BILL NUMBER: SB 30 CHAPTERED
BILL TEXT
CHAPTER 566
FILED WITH SECRETARY OF STATE SEPTEMBER 17, 2004
APPROVED BY GOVERNOR SEPTEMBER 17, 2004
PASSED THE SENATE AUGUST 26, 2004
PASSED THE ASSEMBLY AUGUST 23, 2004
AMENDED IN ASSEMBLY AUGUST 18, 2004
AMENDED IN ASSEMBLY AUGUST 9, 2004
AMENDED IN ASSEMBLY JUNE 30, 2004
AMENDED IN ASSEMBLY MAY 24, 2004
AMENDED IN SENATE MAY 20, 2003
AMENDED IN SENATE APRIL 21, 2003
INTRODUCED BY Senator Figueroa
(Coauthor: Assembly Member Correa)
DECEMBER 2, 2002
An act to amend Section 7030 of, to add Sections 7159.4, 7159.5,
7159.6, 7159.10, 7159.11, 7159.12, 7159.13, and 7159.14 to, to repeal
Section 7018.5 of, and to repeal and add Sections 7159 and 7159.3
of, the Business and Professions Code, and to amend Sections 1689.5,
1689.6, and 1689.7 of, to add Section 1689.15 to, and to repeal and
add Section 1689.13 of, the Civil Code, relating to home improvement
contracts.
LEGISLATIVE COUNSEL'S DIGEST
SB 30, Figueroa. Home improvement contracts.
Existing law defines a "home improvement contract" and requires
home improvement contracts between contractors and homeowners or
tenants to comply with specified requirements, and makes a violation
of these provisions regarding home improvement contracts a crime.
Existing law authorizes an individual to rescind a home improvement
contract if certain conditions are met.
This bill would repeal these provisions and instead require that a
home improvement contract and any changes made to that contract be
in writing, be legible, be easy to understand, and inform a consumer
of his or her right to cancel or rescind the contract. The bill
would require that a home improvement contract contain various
information, notices, and disclosures for the protection of the
consumer. The bill would provide that a violation of these
provisions subjects the home improvement contractor to discipline.
The bill would define a "service and repair contract" and would enact
various disclosure requirements applicable to this type of contract.
The bill would provide that a violation of these provisions
subjects the contractor to discipline. The bill would make
conforming changes and revise and recast certain existing provisions
regarding home improvement contracts and related matters.
The bill would become operative on July 1, 2005.
Because a violation of the bill would be a crime, it would impose
a state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 7018.5 of the Business and Professions Code is
repealed.
SEC. 2. Section 7030 of the Business and Professions Code is
amended to read:
7030. (a) Except for contractors writing home improvement
contracts pursuant to Section 7151.2 and contractors writing service
and repair contracts pursuant to Section 7159.10, every person
licensed pursuant to this chapter shall include the following
statement in at least 10-point type on all written contracts with
respect to which the person is a prime contractor:
"Contractors are required by law to be licensed and regulated by
the Contractors' State License Board which has jurisdiction to
investigate complaints against contractors if a complaint regarding a
patent act or omission is filed within four years of the date of the
alleged violation. A complaint regarding a latent act or omission
pertaining to structural defects must be filed within 10 years of the
date of the alleged violation. Any questions concerning a
contractor may be referred to the Registrar, Contractors' State
License Board, P.O. Box 26000, Sacramento, CA 95826."
(b) Every person licensed pursuant to this chapter shall include
the following statement in at least 12-point type in all home
improvement contracts written pursuant to Section 7151.2 and service
and repair contracts written pursuant to Section 7159.10:
"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."
(c) Failure to comply with the notice requirements set forth in
subdivision (a) or (b) of this section is cause for disciplinary
action.
SEC. 3. Section 7159 of the Business and Professions Code is
repealed.
SEC. 4. Section 7159 is added to the Business and Professions
Code, to read:
7159. This section and Sections 7159.3 to 7159.6, inclusive,
apply to all home improvement contracts, as defined in Section
7151.2, between a contractor, whether a general or a specialty
contractor, who is licensed or subject to be licensed pursuant to
this chapter with regard to the transaction and who contracts with an
owner or tenant for home improvement work, except that this section
and Sections 7159.3 to 7159.6, inclusive, do not apply to service and
repair contracts as defined in Section 7159.10.
