AB1327 - Home improvement and home solicitation: right to cancel contracts: notice.

Assembly Bill No. 1327 CHAPTER 348 An act to amend Sections 7159 and 17511.5 of the Business and Professions Code, and to amend Sections 1689.6, 1689.7, 1689.20, and 1689.21 of the Civil Code, relating to contracts. [ Approved by Governor October 06, 2025. Filed with Secretary of State October 06, 2025. ] LEGISLATIVE COUNSEL'S DIGEST AB 1327, Aguiar-Curry. Home improvement and home solicitation: right to cancel contracts: notice. Existing law generally regulates various types of consumer transactions, including home improvement and home solicitation contracts and offers. Existing law authorizes a buyer to cancel certain home improvement and home solicitation contracts or offers until midnight of the 3rd business day after the day on which the buyer signs an agreement or offer to purchase that complies with specified requirements. Existing law provides an alternate 5-day period of time to cancel the contracts or offers described above if the buyer or property owner is a senior citizen, as defined, for contracts entered into, or offers to purchase conveyed, on or after January 1, 2021. Existing law also provides a 7-day period of time to cancel the contracts or offers described above if the contract is for the repair or restoration of residential premises damaged by any sudden or catastrophic event for which a state of emergency or local emergency has been declared. Existing law requires a home improvement or home solicitation contract or offer to include a notice of cancellation form with specified statements as to the buyer’s right to cancel, including how a notice of cancellation may be delivered to the seller. This bill would require that notice of cancellation to also be delivered by email and require the seller to include in the contract an email address to which the notice of cancellation is to be sent and a telephone number to assist the buyer with locating and filling out the notice of cancellation, and would make conforming changes. Existing law, the Contractors State License Law, defines and regulates the activities of contractors and provides for their licensure, regulation, and discipline by the Contractors State License Board within the Department of Consumer Affairs. Existing law governing home improvement contracts specifies that the failure of a licensee, their agent or salesperson, or a person subject to the Contractors State License Law to provide certain information, notices, and disclosures in the contract, or to otherwise fail to comply with those provisions, is cause for discipline. This bill would authorize a buyer to file a complaint with the Contractors State License Board if a notice of cancellation is not included in or attached to a home improvement contract, as provided. This bill would incorporate additional changes to Section 7159 of the Business and Professions Code proposed by SB 517 to be operative only if this bill and SB 517 are enacted and this bill is enacted last. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO Bill Text The people of the State of California do enact as follows: SECTION 1. Section 7159 of the Business and Professions Code is amended to read: 7159. (a) (1) This section identifies the projects for which a home improvement contract is required, outlines the contract requirements, and lists the items that shall be included in the contract, or may be provided as an attachment. (2) This section does not apply to service and repair contracts that are subject to Section 7159.10, if the contract for the applicable services complies with Sections 7159.10 to 7159.14, inclusive. (3) This section does not apply to the sale, installation, and servicing of a fire alarm sold in conjunction with an alarm system, as defined in Section 7590.1, if all costs attributable to making the fire alarm system operable, including sale and installation costs, do not exceed five hundred dollars ($500), and the licensee complies with the requirements set forth in Section 7159.9. (4) This section does not apply to any costs associated with monitoring a burglar or fire alarm system. (5) Failure by the licensee, their agent or salesperson, or by a person subject to be licensed under this chapter, to provide the specified information, notices, and disclosures in the contract, or to otherwise fail to comply with any provision of this section, is cause for discipline. (6) If the applicable “Notice of Cancellation” is not included in or attached to the contract as required by this section, the buyer may file a complaint with the Contractors State License Board. (b) For purposes of this section, “home improvement contract” means an agreement, whether oral or written, or contained in one or more documents, between a contractor and an owner or between a contractor and a tenant, regardless of the number of residence or dwelling units contained in the building in which the tenant resides, if the work is to be performed in, to, or upon the residence or dwelling unit of the tenant, for the performance of a home improvement, as defined in Section 7151, and includes all labor, services, and materials to be furnished and performed thereunder, if the aggregate contract price specified in one or more improvement contracts, including all labor, services, and materials to be furnished by the contractor, exceeds five hundred dollars ($500). “Home improvement contract” also means an agreement, whether oral or written, or contained in one or more documents, between a salesperson, whether or not they are a home improvement salesperson, and an owner or a tenant, regardless of the number of residence or dwelling units contained in the building in which the tenant resides, which provides for the sale, installation, or furnishing of home improvement goods or services. (c) In addition to the specific requirements listed under this section, every home improvement contract and any person subject to licensure under this chapter or their agent or salesperson shall comply with all of the following: (1) The writing shall be legible. (2) Any printed form shall be readable. Unless a larger typeface is specified in this article, text in any printed form shall be in at least 10-point typeface and the headings shall be in at least 10-point boldface type. (3) (A) Before any work is started, the contractor shall give the buyer a copy of the contract signed and dated by both the contractor and the buyer. The buyer’s receipt of the copy of the contract initiates the buyer’s rights to cancel the contract pursuant to Sections 1689.5 to 1689.14, inclusive, of the Civil Code. (B) The contract shall contain on the first page, in a typeface no smaller than that generally used in the body of the document, both of the following: (i) The date the buyer signed the contract. (ii) The name, address, and email address of the contractor to which the applicable “Notice of Cancellation” is to be sent, immediately preceded by a statement advising the buyer that the “Notice of Cancellation” may be sent to the contractor at the address or email address noted on the contract. (iii) The telephone number of the contractor, or the contractor’s representative, to assist the buyer with locating and filling out the “Notice of Cancellation.” (4) The contract shall include a statement that, upon satisfactory payment being made for any portion of the work performed, the contractor, prior to any further payment being made, shall furnish