BILL NUMBER: AB 2073	CHAPTERED
	BILL TEXT

	CHAPTER  114
	FILED WITH SECRETARY OF STATE  JULY 24, 2006
	APPROVED BY GOVERNOR  JULY 24, 2006
	PASSED THE SENATE  JUNE 26, 2006
	PASSED THE ASSEMBLY  APRIL 20, 2006
	AMENDED IN ASSEMBLY  APRIL 5, 2006
	AMENDED IN ASSEMBLY  MARCH 27, 2006

INTRODUCED BY   Assembly Member Matthews

                        FEBRUARY 16, 2006

   An act to amend Section 7159 of, and to add Section 7159.9 to, the
Business and Professions Code, relating to contractors.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2073, Matthews  Home improvement: exemption for fire alarm
installation.
   Existing law licenses and regulates contractors by the Contractors'
State License Board. Existing law imposes certain requirements on
home improvement contracts. Existing law also regulates alarm company
operators by the Bureau of Security and Investigative Services.
   This bill would exclude the sale, installation, and servicing of a
fire alarm sold in conjunction with an alarm system from the
requirements imposed on home improvement contracts if the cost of
making the fire alarm operable does not exceed $500 and other
specified terms and conditions are satisfied.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 7159 of the Business and Professions Code is
amended to read:
   7159.  (a) (1) This section identifies the projects for which a
home improvement contract is required, outlines the contract
requirements, and lists the items that shall be included in the
contract, or may be provided as an attachment.
   (2) This section does not apply to service and repair contracts
that are subject to Section 7159.10, provided the contract for the
applicable services complies with Sections 7159.10 to 7159.14,
inclusive.
   (3) This section does not apply to the sale, installation, and
servicing of a fire alarm sold in conjunction with an alarm system,
as defined in subdivision (n) of Section 7590.1, provided all costs
attributable to making the fire alarm system operable, including sale
and installation costs, do not exceed five hundred dollars ($500),
and the licensee complies with the requirements set forth in Section
7159.9.
   (4) This section does not apply to any costs associated with
monitoring a burglar or fire alarm system.
   (5) Failure by the licensee, his or her agent or salesperson, or
by a person subject to be licensed under this chapter, to provide the
specified information, notices, and disclosures in the contract, or
to otherwise fail to comply with any provision of this section, is
cause for discipline.
   (b) For purposes of this section, "home improvement contract"
means an agreement, whether oral or written, or contained in one or
more documents, between a contractor and an owner or between a
contractor and a tenant, regardless of the number of residence or
dwelling units contained in the building in which the tenant resides,
if the work is to be performed in, to, or upon the residence or
dwelling unit of the tenant, for the performance of a home
improvement, as defined in Section 7151, and includes all labor,
services, and materials to be furnished and performed thereunder, if
the aggregate contract price specified in one or more improvement
contracts, including all labor, services, and materials to be
furnished by the contractor, exceeds five hundred dollars ($500).
"Home improvement contract" also means an agreement, whether oral or
written, or contained in one or more documents, between a
salesperson, whether or not he or she is a home improvement
salesperson, and an owner or a tenant, regardless of the number of
residence or dwelling units contained in the building in which the
tenant resides, which provides for the sale, installation, or
furnishing of home improvement goods or services.
   (c) In addition to the specific requirements listed under this
section, every home improvement contract and any person subject to
licensure under this chapter or his or her agent or salesperson shall
comply with all of the following:
   (1) The writing shall be legible.
   (2) Any printed form shall be readable. Unless a larger typeface
is specified in this article, text in any printed form shall be in at
least 10-point typeface and the headings shall be in at least
10-point boldface type.
   (3) (A) Before any work is started, the contractor shall give the
buyer a copy of the contract signed and dated by both the contractor
and the buyer. The buyer's receipt of the copy of the contract
initiates the buyer's rights to cancel the contract pursuant to
Sections 1689.5 to 1689.14, inclusive, of the Civil Code.
   (B) The contract shall contain on the first page, in a typeface no
smaller than that generally used in the body of the document, both
of the following:
   (i) The date the buyer signed the contract.
   (ii) The name and address of the contractor to which the
applicable "Notice of Cancellation" is to be mailed, immediately
preceded by a statement advising the buyer that the "Notice of
Cancellation" may be sent to the contractor at the address noted on
the contract.
   (4) A statement that, upon satisfactory payment being made for any
portion of the work performed, the contractor shall, prior to any
further payment being made, furnish to the person contracting for the
home improvement or swimming pool work a full and unconditional
release from any claim or mechanic's lien pursuant to Section 3114 of
the Civil Code for that portion of the work for which payment has
been made.
   (5) A change-order form for changes or extra work shall be
incorporated into the contract and shall become part of the contract
only if it is in writing and signed by the parties prior to the
commencement of any work covered by a change order.
   (6) The contract shall contain, in close proximity to the
signatures of the owner and contractor, a notice stating that the
owner or tenant has the right to require the contractor to have a
performance and payment bond.
   (7) If the contract provides for a contractor to furnish joint
control, the contractor shall not have any financial or other
interest in the joint control.
   (8) The provisions of this section are not exclusive and do not
relieve the contractor from compliance with any other applicable
provision of law.
   (d) A home improvement contract and any changes to the contract,
shall be in writing and signed by the parties to the contract prior
to the commencement of any work covered by the contract or applicable
change order, and shall include or comply with all of the following:

