California Home Improvement Contract Checklist

In 2026, a California home improvement contract must be in writing and signed before work starts on most jobs over $500, cap the down payment at $1,000 or 10 percent of the price, whichever is less, and carry notices the law spells out word for word. Since January 1, 2026, it must also say whether subcontractors will be used and give an email address for cancelling.

What has to be on the first page of a California home improvement contract?

Page one has to tell you how to back out. Section 7159 requires the first page to show the date you signed, the address and email address where your Notice of Cancellation goes, and a phone number for help filling it out. The contract must also carry the heading "Home Improvement" and the contractor's name, business address and license number. A contract missing any of those is out of compliance before you reach the price.

The license number is the line worth acting on. Type it into CSLB's license lookup and check three things: the license is active, the classification matches the work (a B for general building, a C-36 for plumbing, and so on), and the name on the license matches the name on the contract. If those two names differ, ask why before you sign.

The contract also needs one sentence in 12-point bold type: "You are entitled to a completely filled in copy of this agreement, signed by both you and the contractor, before any work may be started." Take it at its word. Blank lines that "we'll fill in later" are the problem the sentence exists to prevent.

Two more items belong in the contract. A description of the project and the significant materials and equipment, which is where the detail of the job is written down. And, if a home improvement salesperson sold the job, that person's name and CSLB registration number.

The law sets these requirements for home improvement contracts where the total price is more than $500 in 2026, labor and materials together. Small service and repair jobs of $750 or less in 2026 follow a separate section, 7159.10. Above $500, even an oral agreement counts as a home improvement contract under the statute, which is why the law insists the terms get written down.

What are the money rules: down payment, progress payments and lien releases?

In California the down payment on a home improvement contract cannot exceed $1,000 or 10 percent of the contract price, whichever is less, under the 2026 text of section 7159.5. On a $60,000 kitchen in 2026 that is $1,000, not $6,000. On a $40,000 job in 2026 it is still $1,000, not $4,000. On a $10,000 job the two limits meet at $1,000, and on an $8,000 bathroom refresh in 2026 it is $800.

After the down payment, every payment has to follow work already done or materials already delivered. The statute puts it in capital letters inside the contract itself: "IT IS AGAINST THE LAW FOR A CONTRACTOR TO COLLECT PAYMENT FOR WORK NOT YET COMPLETED, OR FOR MATERIALS NOT YET DELIVERED." The schedule of progress payments must name each phase of work and the dollar amount tied to it.

A claim circulates online that special-order materials are an exception to the deposit cap. Section 7159.5 contains no such exception, and CSLB says so in one line: "There are no exceptions for special-order materials."

There is one real exception, and it is narrow. Under section 7159.5(a)(8), a contractor that furnishes a performance and payment bond, a lien and completion bond, or a bond equivalent or joint control approved by CSLB's registrar may collect payment ahead of the work. An ordinary contractor's license bond does not count.

CSLB's contracts page explains the blanket bond version. If the deposit is larger than the cap and nobody mentions one of these, that is the question to ask.

Lien releases are the third money rule and the easiest to overlook. The contract must state that after each payment, and before the next one, the contractor will furnish a full and unconditional release from lien claims for the work you paid for. Section 7159.5(a)(6) adds that if the owner requests those releases, the owner may withhold further payments until they are furnished.

Here is the sequencing that matters. The payment schedule says when you pay. The lien release is the document in which a potential lien claimant gives up its claim for the part you paid for. The schedule and the releases are meant to be read together.

If you want the contractor to commit to a fixed price before demolition, with a schedule built around finished stages, our guide to locking design and price in a home renovation contract walks through one way to set that up.

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Which notices does the law require, word for word?

California requires five notices in a home improvement contract, and much of the wording is set by statute, so a contractor cannot paraphrase it away. Most contracts also need a right-to-cancel notice.

As of 2026 the five are the Mechanics Lien Warning, the CSLB information notice, a commercial general liability insurance notice, a workers' compensation notice, and a notice on extra work and change orders. A contractor with a qualifying bond under section 7159.5(a)(8) may leave out the lien warning.

The Mechanics Lien Warning is the long one, and the most useful. It explains that a subcontractor or supplier who is not paid can record a lien on your house even after you pay your contractor in full.

The warning also explains the Preliminary Notice: each subcontractor and supplier must provide you one to preserve lien rights, and, in the warning's words, it "can be sent up to 20 days after the subcontractor starts work or the supplier provides material." Pay your contractor before those notices land and you can end up paying twice.

The warning's own advice is practical: ask for the list of subcontractors and suppliers, wait out the 20 days, and pay with joint checks made out to both the contractor and the subcontractor.

The insurance notices are fill-in-the-blank. The contractor has to say whether it carries commercial general liability insurance and with which company, or is self-insured, and whether it carries workers' compensation or has no employees. If the notice says no employees, it is fair to ask who will be doing the work.

The right to cancel applies to most contracts negotiated anywhere other than the contractor's place of business, which covers the kitchen-table signing.

The window runs until midnight of the third business day after you receive a signed and dated copy of the contract that includes the notice, or the fifth if you are 65 or older (Civil Code 1689.5 and 1689.6). Saturday counts as a business day; Sunday and listed holidays do not. Contracts to repair damage from a declared emergency get seven business days under section 7159(e)(7).

The notice must be in 12-point bold type, sit next to your signature, come with a detachable Notice of Cancellation form in duplicate, and be in the same language the salesperson used. If the pitch was in Spanish, the notice has to be in Spanish.

