What Must Be Included in a California Home Improvement Contract?

The following checklist summarizes the primary items that should be included in a California home improvement contract. This is a practical overview, not a substitute for having a California construction attorney review your specific contract form.

1. Written, Legible and Readable Contract

The contract and subsequent changes must be in writing and signed before the covered work begins.

Printed contract text must generally be at least 10-point type, and headings must be at least 10-point boldface type, unless the law requires a larger font for a particular notice.

This is commonly overlooked. I regularly review contracts containing important payment terms, warranty exclusions, arbitration clauses, and cancellation provisions printed in six-, seven- or eight-point type. Reducing the font size to fit more language onto fewer pages does not excuse noncompliance.

2. Required “Home Improvement” Heading

The contract must identify the type of agreement with the heading:

Home Improvement

That heading must appear in at least 10-point boldface type. Merely labeling the document “Proposal,” “Estimate,” “Agreement,” or “Construction Contract” does not, by itself, satisfy this specific requirement.

3. Contractor and Salesperson Information

The contract must include:

• The contractor’s legal name.
• Business address.
• Contractor’s license number.
• The home improvement salesperson’s name and registration number, when applicable.

The contractor’s name should match the name associated with the CSLB license. Contractors should be careful when using trade names, abbreviations, assumed business names, or affiliated company names that are not properly reflected in CSLB records.

4. Fully Completed and Signed Copy

Before work begins, the homeowner must receive a completely filled-in copy of the agreement signed and dated by both the homeowner and the contractor.

The first page must also contain the date the homeowner signed and the contractor’s address, email address, and telephone number for purposes of submitting or obtaining assistance with a cancellation notice.

Blank spaces should be completed or crossed out. A contractor should never ask a homeowner to sign an incomplete contract with the promise that missing prices, dates, materials, or payment terms will be filled in later.

5. Contract Price and Finance Charges

The contract must contain a clearly identified Contract Price, stated in dollars and cents.

Any finance charge must be separately identified and cannot simply be buried within the overall price. Allowances, alternates, exclusions, credits, permit fees, engineering costs, and owner-supplied materials should also be clearly described so the homeowner understands what is and is not included.

6. Lawful Down Payment

When a down payment is required, the contract must identify it under the appropriate heading and include the statutory warning in at least 12-point boldface type.

For most California home improvement contracts, the down payment cannot exceed:

$1,000 or 10 percent of the contract price, whichever is less.

There is no general exception allowing a contractor to collect a larger down payment because materials are custom-made, expensive, nonreturnable, or must be ordered in advance. The exception here is for Design/Build contractors who are entitled to be paid for their design services before plans are delivered to the homeowner.

7. Detailed Schedule of Progress Payments

Progress payments must be listed in dollars and cents and tied to specifically described phases of completed work or materials and equipment actually supplied.

Each payment should identify the work being completed and the amount due for that work. With the exception of the lawful down payment, a contractor cannot collect more than the value of the work performed or materials delivered.

In my opinion, vague or front-loaded payment schedules are among the most common and consequential defects in home improvement contracts.

Front-loading: arranging a payment schedule so that a disproportionately large share of the total contract price is collected early, before an equivalent value of labor, materials, or completed work has been provided.

8. Detailed Project Description

The contract must contain a sufficiently detailed description of the project, significant materials, and equipment to be installed. Depending on the project, this may include, dimensions and quantities, material types and manufacturers, colors and finishes, equipment specifications, demolition and disposal responsibilities, permit and inspection responsibilities.

Phrases such as “remodel backyard,” “install pool,” or “complete landscape work” are generally too vague to communicate what the contractor has agreed to provide. CSLB advises that contracts should clearly explain how the work will be performed, what products will be used, when it will be completed, and what it will cost.

9. Additional Requirements for Swimming Pool Contracts

Swimming pool contracts require more than a written description. The project description must also include a plan and scale drawing showing the pool’s: shape, size, dimensions, construction and equipment specifications.

10. Approximate Start and Completion Dates

The contract must explain what constitutes substantial commencement of the work and provide an Approximate Start Date and an Approximate Completion Date.

Statements such as “to be determined,” “upon permit approval,” or “as scheduling permits” may create uncertainty unless the contract also provides an understandable method for determining when the work will begin and finish.