   (1) The name, business address, and license number of the
contractor.
   (2) If applicable, the name and registration number of the home
improvement salesperson that solicited or negotiated the contract.
   (3) The following heading on the contract form that identifies the
type of contract in at least 10-point boldface type: "Home
Improvement."
   (4) The following statement in at least 12-point boldface type:
"You are entitled to a completely filled in copy of this agreement,
signed by both you and the contractor, before any work may be
started."
   (5) The heading: "Contract Price," followed by the amount of the
contract in dollars and cents.
   (6) If a finance charge will be charged, the heading: "Finance
Charge," followed by the amount in dollars and cents. The finance
charge is to be set out separately from the contract amount.
   (7) The heading: "Description of the Project and Description of
the Significant Materials to be Used and Equipment to be Installed,"
followed by a description of the project and a description of the
significant materials to be used and equipment to be installed. For
swimming pools, the project description required under this paragraph
also shall include a plan and scale drawing showing the shape, size,
dimensions, and the construction and equipment specifications.
   (8) If a down payment will be charged, the details of the down
payment shall be expressed in substantially the following form, and
shall include the text of the notice as specified in subparagraph
(C):
   (A) The heading: "Down Payment."
   (B) A space where the actual downpayment appears.
   (C) The following statement in at least 12-point boldface type:
   "THE DOWN PAYMENT MAY NOT EXCEED $1,000 OR 10 PERCENT OF THE
CONTRACT PRICE, WHICHEVER IS LESS."
   (9) If any payments, other than the downpayment, is to be made
before the project is completed, the details of these payments, known
as progress payments, shall be expressed in substantially the
following form, and shall include the text of the statement as
specified in subparagraph (C):
   (A) A schedule of progress payments shall be preceded by the
heading: "Schedule of Progress Payments."
   (B) Each progress payment shall be stated in dollars and cents and
specifically reference the amount of work or services to be
performed and any materials and equipment to be supplied.
   (C) The section of the contract reserved for the progress payments
shall include the following statement in at least 12-point boldface
type:
   "The schedule of progress payments must specifically describe each
phase of work, including the type and amount of work or services
scheduled to be supplied in each phase, along with the amount of each
proposed progress payment. IT IS AGAINST THE LAW FOR A CONTRACTOR TO
COLLECT PAYMENT FOR WORK NOT YET COMPLETED, OR FOR MATERIALS NOT YET
DELIVERED.  HOWEVER, A CONTRACTOR MAY REQUIRE A DOWNPAYMENT."
   (10) The contract shall address the commencement of work to be
performed in substantially the following form:
   (A) A statement that describes what constitutes substantial
commencement of work under the contract.
   (B) The heading: "Approximate Start Date."
   (C) The approximate date on which work will be commenced.
   (11) The estimated completion date of the work shall be referenced
in the contract in substantially the following form:
   (A) The heading: "Approximate Completion Date."
   (B) The approximate date of completion.
   (12) If applicable, the heading: "List of Documents to be
Incorporated into the Contract," followed by the list of documents
incorporated into the contract.
   (13) The heading: "Note about Extra Work and Change Orders,"
followed by the following statement:
   "Extra Work and Change Orders become part of the contract once the
order is prepared in writing and signed by the parties prior to the
commencement of any work covered by the new change order. The order
must describe the scope of the extra work or change, the cost to be
added or subtracted from the contract, and the effect the order will
have on the schedule of progress payments."
   (e) All of the following notices shall be provided to the owner as
part of the contract form as specified or, if otherwise authorized
under this subdivision, may be provided as an attachment to the
contract:
   (1) A notice concerning commercial general liability insurance.
This notice may be provided as an attachment to the contract if the
