcontractor or home improvement salesperson for that person’s own violations.
In layman’s terms, the homeowner hired the prime contractor to deliver the completed project. The prime contractor remains responsible for coordinating, supervising, and completing that project, even when portions of the work are delegated to specialty subcontractors.
Subcontractors and Mechanics Liens
The disclosure is also important because subcontractors and material suppliers may have mechanics-lien rights when they are not paid. A homeowner may have paid the prime contractor but still face a claim from an unpaid subcontractor or supplier.
Knowing which subcontractors are working on the property allows the homeowner to track preliminary notices and request appropriate conditional and unconditional lien waivers and releases as payments are made.
The new subcontractor disclosure does not replace lien releases, preliminary notices, license verification, insurance requirements, or proper payment administration. It simply gives the homeowner better information about who is working on the project.
Older Contract Forms Should Be Updated
Any contractor using a home improvement contract prepared before January 1, 2026, should review and update the form. The subcontractor disclosure must be included in the original contract, and the required disclaimer must also be incorporated into applicable change-order forms.
Failure to Comply May Result in CSLB Discipline
Business and Professions Code section 7159 provides that a contractor’s failure to include the required information, notices, and disclosures—or otherwise comply with the section—is cause for CSLB discipline.
A missing disclosure does not automatically determine every issue in a civil lawsuit, invalidate the entire agreement, or prove that defective construction occurred. Those questions depend on the facts of the case and applicable legal analysis. However, the omission may constitute a CSLB contract-compliance deficiency and may become relevant in a disciplinary investigation, payment dispute, construction-defect claim, arbitration, or civil action.
Experience Reviewing CSLB Contract Compliance
I have served as a California Contractors State License Board Industry Expert since 2002—more than 24 years. As part of my construction-defect and expert-witness casework, I am frequently retained to perform CSLB compliance reviews of home improvement contracts.
I am not an attorney, and I do not offer legal opinions. My findings are based on more than 36 years of licensed contracting experience and more than two decades assisting the CSLB in consumer-protection and contractor-compliance matters.
The Contractors State License Law and CSLB requirements establish baseline obligations for licensed contractors. A detailed compliance review may identify missing notices, improper payment schedules, excessive down payments, incomplete project descriptions, missing cancellation forms, undersized contract text, improper change-order procedures, and other deficiencies that may be relevant to evaluating a contractor’s conduct.
The Bottom Line
California contractors who use subcontractors must now say so clearly in their home improvement contracts. They must check “Yes” or “No,” provide the required additional disclosure when subcontractors will be used, and repeat the applicable disclosure on change orders.
Using qualified subcontractors is normal and appropriate. Failing to properly disclose their use is now a contract-compliance issue.
YOUR CONTRACT MAY BE UNENFORECEABLE:
Failure to comply with California’s home improvement contract requirements can have serious consequences. Business and Professions Code section 7159 provides that a contractor’s failure to include the required information, notices, and disclosures is grounds for CSLB discipline. A contract that materially fails to comply with section 7159 may also be challenged as unenforceable.
For swimming pool construction contracts, the consequences are even more explicit: Business and Professions Code section 7167 provides that a pool contract that does not substantially comply with certain requirements of section 7159 is void and unenforceable by the contractor as contrary to public policy.
Therefore, using an outdated or incomplete contract form can affect not only the contractor’s license but also the contractor’s ability to enforce the agreement and collect payment.
Scott Cohen is an award-winning garden artisan, licensed swimming pool, general and landscape contractor, and renowned expert in construction defect analysis. With three decades of experience designing and building luxury landscapes and pools, Scott combines artistry with technical precision to create safe, stunning outdoor spaces. A nationally recognized speaker and author of eight books, he also serves as an expert witness in construction-related disputes, providing guidance to homeowners, contractors, and legal professionals. Scott is the President of The Green Scene, known as “The Wow Factor Contractor,” specializing in innovative, family-friendly, and resort-style backyard designs.