A violation of this section by a licensee or a person subject to
be licensed under this chapter, or by his or her agent or
salesperson, is cause for discipline.
(a) A home improvement contract and any changes to the contract
shall be in writing and signed by the parties.
(b) The writing shall be legible.
(c) 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.
(d) 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 triggers the buyer's
rights under the Home Solicitation Act, if the right to cancel is
applicable, provided that the contract complies with the Home
Solicitation Act.
(e) A change-order form for changes or extra work shall be
incorporated into the contract and shall become part of the contract
if it is in writing and signed by the parties.
(f) Change orders required by the building department at the
jobsite shall be considered incorporated into the contract without
being signed by both the parties.
(g) The provisions of this section are not exclusive and do not
relieve the contractor from compliance with any other applicable
provision of law.
SEC. 5. Section 7159.3 of the Business and Professions Code is
repealed.
SEC. 6. Section 7159.3 is added to the Business and Professions
Code, to read:
7159.3. This section applies to all home improvement contracts,
as defined in Section 7151.2, between an owner or tenant and a
contractor, whether a general contractor or a specialty contractor,
who is licensed or subject to be licensed pursuant to this chapter
with regard to the transaction. Failure by the licensee, or a person
subject to be licensed under this chapter, or by his or her agent or
salesperson, to provide the following information, notices, and
disclosures in the contract is cause for discipline:
(a) The name, business address, and license number of the
contractor and the description of the license classification relevant
to the project.
(b) The name and registration number of the home improvement
salesperson, if any.
(c) A notice concerning commercial general liability insurance.
This notice may be provided as an attachment to the contract if the
contract includes the 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:
(1) "(The name on the license or "This contractor') does not carry
commercial general liability insurance."
(2) "(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."
(3) "(The name on the license or "This contractor') is
self-insured."
(d) 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:
(1) "(The name on the license or "This contractor') has no
employees and is exempt from workers' compensation requirements."
(2) "(The name on the license or "This contractor') carries
workers' compensation insurance for all employees."
SEC. 7. Section 7159.4 is added to the Business and Professions
Code, to read:
7159.4. This section applies to all home improvement contracts,
as defined in Section 7151.2, between an owner or tenant and a
contractor, whether a general contractor or a specialty contractor,
who is licensed or subject to be licensed pursuant to this chapter
with regard to the transaction. Failure by the licensee, or a person
subject to be licensed under this chapter, or by his or her agent or
salesperson, to provide the following information, notices, and
disclosures in the contract is cause for discipline:
(a) Notice of the type of contract in at least 10-point boldface
type: "Home Improvement."
(b) The notice in at least 12-point boldface type: "Notice to the
Buyer: 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."
(c) The heading: "Contract Price," followed by the amount of the
contract in dollars and cents.
(d) 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.
(e) 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.
(f) For swimming pools, in addition to the project description
required under subdivision (e), a plan and scale drawing showing the
shape, size, dimensions, and the construction and equipment
specifications.
(g) If a down payment will be charged, the heading: "Down Payment"
and a space where the actual down payment appears followed by the
text in at least 12-point boldface type: "THE DOWNPAYMENT MAY NOT
EXCEED $1,000 OR 10 PERCENT OF THE CONTRACT PRICE, WHICHEVER IS LESS."
(h) If any payment, besides the down payment, is to be made before
the project is completed, the contract shall include a schedule with
a heading labeled "Schedule of Progress Payments," stated in dollars
and cents and specifically referencing the amount of work or
services to be performed and any materials and equipment to be
supplied, and 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."
(i) The heading: "Approximate Start Date" and "Approximate
Completion Date," each followed by the approximate dates for start
and completion.
(j) If applicable, the heading, "List of Documents to be
Incorporated into the Contract," followed by the list of documents
incorporated into the contract.
(k) 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. The order
must describe the scope of the extra 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. Change orders required by the
building department at the jobsite shall be considered incorporated
into the contract without being signed by both parties."
(l) (1) Except when the contract is negotiated at the contractor's
place of business, the statement found in paragraph (4) of
subdivision (a) of Section 1689.7 of the Civil Code for the three-day
right to cancel or the statement found in paragraph (2) of
subdivision (e) of Section 1689.7 for the seven-day right to cancel,
whichever is relevant. A statement that complies with Section 1689.7
may be attached to the contract if the contract includes a checkbox
and whichever statement is relevant in at least 12-point boldface
type:
(A) "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.'