The bond notice is a single line near the signatures: you, the owner, have the right to require the contractor to have a performance and payment bond. On a large job it is worth asking what a bond would add to the price.

What changed on January 1, 2026?

Two bills rewrote parts of section 7159, both effective January 1, 2026. SB 517 added a subcontractor disclosure, and AB 1327 made it possible to cancel by email. Contracts written on an older template may be missing both, and CSLB's sample home improvement contract already shows the new lines.

The subcontractor box (SB 517). The contract must now ask "Will subcontractors be used?" with a Yes and a No box to check. If Yes, the contract must carry a disclaimer that a list of the subcontractors, with names, contact information, license numbers and classifications, will be provided on request. The same disclaimer goes on every change order.

One correction, because it is still circulating in bill summaries and trade posts: some say the rule applies only to a subcontractor doing more than 50 percent of the project cost. That number does not appear in the enacted text. Section 7159(c)(7) has no percentage threshold, and any subcontractor triggers the Yes box.

SB 517 also states that the prime contractor is responsible for completing the project according to the contract, plans and specifications. Read that carefully. It applies "for purposes of administrative discipline", meaning CSLB can discipline the prime contractor. It does not, by itself, make the prime contractor liable in court for everything a subcontractor does.

Email cancellation (AB 1327). Page one must now list an email address for your Notice of Cancellation and a phone number to help you find and fill out the form. Civil Code 1689.6(d), as amended, says cancellation occurs when the buyer gives written notice to the seller at the address or email address in the contract.

If the cancellation notice is missing altogether, the statute now says you can file a complaint with CSLB.

For a reader, the practical change is simple. Email now sits in the notice next to mail, fax and hand delivery as a way to cancel, inside the same three, five or seven business days.

What happens if your contract is missing something?

A home improvement contract that leaves out a required item is cause for CSLB discipline against the contractor under section 7159(a)(5).

Three violations go further and are misdemeanors under section 7159.5(b)(1), punishable in 2026 by a fine of $100 to $5,000, up to a year in county jail, or both: no written contract with a stated price, a down payment over the cap, and collecting payment ahead of the work.

The distinction matters, because the two get blurred. A missing insurance notice is grounds for discipline, and it is not one of the three misdemeanors in section 7159.5(b)(1). An $8,000 deposit on a $40,000 job in 2026, with no qualifying bond or approved joint control, is on that list.

The licensing question sits above all of it. Under section 7031(b), a person who hires an unlicensed contractor for work that requires a license can sue to recover all compensation paid for that work. Under 7031(a), an unlicensed contractor generally cannot sue to collect payment, with a narrow exception in subsection (e). That is why the license number on page one is the first check, not the last.

One gap works differently from the rest. Under Civil Code 1689.7(g), until the contractor complies with the cancellation-notice rules, the buyer may cancel a home solicitation contract. A missing cancellation form does not start the three-day clock.

For other gaps, the statute's stated remedy is CSLB discipline, and whether a gap affects the contract itself is a question for an attorney. If a dispute has started, CSLB's complaint process and a California attorney are the routes. Our piece on what to do when a contractor disappears mid-project covers the practical steps once work has stopped.

What does section 7159 leave out, and what should you discuss before signing?

Section 7159 governs form, payments, change orders and notices. It says little about several things owners and contractors argue over in 2026: who pulls the permits, how a hidden problem behind a wall gets priced, what the warranty covers, and how disputes get resolved. Other laws may touch some of these, and the contract is where the parties put their own terms.

Five topics worth raising before you sign:

• Permits and inspections. Who applies, who pays the fees, and who fixes a failed inspection.
• Hidden conditions. How work behind walls gets priced: a unit rate written in now, or a change order with a cap.
• Allowances. Every allowance for tile, fixtures or cabinets listed in dollars, so "standard" has a number.
• Warranty. Length and scope for workmanship, separate from the manufacturer warranties on products.
• Cleanup and site rules. Working hours, debris removal, protection of floors and the parts of the house not under construction.

The scope description is where those terms live, and a vague scope is where costs hide. Two bids that look $15,000 apart in 2026 can describe two different jobs. Our guides to reading a contractor quote line by line and the three estimates rule show how to line them up before you sign either one.

The Renology Take

The 2026 changes read like a big deal. They are smaller than they look.

The subcontractor box is a yes or a no. It tells you nothing about who will be in your house until you ask for the list, and the statute puts the burden of asking on you. Email cancellation is a real convenience, but it only helps inside a short window, three business days for most buyers.

The protection with the most money riding on it is the easiest one to skim: lien releases, requested at every payment, matched against the Preliminary Notices that arrive in the mail. It is tedious. A contract can tick every box in the table above and still leave you exposed if you pay on schedule and file the paperwork unread.

The law makes a contract legal. Reading it at each payment is what makes it useful.

How we checked this

Every requirement on this page was read from the current text of Business and Professions Code sections 7159, 7159.5 and 7031 and Civil Code sections 1689.5, 1689.6 and 1689.7 on the California Legislature's official site on October 30, 2026. Section 7159 carries the note "Amended by Stats. 2025, Ch. 585, Sec. 1.5 (SB 517), effective January 1, 2026."

We compared the statute against CSLB's December 2025 bulletin on new laws for 2026 and CSLB's sample home improvement contract. On the same date we read seven pages that rank for this search, looking for the two 2026 changes; none of those seven mentioned the subcontractor box or email cancellation.

This page describes what the law requires. It does not tell you what to do in a specific dispute, and nothing here is legal advice. Statute text was checked on October 30, 2026. For a dispute, contact the Contractors State License Board (CSLB) or a California attorney.