contract includes the following statement: "A notice concerning
commercial general liability insurance is attached to this contract."
The notice shall include the heading "Commercial General Liability
Insurance (CGL)," followed by whichever of the following statements
is both relevant and correct:
   (A) "(The name on the license or 'This contractor') does not carry
commercial general liability insurance."
   (B) "(The name on the license or 'This contractor') carries
commercial general liability insurance written by (the insurance
company). You may call the (insurance company) at __________ to check
the contractor's insurance coverage."
   (C) "(The name on the license or 'This contractor') is
self-insured."
   (2) A notice concerning workers' compensation insurance. This
notice may be provided as an attachment to the contract if the
contract includes the statement: "A notice concerning workers'
compensation insurance is attached to this contract." The notice
shall include the heading "Workers' Compensation Insurance" followed
by whichever of the following statements is correct:
   (A) "(The name on the license or 'This contractor') has no
employees and is exempt from workers' compensation requirements."
   (B) "(The name on the license or 'This contractor') carries
workers' compensation insurance for all employees."
   (3) A notice that provides the buyer with the following
information about the performance of extra or change-order work:
   (A) A statement that the buyer may not require a contractor to
perform extra or change-order work without providing written
authorization prior to the commencement of any work covered by the
new change order.
   (B) A statement informing the buyer that extra work or a change
order is not enforceable against a buyer unless the change order also
identifies all of the following in writing prior to the commencement
of any work covered by the new change order:
   (i) The scope of work encompassed by the order.
   (ii) The amount to be added or subtracted from the contract.
   (iii) The effect the order will make in the progress payments or
the completion date.
   (C) A statement informing the buyer that the contractor's failure
to comply with the requirements of this paragraph does not preclude
the recovery of compensation for work performed based upon legal or
equitable remedies designed to prevent unjust enrichment.
   (4) A notice with the heading "Mechanics' Lien Warning" written as
follows:
   "MECHANICS LIEN WARNING:
   Anyone who helps improve your property, but who is not paid, may
record what is called a mechanics' lien on your property. A mechanics'
lien is a claim, like a mortgage or home equity loan, made against
your property and recorded with the county recorder.
   Even if you pay your contractor in full, unpaid subcontractors,
suppliers, and laborers who helped to improve your property may
record mechanics' liens and sue you in court to foreclose the lien.
If a court finds the lien is valid, you could be forced to pay twice
or have a court officer sell your home to pay the lien. Liens can
also affect your credit.
   To preserve their right to record a lien, each subcontractor and
material supplier must provide you with a document called a '20-day
Preliminary Notice.' This notice is not a lien. The purpose of the
notice is to let you know that the person who sends you the notice
has the right to record a lien on your property if he or she is not
paid.
   BE CAREFUL. The Preliminary Notice can be sent up to 20 days after
the subcontractor starts work or the supplier provides material.
This can be a big problem if you pay your contractor before you have
received the Preliminary Notices.
   You will not get Preliminary Notices from your prime contractor or
from laborers who work on your project. The law assumes that you
already know they are improving your property.
   PROTECT YOURSELF FROM LIENS. You can protect yourself from liens
by getting a list from your contractor of all the subcontractors and
material suppliers that work on your project. Find out from your
contractor when these subcontractors started work and when these
suppliers delivered goods or materials. Then wait 20 days, paying
attention to the Preliminary Notices you receive.
   PAY WITH JOINT CHECKS. One way to protect yourself is to pay with
a joint check. When your contractor tells you it is time to pay for
the work of a subcontractor or supplier who has provided you with a