"
(B) "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.'
"
(2) This subdivision does not apply to home improvement contracts
entered into by a person who holds an alarm company operator's
license issued pursuant to Chapter 11.6 (commencing with Section
7590), provided the person complies with Sections 1689.5, 1689.6, and
1689.7 of the Civil Code, as applicable.
(m) The signatures of the contractor or the contractor's
representative, and the buyer.
(n) The date the contract was signed.
(o) A statement with the heading "Mechanics' Lien Warning" 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."
SEC. 8. Section 7159.5 is added to the Business and Professions
Code, to read:
7159.5. This section applies to all home improvement contracts,
as defined in Section 7151.2, between an owner or tenant and a
contractor, whether a general contractor or a specialty contractor,
who is licensed or subject to be licensed pursuant to this chapter
with regard to the transaction.
(a) Failure by the licensee or a person subject to be licensed
under this chapter, or by his or her agent or salesperson to comply
with the following provisions is cause for discipline:
(1) The contract shall include the agreed contract amount in
dollars and cents. The contract amount shall include the entire cost
of the contract, including profit, labor, and materials, but
excluding finance charges.
(2) If there is a separate finance charge between the contractor
and the person contracting for home improvement, the finance charge
shall be set out separately from the contract amount.
(3) If a down payment will be charged, the down payment may not
exceed one thousand dollars ($1,000) or 10 percent of the contract
amount, whichever is less.
(4) If, in addition to a down payment, the contract provides for
payments to be made prior to completion of the work, the contract
shall include a schedule of payments in dollars and cents
specifically referencing the amount of work or services to be
performed and any materials and equipment to be supplied.
(5) Except for a down payment, the contractor may neither request
nor accept payment that exceeds the value of the work performed or
material delivered.
(6) Upon any payment by the person contracting for home
improvement, and prior to any further payment being made, the
contractor shall, if requested, obtain and furnish to the person a
full and unconditional release from any potential lien claimant claim
or mechanic's lien pursuant to Section 3114 of the Civil Code for
any portion of the work for which payment has been made. The person
contracting for home improvement may withhold all further payments
until these releases are furnished.
(7) If the contract provides for a payment of a salesperson's
commission out of the contract price, that payment shall be made on a
pro rata basis in proportion to the schedule of payments made to the
contractor by the disbursing party in accordance with paragraph (4).
(8) A contractor furnishing a performance and payment bond, lien
and completion bond, or a bond equivalent or joint control approved
by the registrar covering full performance and payment is exempt from
paragraphs (3), (4), and (5), and need not include, as part of the
contract, the Mechanics' Lien Warning found in subdivision (o) of
Section 7159.4. A contractor furnishing these bonds, bond
equivalents, or a joint control approved by the registrar may accept
payment prior to completion. 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.
(b) A violation of paragraph (1), (3), or (5) of subdivision (a)
by a licensee or a person subject to be licensed under this chapter,
or by his or her agent or salesperson, is a misdemeanor punishable by
a fine of not less than one hundred dollars ($100) nor more than
five thousand dollars ($5,000), or by imprisonment in a county jail
not exceeding one year, or by both fine and imprisonment.
(1) An indictment or information against a person who is not
licensed but who is required to be licensed under this chapter shall
be brought, or a criminal complaint filed, for a violation of this
section within four years from the date the buyer signs the contract.
(2) An indictment or information against a person who is licensed
under this chapter shall be brought, or a criminal complaint filed,
for a violation of this section within two years from the date the
buyer signs the contract.
(3) The limitations on actions in this subdivision shall not apply
to any administrative action filed against a licensed contractor.
(c) Any person who violates this section as part of a plan or
scheme to defraud an owner or tenant of a residential or
nonresidential structure, including a mobilehome or manufactured
home, in connection with the offer or performance of repairs to the
structure for damage caused by a natural disaster, shall be ordered
by the court to make full restitution to the victim based on the
person's ability to pay, as defined in subdivision (e) of Section
1203.1b of the Penal Code. In addition to full restitution, and
imprisonment authorized by this section, the court may impose a fine
of not less than five hundred dollars ($500) nor more than
twenty-five thousand dollars ($25,000), based upon the defendant's
ability to pay. This subdivision applies to natural disasters for
which a state of emergency is proclaimed by the Governor pursuant to
Section 8625 of the Government Code, or for which an emergency or
major disaster is declared by the President of the United States.
