Quick answer: Before signing a California home improvement contract, verify the contractor’s license, written project scope, total price, payment schedule, cancellation notices, insurance disclosures, and mechanics-lien protections. For most covered contracts, the ordinary down-payment limit is the lesser of $1,000 or 10% of the contract price, subject to statutory exceptions.
California Business and Professions Code §7159 establishes consumer protections for qualifying home improvement contracts. Covered projects generally exceed $500, though exceptions and different contract categories may apply. Use this 12-point checklist when planning a Los Angeles kitchen renovation, bathroom remodel, home addition or major residential improvement.
1. Verify the contractor’s California license
Check the business independently in the CSLB license lookup. Confirm the license is active, the business name matches, the classification is appropriate, and bonding, workers’ compensation status and any disclosed disciplinary record are understood. A Class B General Building contractor may contract for qualifying multi-trade projects; certain specialty work requires appropriate specialty licensing.
Related: How to check a California contractor’s license before hiring.
2. Require a detailed written scope
The agreement should identify the work, significant materials, equipment and exclusions. For a renovation, address demolition, framing, structural alterations, plumbing, electrical, HVAC, insulation, finishes and cleanup as applicable. Clarify responsibility for design, engineering, owner-selected fixtures, permits, inspections and debris disposal. Do not assume work is included merely because it appears in a preliminary conversation.
3. Understand the down-payment rule and exceptions
For most covered contracts, Business and Professions Code §7159.5 limits the down payment to $1,000 or 10% of the contract price, whichever is less.
| Contract price | Ordinary maximum down payment |
|---|---|
| $5,000 | $500 |
| $15,000 | $1,000 |
| $50,000 | $1,000 |
| $150,000 | $1,000 |
Exception: Section 7159.5 provides exemptions from specified payment restrictions for a contractor furnishing certain qualifying performance and payment bonds, lien and completion bonds, or registrar-approved bond equivalents or joint control covering full performance and payment. A standard CSLB contractor license bond alone is not evidence of that exemption. The table describes only the ordinary statutory rule.
Planning a significant renovation? Review Cali Builders’ major renovations and whole-home remodeling services and ask for a clearly defined written scope.
4. Examine progress payments
The contract’s payment schedule must identify payments in dollars and cents and describe the associated work, services, materials or equipment. Except where the statute permits otherwise, payments generally may not exceed the value of work performed or materials delivered. Avoid schedules demanding large advances disconnected from measurable progress.
5. Document change orders before changed work begins
Upgraded materials, additional fixtures or changed layouts can alter price and schedule. Covered extra work and changes generally must be described in written change orders signed before the affected work starts. Record the revised scope, cost, payment effects and completion implications rather than relying on verbal agreements.
6. Review commencement and completion terms
Under §7159, the contract must define substantial commencement of work, identify an approximate start date and state an approximate completion date. Ask which activities count as commencement and how changes or delays will be documented. Los Angeles approvals, engineering revisions, inspections, utility coordination, procurement and concealed conditions may affect the actual schedule.
7. Understand applicable cancellation rights
Cancellation periods depend on the transaction and statutory conditions. Not every construction contract receives the same cancellation window.
| Qualifying transaction | Applicable cancellation period |
|---|---|
| Covered home improvement contract subject to the standard cancellation notice | 3 business days |
| Covered home improvement contract with a buyer age 65 or older, subject to the senior cancellation notice | 5 business days |
| Qualifying residential disaster-damage repair or restoration contract under the declared-emergency provisions | 7 business days |
The prescribed notices measure the deadline from receipt of a signed and dated copy of the contract containing the notice. Review the applicable notice, deadline and exceptions, including the exception for contracts negotiated at the contractor’s place of business. Qualifying service and repair contracts follow separate statutory requirements.
2026 cancellation update: Home improvement contracts must include the contractor’s email address and permit cancellation by email. The first page must identify the contractor’s cancellation mailing address and email address, the date the buyer signed, and a telephone number for help locating and completing the Notice of Cancellation.
Where required, receive the applicable right-to-cancel notice and two completed, easily detachable copies of the Notice of Cancellation. Check the required language, acknowledgment and deadline rather than assuming that an electronic signature alone satisfies delivery requirements.
Relevant authorities include Civil Code §1689.6, §1689.7, Business and Professions Code §7159 and the CSLB 2026 legislative update. Some transactions have exceptions or separate rules.
8. Check required liability, workers’ compensation and bond notices
Section 7159 requires prescribed contract notices concerning commercial general liability insurance and workers’ compensation. The applicable CGL statement identifies coverage status and, where the contractor reports carrying CGL, includes the insurer’s name and a telephone number for verification. The workers’ compensation statement must accurately reflect coverage or a lawful no-employee exemption. A general contractor’s exemption does not establish subcontractors’ status.
The contract also contains a notice near the signature area regarding the homeowner’s right to require a performance and payment bond. The standard CSLB contractor license bond amount is $25,000; it is not the same as a project-specific performance and payment bond or liability insurance. Verify current statements and coverage rather than relying on assumptions.