Preliminary Notice, write a joint check payable to both the
contractor and the subcontractor or material supplier.
   For other ways to prevent liens, visit CSLB's Web site at
www.cslb.ca.gov or call CSLB at 800-321-CSLB (2752).
   REMEMBER, IF YOU DO NOTHING, YOU RISK HAVING A LIEN PLACED ON YOUR
HOME. This can mean that you may have to pay twice, or face the
forced sale of your home to pay what you owe."
   (5) The following notice shall be provided in at least 12-point
typeface: "Information about the Contractors' State License Board
(CSLB): CSLB is the state consumer protection agency that licenses
and regulates construction contractors.
   Contact CSLB for information about the licensed contractor you are
considering, including information about disclosable complaints,
disciplinary actions and civil judgments that are reported to CSLB.
   Use only licensed contractors. If you file a complaint against a
licensed contractor within the legal deadline (usually four years),
CSLB has authority to investigate the complaint. If you use an
unlicensed contractor, CSLB may not be able to help you resolve your
complaint. Your only remedy may be in civil court, and you may be
liable for damages arising out of any injuries to the unlicensed
contractor or the unlicensed contractor's employees.
   For more information:
   Visit CSLB's Web site at www.cslb.ca.gov
   Call CSLB at 800-321-CSLB (2752)
   Write CSLB at P.O. Box 26000, Sacramento, CA 95826."
   (6) (A) The notice set forth in subparagraph (B) and entitled
"Three-Day Right to Cancel," shall be provided to the buyer unless
the contract is:
   (i) Negotiated at the contractor's place of business.
   (ii) Subject to the "Seven-Day Right to Cancel," as set forth in
paragraph (8).
   (iii) Subject to licensure under the Alarm Company Act (Chapter
11.6 (commencing with Section 7590)), provided the alarm company
licensee complies with Sections 1689.5, 1689.6, and 1689.7 of the
Civil Code, as applicable.
   (B) "Three-Day Right to Cancel
   "You, the buyer, have the right to cancel this contract within
three business days. You may cancel by e-mailing, mailing, faxing, or
delivering a written notice to the contractor at the contractor's
place of business by midnight of the third business day after you
received a signed and dated copy of the contract that includes this
notice. Include your name, your address, and the date you received
the signed copy of the contract and this notice.
   If you cancel, the contractor must return to you anything you paid
within 10 days of receiving the notice of cancellation. For your
part, you must make available to the contractor at your residence, in
substantially as good condition as you received it, any goods
delivered to you under this contract or sale. Or, you may, if you
wish, comply with the contractor's instructions on how to return the
goods at the contractor's expense and risk. If you do make the goods
available to the contractor and the contractor does not pick them up
within 20 days of the date of your notice of cancellation, you may
keep them without any further obligation. If you fail to make the
goods available to the contractor, or if you agree to return the
goods to the contractor and fail to do so, then you remain liable for
performance of all obligations under the contract."
   (C) The "Three-Day Right to Cancel" notice required by this
paragraph shall comply with all of the following:
   (i) The text of the notice is at least 12-point boldface type.
   (ii) The notice is in immediate proximity to a space reserved for
the owner's signature.
   (iii) The owner acknowledges receipt of the notice by signing and
dating the notice form in the signature space.
   (iv) The notice is written in the same language, e.g., Spanish, as
that principally used in any oral sales presentation.
   (v) The notice may be attached to the contract if the contract
includes, in at least 12-point boldface type, a checkbox with the
following statement: "The law requires that the contractor give you a
notice explaining your right to cancel. Initial the checkbox if the
contractor has given you a 'Notice of the Three-Day Right to Cancel."
'
   (vi) The notice shall be accompanied by a completed form in
duplicate, captioned "Notice of Cancellation," which shall also be
attached to the agreement or offer to purchase and be easily
detachable, and which shall contain the following statement written
in the same language, e.g., Spanish, as used in the contract:


             "Notice of Cancellation"
                      /enter date of transaction/
                    ______________________________
                                (Date)

   "You may cancel this transaction, without any penalty or
obligation, within three business days from the above date.
   If you cancel, any property traded in, any payments made by you
under the contract or sale, and any negotiable instrument executed by
you will be returned within 10 days following receipt by the seller
of your cancellation notice, and any security interest arising out of
the transaction will be canceled.
   If you cancel, you must make available to the seller at your
residence, in substantially as good condition as when received, any
goods delivered to you under this contract or sale, or you may, if
you wish, comply with the instructions of the seller regarding the
return shipment of the goods at the seller's expense and risk.
   If you do make the goods available to the seller and the seller
does not pick them up within 20 days of the date of your notice of
cancellation, you may retain or dispose of the goods without any
further obligation. If you fail to make the goods available to the
seller, or if you agree to return the goods to the seller and fail to
do so, then you remain liable for performance of all obligations
under the contract."


To cancel this transaction, mail or deliver a
signed and dated copy of this cancellation
notice, or any other written notice, or send a
telegram
to_____________________________________________,
                /name of seller/
at______________________________________________
           /address of seller's place of
business/
not later than midnight of_____________________.
                           (Date)
  I hereby cancel this transaction. _____________
                             (Date)
                _________________________________
                        (Buyer's signature)

   (7) (A) The following notice entitled "Seven-Day Right to Cancel"
shall be provided to the buyer for any contract that is written for
the repair or restoration of residential premises damaged by any
sudden or catastrophic event for which a state of emergency has been
declared by the President of the United States or the Governor, or
for which a local emergency has been declared by the executive
officer or governing body of any city, county, or city and county:
   "Seven-Day Right to Cancel
   You, the buyer, have the right to cancel this contract within
seven business days. You may cancel by e-mailing, mailing, faxing, or
delivering a written notice to the contractor at the contractor's
place of business by midnight of the seventh business day after you
received a signed and dated copy of the contract that includes this
notice. Include your name, your address, and the date you received
the signed copy of the contract and this notice.
   If you cancel, the contractor must return to you anything you paid
within 10 days of receiving the notice of cancellation. For your
part, you must make available to the contractor at your residence, in
substantially as good condition as you received it, any goods
delivered to you under this contract or sale. Or, you may, if you
wish, comply with the contractor's instructions on how to return the
goods at the contractor's expense and risk. If you do make the goods
available to the contractor and the contractor does not pick them up
within 20 days of the date of your notice of cancellation, you may
keep them without any further obligation. If you fail to make the
goods available to the contractor, or if you agree to return the
goods to the contractor and fail to do so, then you remain liable for
performance of all obligations under the contract."
   (B) The "Seven-Day Right to Cancel" notice required by this
subdivision shall comply with all of the following:
   (i) The text of the notice is at least 12-point boldface type.
   (ii) The notice is in immediate proximity to a space reserved for
the owner's signature.
   (iii) The owner acknowledges receipt of the notice by signing and
dating the notice form in the signature space.
   (iv) The notice is written in the same language, e.g., Spanish, as
that principally used in any oral sales presentation.
   (v) The notice may be attached to the contract if the contract
includes, in at least 12-point boldface type, a checkbox with the
following statement: "The law requires that the contractor give you a
notice explaining your right to cancel. Initial the checkbox if the
contractor has given you a 'Notice of the Seven-Day Right to Cancel."
'
   (vi) The notice shall be accompanied by a completed form in
duplicate, captioned "Notice of Cancellation," which shall also be
attached to the agreement or offer to purchase and be easily
detachable, and which shall contain the following statement written
in the same language, e.g., Spanish, as used in the contract:


