Business Management, Contract Law, and Project Administration
The home improvement contract
Anything over $500 must be in writing and signed before work starts. The contract should identify the contractor, license number, and address; describe the work and materials; state the price and payment schedule; and include the cancellation notice and lien warnings required by the Business and Professions Code. Down payments are capped at $1,000 or 10 percent of the contract price, whichever is less.
Changes and payment
Every change should be a written change order signed by the owner before the work is performed. Progress payments should track completed work, and final payment and retainage are tied to completion and sign-off rather than to a calendar date.
Liens and notices
A contractor or supplier who wants lien rights on a private job generally must serve a preliminary notice within 20 days of first furnishing labor or materials, and must record a lien within the statutory window after completion. Miss the notice or the deadline and the right is gone, no matter how valid the debt.
Licensing and risk
Keep the license active, maintain the contractor's bond and workers' compensation coverage, and never subcontract to an unlicensed firm - it exposes you to discipline and can bar you from collecting. Advertising must show the license number.
Traps
Oral change orders, starting before signatures, and "we'll do the paperwork later" are always wrong answers. Watch also for questions that confuse the down-payment cap with a straight percentage deposit, or that assume lien rights exist without any notice.
Worked example: on a $12,000 re-roof, 10 percent is $1,200, but the statutory cap is $1,000 - so the most you may collect at signing is $1,000.