Running the Business · Part 3
The home improvement contract (B&P 7159): every required element, the exact notices, and the three-day right to cancel
Every residential plumbing job over $500 is a home improvement contract under Business and Professions Code section 7159, and the section does not merely require a contract; it dictates what the contract says, in what typeface, under which headings, with which statutory notices attached, and what the customer must be handed before the first tool comes off the truck. Missing any of it is cause for discipline, and the deposit and progress-payment rules inside it are misdemeanors. This lesson walks the section top to bottom, explains what each piece is for, and shows why the three-day right to cancel decides when you may start work. The template that follows it is the form itself, with every notice verbatim.
What the full lesson covers
- The threshold is $500 in aggregate, oral or written, with an owner or a tenant. Almost every plumbing job that is not a small service call is a home improvement contract, and the service and repair form is the only alternative (lesson 3.3).
- The contract must carry thirteen items under exact headings ("Home Improvement," "Contract Price," "Downpayment," "Schedule of Progress Payments," "Approximate Start Date," "Approximate Completion Date," "Note About Extra Work and Change Orders," and the rest), in at least 10-point type, with three statements in 12-point boldface: the right to a completed copy, the $1,000-or-10-percent deposit cap, and the progress-payment warning.
- Six notices are required: general liability, workers' compensation, change-order rights, the Mechanics Lien Warning, the CSLB information notice, and the right to cancel, with a detachable Notice of Cancellation in duplicate. Since January 1, 2026, the first page must also give the email address to which a cancellation may be sent.
- The customer's right to cancel runs three business days (five for a senior citizen, seven after a declared emergency) from receipt of the signed, dated copy with the notice. Work started inside that window is at your risk.
- Failure to include any required element is cause for discipline (7159(a)(5)); the deposit and progress-payment violations are misdemeanors (7159.5).
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More lessons in Contracts and Getting Paid
- 1The home improvement contract (B&P 7159): every required element, the exact notices, and the three-day right to cancelYou are here
- 2The deposit cap: $1,000 or 10 percent, whichever is less, and progress payments that cannot exceed the work. CSLB's most common citation
- 3Service and repair contracts (B&P 7159.10): when the short form applies, what it must say, and how a service call falls out of it
- 4Subcontracts with GCs: the twelve clauses to read, what to strike, and what to negotiate
- 5Change orders: written, signed, before the work. Every time. Why verbal ones end in CSLB complaints
- 6Mechanics liens I: the 20-day preliminary notice. Miss it, lose your rights
- 7Mechanics liens II: recording deadlines, the 90-day foreclosure clock, the four statutory release forms, stop payment notices, and payment bonds on public work
- 8Collections: demand letter, lien, small claims, attorney. When each is worth it, and the one thing that makes all of them impossible
- 9Taking payment: cards, ACH, checks, cash, financing partners, and getting every dollar into the right account
- 10Case: the job that went unpaid. Where the contractor lost lien rights and how to have kept them
- 11Case: the deposit that became a citation
- 12Case: the change order that was never written
- 13Template: the home improvement contract, with every B&P 7159 notice verbatim
- 14Template: the service and repair contract (B&P 7159.10), one page, with the notices verbatim
- 15Template: the change order, one page, signed before the work
- 16Template: the 20-day preliminary notice, with the proof-of-notice declaration
- 17Template: the four statutory lien waiver and release forms (Civil Code 8132 to 8138), verbatim
- 18Template: the demand letter, homeowner version and general contractor version
- 19Template: the subcontract review checklist. Twelve clauses, three boxes each