New Legislation Regarding Significant Changes to Home Improvement Contract Requirements

Joseph M. Sweeney, Esq., Christopher J. Olson, Esq., Scott A. Mangum, Esq., William M. Kaufman, Esq., Andrew J. Kozlow, Esq.

Senate Bill 517 and Assembly Bill 1327 were chaptered by the California Secretary of State on October 10, 2025, and October 6, 2025, respectively. The Bills amend California Business and Professions Code § 7159. The amendments require substantial changes to home improvement contracts. The amended laws take effect beginning on January 1, 2026. Contractors must update home improvement contracts in order to comply with the updated law.

We recommend contractors review California Business and Professions Code § 7159 in its entirety, but we have summarized the recent changes as follows:

(1) Prime Contractor Now Expressly Responsible
The prime/direct contractor is now expressly responsible for completion of the project “in accordance with the home improvement contract, plans, and specifications.” Although subcontractors remain subject to administrative discipline, the prime contractor is now expressly liable for compliance on home improvement projects.

• Relevant Code Provision: Cal. Bus. & Profs. Code § 7159(a)(5)(B).

(2) Additional Disclosure Requirements- Use of Subcontractors
All home improvement contracts must now contain a “checkbox” style disclosure indicating whether a subcontractor will be used on the project. The required “checkbox style is as follows:

“[  ] Yes  [  ] No.”

• Relevant Code Provisions: Cal. Bus. & Profs. Code § 7159(c)(7)(A)-(C).

(3) Additional Disclaimer Requirement- Use of Subcontractors
(A) If the home improvement contract “checkbox” is checked “yes”, indicating a subcontractor will be used then a disclaimer must be stated in the contract. Also, the disclaimer must be on all change orders. The required disclaimer is as follows:

“One or more subcontractors will be used on this project, and the contractor is aware that a list of subcontractors is required to be provided, upon request, along with the names, contact information, license number, and classification of those subcontractors.”

(B) If there is a change order presented and/or executed during the project, the same disclaimer must be stated on the change order.

• Relevant Code Provisions: Cal. Bus. & Profs. Code § 7159(b)(7)(B) and (C).

(4) Transmittal of Executed Home Improvement Contract
Before any work can commence on the project, the contractor must provide a fully signed and dated contract to the buyer.
Relevant Code Provisions: Cal. Bus. & Profs. Code § 7159(c)(3)(A).

(5) Notice of Cancellation- Additional Contact Information And Method of Cancellation
(A) All home improvement contracts must contain the contractor’s name, address, and email address.

(B) All Home improvement contracts must contain the phone number of the contractor or the contractor’s representative to assist the buyer with locating and filling out the notice of cancellation forms.

(C) The code now expressly allows buyers to cancel the home improvement contract within the applicable cancellation period via email, in addition to mail and fax.

Relevant Code Provisions: Cal. Bus. & Prof. Code § 7159(c)(3)(B)(ii)-(iii).

(6) New Right of Buyer to File A CLSB Complaint Against Contractors
If the notice of cancellation disclosures are missing, or do not comply with the new requirements, the code now allows the buyer to file a complaint with the CSLB.
Relevant Code Provisions: Cal. Bus. & Prof. Code § 7159(a)(6).

For more information or to request a review of your contract forms, please contact our Construction Team at 408-356-3000 or via email: Joe Sweeney at rmason@smllp.com, Chris Olson at colson@smllp.com, Scott Mangum at smangum@smllp.com, William Kaufman at wkaufman@smllp.com, or Andrew Kozlow at akozlow@smllp.com.