SEC. 9. Section 7159.6 is added to the Business and Professions
Code, to read:
7159.6. (a) An extra work or change order is not enforceable
against a buyer unless the change order sets forth all of the
following:
(1) The scope of work encompassed by the order.
(2) The amount to be added or subtracted from the contract.
(3) The effect the order will make in the progress payments or the
completion date.
(b) The buyer may not require a contractor to perform extra or
change-order work without providing written authorization.
(c) Failure to comply with the requirements of this section does
not preclude the recovery of compensation for work performed based
upon legal or equitable remedies designed to prevent unjust
enrichment.
SEC. 10. Section 7159.10 is added to the Business and Professions
Code, to read:
7159.10. (a) "Service and repair contract" means an agreement
between a contractor or salesperson for a contractor, whether a
general contractor or a specialty contractor, who is licensed or
subject to be licensed pursuant to this chapter with regard to the
transaction, and a homeowner or a tenant, for the performance of a
home improvement as defined in Section 7151, that meets the following
requirements:
(1) The contract amount is seven hundred fifty dollars ($750) or
less.
(2) The prospective buyer initiated contact with the contractor to
request the work.
(3) The contractor does not sell the buyer goods or services
beyond those reasonably necessary to take care of the particular
problem that caused the buyer to contact the contractor.
(4) No payment is due until the work is completed.
(b) A bona fide service repairperson employed by a licensed
contractor or subcontractor hired by a licensed contractor may enter
into a service and repair contract on behalf of that contractor.
SEC. 11. Section 7159.11 is added to the Business and Professions
Code, to read:
7159.11. This section applies to service and repair contracts as
defined in Section 7159.10. A violation of this section by a
licensee, or a person subject to be licensed under this chapter, or
by his or her agent or salesperson, is cause for discipline.
(a) A service and repair contract and any changes to the contract
shall be in writing and signed by the parties.
(b) The writing shall be legible.
(c) Any printed form shall be readable. Unless a larger typeface
is specified in this article, the text shall be in at least 10-point
typeface and the headings shall be in at least 10-point boldface
type.
(d) Before any work is started, the contractor shall give the
buyer a copy of the contract signed and dated by the buyer and the
contractor. The buyer's receipt of the copy triggers the buyer's
rights under the Home Solicitation Act, if the right to cancel is
applicable, provided that the contract complies with the Home
Solicitation Act.
(e) The provisions of this section are not exclusive and do not
relieve the contractor from compliance with any other applicable
provision of law.
SEC. 12. Section 7159.12 is added to the Business and Professions
Code, to read:
7159.12. This section applies to service and repair contracts, as
defined in Section 7159.10. Failure by the licensee, or a person
subject to be licensed under this chapter, or by his or her agent or
salesperson, to provide the following information, notices, and
disclosures in the contract is cause for discipline:
(a) The name, business address, and license number of the
contractor and the description of the license classification relevant
to the project.
(b) The name and registration number of the home improvement
salesperson, if any.
(c) A notice concerning commercial general liability insurance.
This notice may be provided as an attachment to the contract if the
contract includes the statement, "The 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:
(1) "(The name on the license or "This contractor') does not carry
commercial general liability insurance."
(2) "(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."
(3) "(The name on the license or "This contractor') is
self-insured."
(d) 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:
(1) "(The name on the license or "This contractor') has no
employees and is exempt from workers' compensation requirements."
(2) "(The name on the license or "This contractor') carries
workers' compensation insurance for all employees."
SEC. 13. Section 7159.13 is added to the Business and Professions
Code, to read:
7159.13. This section applies to service and repair contracts as
defined in Section 7159.10. Failure by the licensee, or a person
subject to be licensed under this chapter, or by his or her agent or
salesperson, to provide the following information, notices, and
disclosures in the contract is cause for discipline:
(a) Notice of the type of contract in at least 10-point boldface
type: "Service and Repair."
(b) A notice in at least 12-point boldface type, signed and dated
by the buyer: "Notice to the Buyer: The law requires that service
and repair contracts must meet all of the following requirements:
(1) The price must be no more than seven hundred and fifty dollars
($750).
(2) You, the buyer, must have initiated contact with the
contractor to request the work.
(3) The contractor must not sell you goods or services beyond
those reasonably necessary to take care of the particular problem
that caused you to contact the contractor.