11. Incorporated Contract Documents

Plans, engineering, specifications, proposals, addenda, finish schedules, equipment lists, and other documents relied upon by the parties should be specifically identified as documents incorporated into the contract.

This matters because disputes frequently arise over whether a rendering, email, estimate, design sheet, text message, or verbal promise was actually part of the agreement.

12. Written Change-Order Requirements

The contract must include a “NOTE ABOUT EXTRA WORK AND CHANGE ORDERS” statement explaining how additional or changed work will be authorized.

Before changed or extra work begins, the change order should be in writing and signed by both parties. It must identify:

• The changed or additional scope of work.
• The amount added to or deducted from the contract.
• The effect on progress payments.
• The effect on the completion date.

Verbal authorization is a poor contract-administration practice and may create serious enforceability and payment problems.

Get it in writing before the work begins. Remember the “Call Girl Principle”: the value of a service often seems to diminish immediately after the service has been provided.

A signed change order protects the contractor by documenting the scope, price, and schedule impact while the owner still recognizes the value of the requested work.

13. Subcontractor Disclosure

Effective January 1, 2026, the contract must state whether subcontractors will be used and provide boxes for a “Yes” or “No” response.

When subcontractors will be used, the contract must advise the homeowner that a list will be provided upon request containing the subcontractors’ names, contact information, license numbers, and license classifications. The required disclosure must also appear on subsequent change orders.

Using qualified specialty subcontractors is normal in construction. The purpose of this requirement is transparency, not to discourage their use.

14. Mechanics-Lien Warning

The contract must include the required Mechanics Lien Warning explaining that unpaid subcontractors, laborers, and suppliers may have lien rights against the homeowner’s property—even when the homeowner has already paid the prime contractor.

The notice also explains preliminary notices, joint checks, and the importance of identifying the subcontractors and suppliers working on the project.

15. Lien-Waiver and Release Statement

The contract must state that, after satisfactory payment for a portion of the work, the contractor will provide the homeowner with the required full and unconditional release for that paid portion before requesting further payment.

16. Performance and Payment Bond Notice

Near the owner’s and contractor’s signatures, the contract must notify the owner or tenant of the right to require the contractor to obtain a performance and payment bond.

This does not mean every home improvement project must be bonded. It means the homeowner must be advised of the right to require bonding.

17. Insurance Disclosures

The contract must contain the applicable disclosures concerning:

• Commercial general liability insurance.
• Workers’ compensation insurance.

The general liability disclosure must identify whether the contractor carries insurance, is self-insured, or does not carry coverage. When insurance is carried, the required information concerning the insurer must be provided.

The workers’ compensation notice must indicate whether the contractor carries workers’ compensation insurance or has no employees and claims an exemption.

18. CSLB Consumer Notice

The contract must include the required information about the Contractors State License Board in at least 12-point type. This notice explains CSLB’s consumer-protection role and provides its website, telephone number, and mailing address.

19. Right-to-Cancel Notices

When applicable, the homeowner must receive the legally required cancellation notice and detachable cancellation forms.

Depending on the circumstances, the cancellation period may be:

• Three business days for many home improvement contracts.
• Five business days when the buyer is a senior citizen.

The notice generally must be prominently printed, positioned near the homeowner’s signature, acknowledged by the homeowner, and provided in the same language principally used during the sales presentation. Exceptions apply, including certain contracts negotiated at the contractor’s established place of business.

Why Contract Compliance Matters

Section 7159 does not describe optional contracting suggestions. It establishes baseline requirements intended to protect California consumers and create clear written agreements.

Failure to provide the required information, notices, and disclosures is grounds for CSLB discipline.

Contract enforceability can also become an issue. The consequences depend on the particular violation, the type of contract, and the facts of the case.

For swimming pool contracts, Business and Professions Code section 7167 expressly provides that a contract that if a contract does not substantially comply with certain specified provisions of section 7159 is unenforceable.

A missing heading, improper down payment, vague payment schedule, inadequate project description, absent cancellation notice, or undersized typeface may appear insignificant when a contract is signed. Those deficiencies can become extremely important when a payment dispute, construction-defect claim, CSLB complaint, arbitration, or lawsuit occurs.