I am excited to be adding explainer videos to various prior blog posts.
Below is a brief video providing an overview of this blog post.
For a more through analysis, continue reading below the video.
Many contractors do not realize that there is language that is absolutely required in every home improvement contract in California. If your contract is missing this language, your license is subject to discipline by the Contractors State Licensing Board (CSLB).
Unfortunately, many contractors use premade forms through the American Institute of Architects (AIA) and similar vendors.
If you are a contractor using AIA forms without any additions, you are violating California law.
California law requires certain disclosures be made in a home improvement construction contract, known as consumer notice disclosures.
Some of these disclosures include:
(1) “Note About Extra Work and Change Orders”;
(2) Commercial General Liability Insurance;
(3) Worker’s Compensation Insurance;
(4) Performance of Extra or Change-order Work Notice;
(5) Mechanic’s Lien Warning; and
(6) Contractors Board Notice.
Before you accept a job to remodel a home, ask yourself: is my contract going to be compliant with California law? If not, you need to make a change immediately.
What is scary is that many of the sample contracts, not just AIA, also fail to make the necessary disclosures. I Googled the following language:
Of the results on the first page, more than one sample contract failed to include these necessary disclosures. Therefore, it is best practice to make your own contract, or make sure to double check the sample contract you are using.
Business and Professions Code § 7159 also outlines many other requirements for your home improvement contract. These include how the contract is labeled, headings, font size, and required statements and disclosures.
You must read this code section and incorporate its elements into your contract.
Do not use AIA contracts in California.
Architects, not lawyers, draft AIA contracts. These contracts, therefore, benefit architects and tend to benefit homeowners as well.
Most of AIA contracts I see do not provide contractors with equal bargaining power. This is often for good reason: contractors are in a better position than a homeowner to draft contracts because they know construction and know what the implications are of certain contract provisions on a project.
Despite this, contractors are generally the ones supplying these AIA contracts for homeowners to sign.
This begs the question:
Why would you use an AIA contract that doesn’t help you?
The answer is: you shouldn’t.
Take the time to review the requirements. No, it’s not fun. Yes, it will take more time than you would like. However, at the end of the day, it’s not worth having the CSLB catch wind of an issue. You owe it to your clients to have a well-written and compliant contract.
My uncle loves the “6P Rule,” which is fitting here: Prior & Proper Preparation Prevents Piss Poor Performance.
When your contracts are compliant with California law, you can focus on what you do best: construction.
Feel free to reach out. You’ll hear back from me personally within 24 hours, if not less.
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Phone: (415) 523-0302. Extension 707.
All initial consultations are free.