(4) No payment is due until the work is completed."
(c) The notice in at least 12-point boldface type: "Notice to the
Buyer: You are entitled to a completely filled in and signed copy
of this agreement before any work may be started."
(d) Where the contract is a fixed contract amount, the heading:
"Contract Price" followed by the amount of the contract in dollars
and cents.
(e) 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.
(f) Where the contract is estimated by a time and materials
formula, the heading "Estimated Contract Price" followed by the
estimated contract amount in dollars and cents. The contract must
disclose the set rate and the estimated cost of materials. The
contract must also disclose how time will be computed: for example,
in increments of quarter hours, half hours, or hours, and the
statement: "The actual contract amount of a time and materials
contract may not exceed
the estimated contract amount without written authorization from the
buyer."
(g) The heading: "Description of the Project and Materials to be
Used and Equipment to be Installed" followed by a description of the
project and materials to be used and equipment to be installed.
(h) The heading: "The law requires that the contractor offer you
any parts that were replaced during the service call. If you do not
want the parts, initial the checkbox labeled "OK for contractor to
take replaced parts.' "
(i) A checkbox labeled "OK for contractor to take replaced parts."
(j) If a service charge is charged, the heading "Amount of Service
Charge" followed by the service charge, and the statement "You may
be charged only one service charge, including any trip charge or
inspection fee".
(k) If applicable, the heading "List of documents to be
incorporated into the contract," followed by the list of documents to
be incorporated into the contract.
(l) (1) Except when the contract is negotiated at the contractor's
place of business, the statement found in paragraph (5) of
subdivision (a) of Section 1689.7 of the Civil Code for the right to
cancel or the statement found in paragraph (2) of subdivision (e) of
Section 1689.7 for the right to cancel, whichever is relevant. A
statement that complies with Section 1689.7 may be attached to the
contract if the contract includes a checkbox and whichever statement
is relevant in at least 12-point boldface type:
(A) "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 Your Right to Cancel.' "
(B) "The law requires that the contractor give you a notice
explaining your right to cancel contracts for the repair or
restoration of residential premises damaged by a disaster. Initial
the checkbox if the contractor has given you a "Notice of Your Right
to Cancel.' "
(2) This subdivision does not apply to home improvement contracts
entered into by a person who holds an alarm company operator's
license issued pursuant to Chapter 11.6 (commencing with Section
7590), provided the person complies with Sections 1689.5, 1689.6, and
1689.7 of the Civil Code, as applicable.
(m) The signatures of the contractor or the contractor's
representative, and the buyer.
(n) The date the contract was signed.
SEC. 14. Section 7159.14 is added to the Business and Professions
Code, to read:
7159.14. (a) This section applies to a service and repair
contract as defined in Section 7159.10. A violation of this section
by a licensee or a person subject to be licensed under this chapter,
or by his or her agent or salesperson, is cause for discipline.
(1) The contract may not exceed seven hundred fifty dollars
($750).
(2) The contract shall state the agreed contract amount, which may
be stated as either a fixed contract amount in dollars and cents or,
if a time and materials formula is used, as an estimated contract
amount in dollars and cents.
(3) The contract amount shall include the entire cost of the
contract including profit, labor and materials but excluding finance
charges.
(4) The actual contract amount of a time and materials contract
may not exceed the estimated contract amount without written
authorization from the buyer.
(5) The prospective buyer must have initiated contact with the
contractor to request work.
(6) The contractor may not sell the buyer goods or services beyond
those reasonably necessary to take care of the particular problem
that caused the buyer to contact the contractor.
(7) No payment may be due before the project is completed.
(8) A service and repair contractor may charge only one service
charge. For purposes of this chapter, a service charge includes such
charges as a service or trip charge, or an inspection fee.
(9) A service and repair contractor charging a service charge must
disclose in all advertisements that there is a service charge and,
when the customer initiates the call for service, must disclose the
amount of the service charge.
(10) The service and repair contractor must offer to the customer
any parts that were replaced.
(11) Upon any payment by the buyer, the contractor shall, if
requested, obtain and furnish to the buyer a full and unconditional
release from any potential lien claimant claim or mechanics' lien
pursuant to Section 3114 of the Civil Code for any portion of the
work for which payment has been made.