             "Notice of Cancellation"
                      /enter date of transaction/
                    ______________________________
                                (Date)

   "You may cancel this transaction, without any penalty or
obligation, within seven business days from the above date.
   If you cancel, any property traded in, any payments made by you
under the contract or sale, and any negotiable instrument executed by
you will be returned within 10 days following receipt by the seller
of your cancellation notice, and any security interest arising out of
the transaction will be canceled.
   If you cancel, you must make available to the seller at your
residence, in substantially as good condition as when received, any
goods delivered to you under this contract or sale, or you may, if
you wish, comply with the instructions of the seller regarding the
return shipment of the goods at the seller's expense and risk.
   If you do make the goods available to the seller and the seller
does not pick them up within 20 days of the date of your notice of
cancellation, you may retain or dispose of the goods without any
further obligation. If you fail to make the goods available to the
seller, or if you agree to return the goods to the seller and fail to
do so, then you remain liable for performance of all obligations
under the contract."


To cancel this transaction, mail or deliver a
signed and dated copy of this cancellation
notice, or any other written notice, or send a
telegram
to_____________________________________________,
                /name of seller/
at______________________________________________
           /address of seller's place of
business/
not later than midnight of_____________________.
                           (Date)
  I hereby cancel this transaction. _____________
                             (Date)
                _________________________________
                        (Buyer's signature)

  SEC. 2  Section 7159.9 is added to the Business and Professions
Code, to read:
   7159.9.  (a) The provisions of Section 7159 do not apply to the
sale, installation, and servicing of a fire alarm sold in conjunction
with an alarm system, as defined in subdivision (n) of Section
7590.1 of the Alarm Company Act, provided the licensee does all of
the following:
   (1) Complies with the contract requirements set forth in Section
7599.54.
   (2) Complies with Sections 1689.5, 1689.6 and 1689.7 of the Civil
Code, as applicable.
   (3) Executes the following certification statement in the contract
or in a separate certification document signed by all parties to the
contract:
   "All costs attributable to making the fire alarm system operable
for the residence identified by this document, including sale and
installation costs, do not exceed five hundred dollars ($500)."
   (4) Certifies to the following if the certification statement
described in paragraph (3) is in a separate document:
          "I certify that all statements and representations made by
me in this document are true and accurate."
   (b) The contract or separate certification document shall also
include both of the following:
   (1) The physical address of the residence for which the
certification is applicable.
   (2) The name, business address, and license number of the
contractor as contained in the official records of the board.
   (c) The licensee shall give an exact copy of all documents
required pursuant to this section to the party who is contracting to
have the alarm system installed.
   (d) All documents required pursuant to this section shall be
retained by the licensee for a period of five years in accordance
with the provisions of Section 7111, and shall be made available to
the board within 30 days of a written request.
   (e) Failure by the contractor to provide the board with the
certification or contract within 30 days of a written request is
cause for discipline.
   (f) Failure by the licensee to provide the board with the
certification or contract within 30 days of a written request creates
a presumption that the licensee has violated the provisions of
Section 7159, unless evidence to the contrary is presented within the
timeframe specified by the board.