HOME IMPROVEMENT CONTRACTS
The Business and Professional Code defines HOME IMPROVEMENT as the repairing, remodeling, altering, converting, modernizing of, or adding to residential property. Home Improvement includes providing any goods or services that in anyway enhance or improve the value of residential property.
A Home Improvement Contract means an agreement between a contractor and an owner, or a contractor and a tenant for Home Improvement work. Given the broad definition, of Home Improvement, almost anything done to an existing residence could and probably would be deemed to require the use of a Home Improvement Contract.
Having looked at hundreds of contracts, I can say with a high degree of certainty that 95% of all the contracts that I have reviewed do not comply with the requirements mandated by the Home Improvement Contract provisions of Business & Professional Code Sections 7159 et. seq..
WHAT HAPPENS WHEN A CONTRACTOR FAILS TO COMPLY
WITH THE REQUIREMENTS OF THE HOME IMPROVEMENT ACT
The first consequence is that you put your contractor license at risk and you are subject to being disciplined by the Contractors’ State License Board (CSLB).
The second consequence is far harsher then the first, because the court will more likely than not VOID your contract. If your contract is voided, all of the terms and conditions in your contract, including the contract price, become nonexistent and unenforceable. A judge may decide that you are not entitled to receive any payment for your labor or material or a judge may decide that you are entitled to “quantum meruit” or the reasonable value of your services.
In one Supreme Court case the court determined that if the contract violated the Home Improvement Act, an unsophisticated homeowner may void a contract. The court also ruled that the contractor was not entitled to be paid for its services. A second Court of Appeal case determined that if the contract was a long term contract and the contractor had substantially performed the majority of the work, it would be unfair to give enrichment to a homeowner to the detriment of the contractor. In the second case the Court of Appeal ruled that the contractor was not entitled to the contract price however the contractor was entitled to the reasonable value of its services. The third case resulted in the Court of Appeal ruling that the contract was void and the contractor was not entitled to any payment.
If you are using a contract that does not comply with the Home Improvement Act and you end up in court you can expect that the attorney for the homeowner will argue that your contract is void and that you are not entitled to receive any payment for your services.
It is our recommendation that you comply with the law and avoid the risk of not getting paid for you services.
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