(b) A violation of paragraph (1), (2), (3), (4), (5), (6), or (8)
of subdivision (a) by a licensee or a person subject to be licensed
under this chapter, or by his or her agent or salesperson, is a
misdemeanor punishable by a fine of not less than one hundred dollars
($100) nor more than five thousand dollars ($5,000) or by
imprisonment in a county jail not exceeding one year, or by both fine
and imprisonment.
(1) An indictment or information against a person who is not
licensed but who is required to be licensed under this chapter shall
be brought, or a criminal complaint filed, for a violation of this
section within four years from the date the buyer signs the contract.
(2) An indictment or information against a person who is licensed
under this chapter shall be brought, or a criminal complaint filed,
for a violation of this section within two years from the date the
buyer signs the contract.
(3) The limitations on actions in this subdivision shall not apply
to any administrative action filed against a licensed contractor.
(c) Any person who violates this section as part of a plan or
scheme to defraud an owner or tenant of a residential or
nonresidential structure, including a mobilehome or manufactured
home, in connection with the offer or performance of repairs to the
structure for damage caused by a natural disaster, shall be ordered
by the court to make full restitution to the victim based on the
person's ability to pay, as defined in subdivision (e) of Section
1203.1b of the Penal Code. In addition to full restitution, and
imprisonment authorized by this section, the court may impose a fine
of not less than five hundred dollars ($500) nor more than
twenty-five thousand dollars ($25,000), based upon the defendant's
ability to pay. This subdivision applies to natural disasters for
which a state of emergency is proclaimed by the Governor pursuant to
Section 8625 of the Government Code, or for which an emergency or
major disaster is declared by the President of the United States.
SEC. 15. Section 1689.5 of the Civil Code is amended to read:
1689.5. As used in Sections 1689.6 to 1689.11, inclusive, and in
Section 1689.14:
(a) "Home solicitation contract or offer" means any contract,
whether single or multiple, or any offer which is subject to
approval, for the sale, lease, or rental of goods or services or
both, made at other than appropriate trade premises in an amount of
twenty-five dollars ($25) or more, including any interest or service
charges. "Home solicitation contract" does not include any contract
under which the buyer has the right to rescind pursuant to Title 1,
Chapter 2, Section 125 of the Federal Consumer Credit Protection Act
(P.L. 90-321) and the regulations promulgated pursuant thereto.
(b) "Appropriate trade premises," means premises where either the
owner or seller normally carries on a business, or where goods are
normally offered or exposed for sale in the course of a business
carried on at those premises.
(c) "Goods" means tangible chattels bought for use primarily for
personal, family, or household purposes, including certificates or
coupons exchangeable for these goods, and including goods that, at
the time of the sale or subsequently, are to be so affixed to real
property as to become a part of the real property whether or not
severable therefrom, but does not include any vehicle required to be
registered under the Vehicle Code, nor any goods sold with this
vehicle if sold under a contract governed by Section 2982, and does
not include any mobilehome, as defined in Section 18008 of the Health
and Safety Code, nor any goods sold with this mobilehome if either
are sold under a contract subject to Section 18036.5 of the Health
and Safety Code.
(d) "Services" means work, labor and services, including, but not
limited to, services furnished in connection with the repair,
restoration, alteration, or improvement of residential premises, or
services furnished in connection with the sale or repair of goods as
defined in Section 1802.1, and courses of instruction, regardless of
the purpose for which they are taken, but does not include the
services of attorneys, real estate brokers and salesmen, securities
dealers or investment counselors, physicians, optometrists, or
dentists, nor financial services offered by banks, savings
institutions, credit unions, industrial loan companies, personal
property brokers, consumer finance lenders, or commercial finance
lenders, organized pursuant to state or federal law, that are not
connected with the sale of goods or services, as defined herein, nor
the sale of insurance that is not connected with the sale of goods or
services as defined herein, nor services in connection with the sale
or installation of mobilehomes or of goods sold with a mobilehome if
either are sold or installed under a contract subject to Section
18036.5 of the Health and Safety Code, nor services for which the
tariffs, rates, charges, costs, or expenses, including in each
instance the time sale price, is required by law to be filed with and
approved by the federal government or any official, department,
division, commission, or agency of the United States or of the state.
(e) "Business day" means any calendar day except Sunday, or the
following business holidays: New Year's Day, Washington's Birthday,
Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans'
Day, Thanksgiving Day, and Christmas Day.