to the person contracting for the home improvement or swimming pool work a full and unconditional release from any potential lien claimant claim or mechanics lien authorized pursuant to Sections 8400 and 8404 of the Civil Code for that portion of the work for which payment has been made. (5) A change-order form for changes or extra work shall be incorporated into the contract and shall become part of the contract only if it is in writing and signed by the parties prior to the commencement of any work covered by a change order. (6) The contract shall contain, in close proximity to the signatures of the owner and contractor, a notice stating that the owner or tenant has the right to require the contractor to have a performance and payment bond. (7) If the contract provides for a contractor to furnish joint control, the contractor shall not have any financial or other interest in the joint control. (8) The provisions of this section are not exclusive and do not relieve the contractor from compliance with any other applicable provision of law. (d) A home improvement contract and any changes to the contract shall be in writing and signed by the parties to the contract prior to the commencement of work covered by the contract or an applicable change order and, except as provided in paragraph (8) of subdivision (a) of Section 7159.5, shall include or comply with all of the following: (1) The name, business address, and license number of the contractor. (2) If applicable, the name and registration number of the home improvement salesperson that solicited or negotiated the contract. (3) The following heading on the contract form that identifies the type of contract in at least 10-point boldface type: “Home Improvement.” (4) The following statement in at least 12-point boldface 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.” (5) The heading: “Contract Price,” followed by the amount of the contract in dollars and cents. (6) If a finance charge will be charged, the heading: “Finance Charge,” followed by the amount in dollars and cents. The finance charge is to be set out separately from the contract amount. (7) The heading: “Description of the Project and Description of the Significant Materials to be Used and Equipment to be Installed,” followed by a description of the project and a description of the significant materials to be used and equipment to be installed. For swimming pools, the project description required under this paragraph also shall include a plan and scale drawing showing the shape, size, dimensions, and the construction and equipment specifications. (8) If a downpayment will be charged, the details of the downpayment shall be expressed in substantially the following form, and shall include the text of the notice as specified in subparagraph (C): (A) The heading: “Downpayment.” (B) A space where the actual downpayment appears. (C) The following statement in at least 12-point boldface type: “THE DOWNPAYMENT MAY NOT EXCEED $1,000 OR 10 PERCENT OF THE CONTRACT PRICE, WHICHEVER IS LESS.” (9) If payments, other than the downpayment, are to be made before the project is completed, the details of these payments, known as progress payments, shall be expressed in substantially the following form, and shall include the text of the statement as specified in subparagraph (C): (A) A schedule of progress payments shall be preceded by the heading: “Schedule of Progress Payments.” (B) Each progress payment shall be stated in dollars and cents and specifically reference the amount of work or services to be performed and materials and equipment to be supplied. (C) The section of the contract reserved for the progress payments shall include the following statement in at least 12-point boldface type: “The schedule of progress payments must specifically describe each phase of work, including the type and amount of work or services scheduled to be supplied in each phase, along with the amount of each proposed progress payment. IT IS AGAINST THE LAW FOR A CONTRACTOR TO COLLECT PAYMENT FOR WORK NOT YET COMPLETED, OR FOR MATERIALS NOT YET DELIVERED. HOWEVER, A CONTRACTOR MAY REQUIRE A DOWNPAYMENT.” (10) The contract shall address the commencement of work to be performed in substantially the following form: (A) A statement that describes what constitutes substantial commencement of work under the contract. (B) The heading: “Approximate Start Date.” (C) The approximate date on which work will be commenced. (11) The estimated completion date of the work shall be referenced in the contract in substantially the following form: (A) The heading: “Approximate Completion Date.” (B) The approximate date of completion. (12) If applicable, the heading: “List of Documents to be Incorporated into the Contract,” followed by the list of documents incorporated into the contract. (13) The heading: “Note About Extra Work and Change Orders,” followed by the following statement: “Extra Work and Change Orders become part of the contract once the order is prepared in writing and signed by the parties prior to the commencement of work covered by the new change order. The order must describe the scope of the extra work or change, the cost to be added or subtracted from the contract, and the effect the order will have on the schedule of progress payments.” (e) Except as provided in paragraph (8) of subdivision (a) of Section 7159.5, all of the following notices shall be provided to the owner as part of the contract form as specified or, if otherwise authorized under this subdivision, may be provided as an attachment to the contract: (1) A notice concerning commercial general liability insurance. This notice may be provided as an attachment to the contract if the contract includes the following statement: “A notice concerning commercial general liability insurance is attached to this contract.” The notice shall include the heading “Commercial General Liability Insurance (CGL),” followed by whichever of the following statements is both relevant and correct: (A) “(The name on the license or ‛This contractor’) does not carry commercial general liability insurance.” (B) “(The name on the license or ‛This contractor’) carries commercial general liability insurance written by (the insurance company). You may call (the insurance company) at _____ to check the contractor’s insurance coverage.” (C) “(The name on the license or ‛This contractor’) is self-insured.” (D) “(The name on the license or ‘This contractor’) is a limited liability company that carries liability insurance or maintains other security as required by law. You may call (the insurance company or trust company or bank) at ____ to check on the contractor’s insurance coverage or security.” (2) A notice concerning workers’ compensation insurance. This notice may be provided as an attachment to the contract if the contract includes the statement: “A notice concerning workers’ compensation insurance is attached to this contract.” The notice shall include the heading “Workers’ Compensation Insurance” followed by whichever of the following statements is correct: (A) “(The name on the license or ‛This contractor’) has no employees and is exempt from workers’ compensation requirements.” (B) “(The name on the license or ‛This contractor’) carries workers’ compensation insurance for all employees.” (3) A notice that provides the buyer with the following information about the performance of extra or [Text truncated for display. Full text available on Congress.gov.]