Above what aggregate contract price do the home improvement contract requirements of Section 7159 apply?
Based on: B&P 7159(b)
California Contractor Law & Business Exam · Contracts
California Home Improvement Contract Rules 2026: The $500 Threshold and Required Terms
In California, a home improvement contract for more than $500 in total labour, services and materials must be in writing and carry a long list of mandatory terms, under Business and Professions Code section 7159. The contractor must give the buyer a copy signed and dated by both parties before any work starts, which is what triggers the buyer's cancellation rights. This guide covers the $500 threshold, what a home improvement is, the required contract terms and typefaces, home improvement salesperson registration, and the promotional-gift limit. Read the governing statute in the Business and Professions Code.
Practice
Free practice questions
Which of the following is expressly included within the definition of a home improvement?
Based on: B&P 7151
A home improvement contract may be formed in which of the following ways?
Based on: B&P 7151.2
What must a home improvement salesperson do before soliciting a home improvement contract for a contractor?
Based on: B&P 7152
Which person is exempt from registering as a home improvement salesperson?
Based on: B&P 7152(d)
A home improvement salesperson registration expires when?
Based on: B&P 7153.2
A salesperson registration that has lapsed may still be renewed within three years upon paying the renewal fee plus what penalty?
Based on: B&P 7153.3
When must a home improvement contractor notify the registrar of a salesperson's employment?
Based on: B&P 7154
A home improvement salesperson's violation of the license law may result in discipline against whom?
Based on: B&P 7155.5
Under Section 7028.5, a responsible managing employee of a licensed corporation may individually act as a contractor only if:
Based on: B&P 7028.5
What counts as a home improvement, and the $500 line
The home improvement rules only bite above a threshold, and the exam wants the number. Under Business and Professions Code section 7159(b), the home improvement contract requirements apply where the aggregate contract price for labour, services and materials exceeds $500. Below that line the formal contract rules do not apply, though the rest of the license law still does. A home improvement, defined in section 7151, is the repair, remodelling, alteration, conversion or improvement of a residence and its structures, and the statute expressly includes the installation of a swimming pool, spa or hot tub on residential property, an item candidates forget. A home improvement contract, under section 7151.2, may be oral or written or contained in one or more documents between a contractor and an owner or tenant, but once the price exceeds $500 the writing and disclosure rules of section 7159 apply. Getting the definition and the threshold right is the foundation for the rest of the topic.
- The section 7159 requirements apply when the aggregate price exceeds $500 (B&P Code § 7159(b)).
- A home improvement includes installing a swimming pool, spa or hot tub on residential property (B&P Code § 7151).
- A home improvement contract may be oral, written or spread across one or more documents (B&P Code § 7151.2).
- It runs between a contractor and an owner or tenant of residential property (B&P Code § 7151.2).
The mandatory contract terms and typefaces
Section 7159 is unusually specific about how a home improvement contract must look, and the exam mines that detail. Before any work is started, the contractor must give the buyer a copy of the contract signed and dated by both the contractor and the buyer, under section 7159(c)(3), and it is the buyer's receipt of that signed, dated copy that initiates the buyer's cancellation rights. The first page must show the date the buyer signed and the contractor's name, address and email for the Notice of Cancellation, under section 7159(c)(3)(B). The formatting rules are equally exact: printed text must be at least 10-point typeface with headings in at least 10-point boldface under section 7159(c)(2); the heading identifying the document as a Home Improvement contract must be in at least 10-point boldface under section 7159(d)(3); and the statement telling the buyer they are entitled to a completely filled-in copy of the agreement before work starts must be in at least 12-point boldface under section 7159(d)(4). Down payments and progress payments are limited by section 7159.5, which ties payments to work actually performed so a contractor cannot take large sums in advance. When you see a question about type size or the first page, it is testing whether you read section 7159 closely.
Home improvement salespersons and promotional gifts
A contractor who uses salespeople to sell home improvements takes on extra duties. A home improvement salesperson must register with the board and, before soliciting, identify the represented contractor's business name and licence number to the owner, under section 7152, though a qualifying person listed on the licensee's record is exempt from registering under section 7152(d). A salesperson registration expires two years from the last day of the month in which it was issued under section 7153.2, and a lapsed registration may be renewed within three years on paying the renewal fee plus a delinquent penalty equal to 50 percent of the renewal fee under section 7153.3. The contractor must notify the registrar in writing before a salesperson begins work under section 7154, and a salesperson's violation is cause for discipline against both the salesperson and the employing contractor under section 7155.5, whether or not the contractor knew of it. Two more rules round out the topic: a salesperson who fails to remit a payment received in a transaction commits a misdemeanour under section 7156, and a promotional gift to a prospective customer is allowed only if it is not conditioned on obtaining a contract, does not exceed $5 in value, and is limited to one per transaction under section 7157.
| Element | Minimum typeface | Statute |
|---|---|---|
| Printed body text | 10-point | B&P Code § 7159(c)(2) |
| Headings | 10-point boldface | B&P Code § 7159(c)(2) |
| 'Home Improvement' identifying heading | 10-point boldface | B&P Code § 7159(d)(3) |
| Buyer's entitlement-to-a-copy statement | 12-point boldface | B&P Code § 7159(d)(4) |
FAQ
Frequently asked questions
When do California home improvement contract rules apply?
In California, the home improvement contract requirements of Business and Professions Code section 7159 apply when the aggregate contract price for labour, services and materials exceeds $500. Below $500 the formal contract rules do not apply, though the rest of the Contractors State License Law still governs the work.
What triggers a California buyer's right to cancel a home improvement contract?
In California, the buyer's cancellation right is initiated by the buyer's receipt of the copy of the contract signed and dated by both parties, which must be given before any work starts, under Business and Professions Code section 7159(c)(3). The first page must state the date the buyer signed and the contractor's address for the Notice of Cancellation under section 7159(c)(3)(B).
Does a swimming pool count as a home improvement in California?
In California, yes: the installation of a swimming pool, spa or hot tub on residential property is expressly included in the definition of a home improvement under Business and Professions Code section 7151, along with the repair, remodelling and alteration of a residence and its structures.
Must a home improvement salesperson register in California?
In California, a home improvement salesperson must register with the Contractors State License Board and identify the represented contractor's name and licence number before soliciting, under Business and Professions Code section 7152. A qualifying person listed on the licensee's record is exempt under section 7152(d), and the registration expires two years after it is issued under section 7153.2.
What is the largest promotional gift a California contractor can give a customer?
In California, a promotional gift to a prospective customer is limited to $5 in value, must not be conditioned on obtaining a contract, and only one such gift is allowed per transaction, under Business and Professions Code section 7157.