SEC. 16. Section 1689.6 of the Civil Code is amended to read:
1689.6. (a) (1) Except for a contract written pursuant to Section
7151.2 or 7159.10 of the Business and Professions Code, in addition
to any other right to revoke an offer, the buyer has the right to
cancel a home solicitation contract or offer until midnight of the
third business day after the day on which the buyer signs an
agreement or offer to purchase which complies with Section 1689.7.
(2) In addition to any other right to revoke an offer, the buyer
has the right to cancel a home solicitation contract written pursuant
to Section 7151.2 of the Business and Professions Code until
midnight of the third business day after the buyer receives a signed
and dated copy of the contract or offer to purchase that complies
with Section 1689.7 of this code.
(3) In addition to any other right to revoke an offer, the buyer
has the right to cancel a home solicitation contract or offer to
purchase written pursuant to Section 7159.10 of the Business and
Professions Code, until the buyer receives a signed and dated copy of
a service and repair contract that complies with Section 1689.7 of
this code and meets the contract requirements found in Section
7159.10 of the Business and Professions Code and the work commences.
(b) In addition to any other right to revoke an offer, any buyer
has the right to cancel a home solicitation contract or offer for the
purchase of a personal emergency response unit until midnight of the
seventh business day after the day on which the buyer signs an
agreement or offer to purchase which complies with Section 1689.7.
This subdivision shall not apply to a personal emergency response
unit installed with, and as part of, a home security alarm system
subject to the Alarm Company Act (Chapter 11.6 (commencing with
Section 7590) of Division 3 of the Business and Professions Code)
which has two or more stationary protective devices used to enunciate
an intrusion or fire and is installed by an alarm company operator
operating under a current license issued pursuant to the Alarm
Company Act, which shall instead be subject to subdivision (a).
(c) In addition to any other right to revoke an offer, a buyer has
the right to cancel a home solicitation contract or offer for the
repair or restoration of residential premises damaged by a disaster
that was not void pursuant to Section 1689.14, until midnight of the
seventh business day after the buyer signs and dates the contract.
(d) Cancellation occurs when the buyer gives written notice of
cancellation to the seller at the address specified in the agreement
or offer.
(e) Notice of cancellation, if given by mail, is effective when
deposited in the mail properly addressed with postage prepaid.
(f) Notice of cancellation given by the buyer need not take the
particular form as provided with the contract or offer to purchase
and, however expressed, is effective if it indicates the intention of
the buyer not to be bound by the home solicitation contract or
offer.
(g) "Personal emergency response unit," for purposes of this
section, means an in-home radio transmitter device or two-way radio
device generally, but not exclusively, worn on a neckchain, wrist
strap, or clipped to clothing, and connected to a telephone line
through which a monitoring station is alerted of an emergency and
emergency assistance is summoned.
SEC. 17. Section 1689.7 of the Civil Code is amended to read:
1689.7. (a) (1) Except for contracts written pursuant to Sections
7151.2 and 7159.10 of the Business and Professions Code, in a home
solicitation contract or offer, the buyer's agreement or offer to
purchase shall be written in the same language, e.g., Spanish, as
principally used in the oral sales presentation, shall be dated,
shall be signed by the buyer, and except as provided in paragraph
(2), shall contain in immediate proximity to the space reserved for
his or her signature a conspicuous statement in a size equal to at
least 10-point boldface type, as follows: "You, the buyer, may
cancel this transaction at any time prior to midnight of the third
business day after the date of this transaction. See the attached
notice of cancellation form for an explanation of this right."
(2) The statement required pursuant to this subdivision for a home
solicitation contract or offer for the purchase of a personal
emergency response unit, as defined in Section 1689.6, which is not
installed with and as part of a home security alarm system subject to
the Alarm Company Act (Chapter 11.6 (commencing with Section 7590)
of Division 3 of the Business and Professions Code) which has two or
more stationary protective devices used to enunciate an intrusion or
fire and is installed by an alarm company operator operating under a
current license issued pursuant to the Alarm Company Act, is as
follows: "You, the buyer, may cancel this transaction at any time
prior to midnight of the seventh business day after the date of this
transaction. See the attached notice of cancellation form for an
explanation of this right."
