California Adds More Contract Disclosures

California quietly made a few small tweaks to its home improvement contract disclosure laws – already considered the most burdensome in the U.S. – and we anticipate compliance enforcement will begin by July of 2026, so if you haven’t implemented the changes, now is the time to do so.  As is typical, the need for these additional disclosures, and how useful they may actually be, is debatable.

First, the customer now has the right to cancel in-home sales via email.  Of course, any contractor with a degree of sophistication has been accepting email cancellations for years now out of prudence.  Regardless, contractors are now legally required to provide an email address on their customer contracts. In conjunction with this, we have been advising clients to update the cancellation delivery language in the Notice of Cancellation itself to include email as a delivery option, as well as noting this in the references to the Notice contained within a compliant California contract.

Second, California contractors may recall that there is a mandatory notice on the front page of the contract that informs the customer where and how the Notice of Cancellation can be sent in (because, apparently, the Notice itself is too confusing to be understood in a vacuum by the customer).  The new regulation requires a phone number to be included in that disclosure to “assist the buyer with locating and filling out the Notice of Cancellation.”  Sheesh.  In other words, you would add to that existing disclosure something such as “For questions about the notice of cancellation, please call 1-800-Contractor.”

Third, California is now following a number of states that have decided the customer needs to be aware if subcontractors are being utilized on a job.  More to the point, the contract needs to disclose whether or not subcontractors will be used on the project, and if the answer is yes, then this statement needs to be provided: 

One or more subcontractors will be used on this project, and the contractor is aware that a list of subcontractors is required to be provided, upon request, along with the names, contact information, license number, and classification of those subcontractors.

For many years BLLP’s standard advice for states that have this type of requirement – given that in the vast majority of cases the contractor is not going to know at time of sale which installers are going to be utilized on a particular job – is to simply create a master list of all possible installers being utilized by the contractor. This form should include a header in bold making clear that at time of closing there is no way to determine which specific subcontractors may be utilized on a particular job, but that the subcontractors will come from this list and the customer will be advised of those specific names, etc. prior to installation. In the unlikely event the customer actually asks for the list, have the sales representative hand it out at time of closing or call into HQ and have it emailed in real-time to the customer.

All of this is just one more warning as to why you should have your customer-facing paperwork reviewed every year or so to ensure it maintains compliance under state and federal law, as well as reflecting the specific protections unique to our industry.

Finally, there has also been some consternation making the rounds in the industry about a new restriction on dispute resolution terms in California consumer contracts.  For the past few decades, BLLP has been strongly advising clients to incorporate state-specific arbitration and class action waiver agreements into their customer contracts as well as their web pages.  The new regulation purports to limit the scope of dispute resolution clauses to the actual purpose of the agreement with the consumer.  In other words, this could mean the dispute resolution coverage might only apply to the installation, use and payment for the home improvement goods and services.  

On its face that seems innocuous, but some have suggested this could impact the ability of dispute resolution clauses contained in lead aggregator web pages to protect the contractor.  Maybe.  But so many lead aggregators still either (i) don’t even use such clauses, (ii) use them but they are so poorly drafted so as to be of questionable value to the contractor already, or (iii) bury them within small print terms and condition so that enforcement, if challenged, is dubious at best.  As such, we are not sure how much of an impact this will make in the long run, especially because this new regulation is likely to receive a very strong challenge under the Federal Arbitration Act.  To date, we continue to enforce arbitration and class action waivers with great success for the industry throughout the U.S., and in the People’s Republic of California.

Berenson LLP serves as counsel to the remodeling and home improvement industry, providing legal compliance solutions, quality control counseling, litigation defense, and agency representation to industry clients throughout the United States. This client alert is intended to provide general information regarding industry legal issues and developments to our clients and other friends. It should not be construed as legal advice or a legal opinion on any specific facts or situations. For further information on your own situation, we encourage you to contact an attorney at the firm. For more information on the legal solutions provided by Berenson LLP, please contact us by phone at 561.429.4496 or by email at info@berensonLLP.com.