9. Assign permit and inspection responsibilities
Building, electrical, plumbing, mechanical and related approvals may apply to a Los Angeles project. Contractors often coordinate permit issuance and inspections, but the agreement should specify who handles applications, drawings, plan-check corrections, utility coordination, inspection scheduling and governmental fees. Permit fees are not automatically included in every estimate.
For a permit-related example, see our Los Angeles permit guide for ADUs. Requirements for a major renovation or addition may differ.
10. Understand mechanics liens and lien releases
Qualifying subcontractors, laborers and suppliers may have mechanics-lien rights when unpaid, even if the owner has paid the general contractor. The covered contract generally must contain the statutory Mechanics Lien Warning. Under §7159.5, after making a payment, homeowners may request applicable full unconditional releases covering work paid for and withhold further payments until the required releases are furnished.
California’s four waiver forms appear in Civil Code §8132 (conditional progress), §8134 (unconditional progress), §8136 (conditional final) and §8138 (unconditional final). A claimant should not provide an unconditional release for a payment it has not received.
11. Clarify allowances and concealed conditions
For allowances covering tile, fixtures, cabinetry or other selections, specify the dollar amount, what it covers and how upgrades are priced. For owner-supplied materials, assign ordering, delivery, storage and installation coordination. Existing Los Angeles homes may conceal damaged framing, old wiring, plumbing deficiencies or undocumented alterations. Establish an investigation and written approval process for unforeseen work.
12. Check subcontractor disclosures and the complete contract package
Section 7159 requires a Yes/No statement addressing whether subcontractors will be used. Where the answer is Yes, the prescribed disclosure explains that a subcontractor list will be provided upon request, including identifying, contact and licensing information; the statutory disclaimer also applies to change orders. Check the exact notices in the current statutory form before signing.
Before work starts, receive a fully completed copy signed and dated by both you and the contractor. Keep the scope, payment schedule, applicable cancellation forms, CGL and workers’ compensation statements, bond and mechanics-lien notices, subcontractor disclosure, drawings and agreed allowances together.
Also check the contractor’s name, business address and license number; the home improvement salesperson’s name and registration number when applicable; the total contract price and any separately stated finance charge; and the prescribed Information about the Contractors State License Board notice. Required wording, type sizes, placement, cancellation copies and language matter in the actual agreement. This article is a planning checklist, not a substitute for a compliant contract form.
12 warning signs before signing a remodeling contract
- No verifiable California license.
- Contracting business name inconsistent with license records.
- Excessive upfront deposit without a demonstrated statutory exception.
- Vague scope or missing exclusions.
- Large progress payments before corresponding work.
- Refusal to document changes in writing.
- Missing required coverage notices.
- Unclear permit and inspection responsibilities.
- Absent required cancellation notices.
- Refusal to discuss appropriate lien releases.
- Undefined material allowances or owner obligations.
- Pressure to sign without time to read the full package.
These are reasons to investigate, not automatic findings of a violation.
Printable homeowner checklist
- ☐ Contractor license and business identity verified
- ☐ Written scope, materials and exclusions reviewed
- ☐ Down payment checked against applicable restrictions
- ☐ Payment milestones defined
- ☐ Written change-order process understood
- ☐ Start and completion terms reviewed
- ☐ Applicable cancellation rights, completed duplicate forms, cancellation email and assistance phone checked
- ☐ Bond and insurance notices reviewed
- ☐ Permit responsibilities and fees assigned
- ☐ Mechanics Lien Warning and lien-release process understood
- ☐ Allowances and concealed-condition procedures reviewed
- ☐ Subcontractor disclosures, required CSLB notice and complete signed package received before work starts
Frequently asked questions
Can a contractor require a 50% deposit in California?
For most covered home improvement contracts, a 50% deposit exceeds the ordinary lesser-of-$1,000-or-10% limit. Specific §7159.5 exceptions apply to qualifying bonds or registrar-approved arrangements covering full performance and payment.
Does a $20,000 kitchen remodel need a written contract?
A typical covered $20,000 kitchen remodeling project is subject to California’s written home improvement contract requirements, subject to statutory exceptions.
Can a contractor charge for unforeseen structural repairs?
Additional work may justify an approved price change, but review the original agreement’s exclusions and follow the applicable written change-order requirements.
Who pays building permit fees in Los Angeles?
The contract should say. Homeowners may pay them directly or the contractor may handle payment under the agreed terms.
Can a homeowner request lien releases before another payment?
Section 7159.5 addresses releases for portions of work already paid for and permits withholding subsequent payments until applicable releases are furnished.
Does a CSLB $25,000 license bond guarantee project completion?
No. It is different from a project-specific performance and payment bond and does not guarantee completion of the entire renovation.
Plan your Los Angeles renovation with clarity
Cali Builders & Construction Inc., California CSLB Class B General Building Contractor #1051566, provides home remodeling, additions and residential construction services throughout Los Angeles and the San Fernando Valley. Clear scope definitions, construction coordination and documented changes help homeowners understand their project before work begins.
Contact Cali Builders to discuss your remodeling or construction project.
Official references
- California Business and Professions Code §7159
- California Business and Professions Code §7159.5
- CSLB home improvement contract checklist
- CSLB statutory lien-waiver guidance
Educational information only, not legal advice. Current requirements depend on contract and transaction facts. Consult official statutory text and qualified counsel for project-specific advice.