(3) Except for contracts written pursuant to Sections 7151.2 and
7159.10 of the Business and Professions Code, the statement required
pursuant to this subdivision for the repair or restoration of
residential premises damaged by a disaster pursuant to subdivision
(c) of Section 1689.6 is as follows: "You, the buyer, may cancel
this transaction at any time prior to midnight of the seventh
business day after the date of this transaction. See the attached
notice of cancellation form for an explanation of this right."
(4) A home solicitation contract written pursuant to Section
7151.2 of the Business and Professions Code shall be written in the
same language, e.g., Spanish, as principally used in the oral sales
presentation. The contract, or an attachment to the contract that
complies with subdivision (l) of Section 7159.4 of the Business and
Professions Code shall include in immediate proximity to the space
reserved for his or her signature, the following statement in a size
equal to at least 12-point boldface type, which shall be dated and
signed by the buyer:
"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."
(5) A home solicitation contract written pursuant to Section
7159.10 of the Business and Professions Code shall be written in the
same language, e.g., Spanish, as principally used in the oral sales
presentation. The contract, or an attachment to the contract that
complies with subdivision (k) of Section 7159.13 of the Business and
Professions Code shall include, in immediate proximity to the space
reserved for his or her signature, the following statement in a size
equal at least to 12-point boldface type, which shall be dated and
signed by the buyer:
"YOUR RIGHTS TO CANCEL BEFORE WORK BEGINS
You, the buyer, have the right to cancel this contract until:
1. You receive a copy of this contract signed and dated by you and
the contractor; and
2. The contractor starts work.
However, even if the work has begun you, the buyer, may still
cancel the contract within three business days if the contract price
is more than seven hundred fifty dollars ($750), or if you, did not
initiate the contact with the contractor to request the work, or if
the contractor sold you goods or services beyond those reasonably
necessary to take care of the particular problem that caused you to
contact the contractor, or if the payment was due before the work was
complete.
If any of these reasons for canceling occurred, you may cancel the
contract by e-mailing, mailing, faxing, or delivering a written
notice to the contractor at the contractor's place of business within
three business days of the date you received a signed and dated copy
of this contract. Include your name, your address, and the date you
received a 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 agreement or offer to purchase shall contain on the first
page, in a type size no smaller than that generally used in the body
of the document, the following: (1) the name and address of the
seller to which the notice is to be mailed, and (2) the date the
buyer signed the agreement or offer to purchase.
(c) Except as provided in subdivision (d), the agreement or offer
to purchase shall be accompanied by a completed form in duplicate,
captioned "Notice of Cancellation" which shall be attached to the
agreement or offer to purchase and be easily detachable, and which
shall contain in type of at least 10-point 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)
(d) Any agreement or offer to purchase a personal emergency
response unit, as defined in Section 1689.6, which is not installed
with and as part of a home security alarm system subject to the Alarm
Company Act which has two or more stationary protective devices used
to enunciate an intrusion or fire and is installed by an alarm
company operator operating under a current license issued pursuant to
the Alarm Company Act, shall be subject to the requirements of
subdivision (c), and shall be accompanied by the "Notice of
Cancellation" required by subdivision (c), except that the first
paragraph of that notice shall be deleted and replaced with the
following paragraph:
You may cancel this transaction, without any penalty or
obligation, within seven business days from the above date.
(e) (1) Except for contracts written pursuant to Sections 7151.2
and 7159.10 of the Business and Professions Code, any agreement or
offer to purchase services for the repair or restoration of
residential premises damaged by a disaster that is subject to
subdivision (c) of Section 1689.6, shall be subject to the
requirements of subdivision (c) of this section, and shall be
accompanied by the "Notice of Cancellation" required by subdivision
(c) of this section, except that the first paragraph of that notice
shall be deleted and replaced with the following paragraph:
You may cancel this transaction, without any penalty or
obligation, within seven business days from the above date.
(2) A home solicitation contract written pursuant to Section
7151.2 of the Business and Professions Code for the repair or
restoration of residential premises damaged by a disaster that is
subject to subdivision (c) of Section 1689.6, shall be written in the
same language, e.g. Spanish, as principally used in the oral sales
presentation. The contract, or an attachment to the contract that
complies with subdivision (l) of Section 7159.4 of the Business and
Professions Code shall include, in immediate proximity to the space
reserved for his or her signature, the following statement in a size
equal to at least 12-point boldface type, which shall be signed and
dated by the buyer:
"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."
(3) A home solicitation contract written pursuant to Section
7159.10 of the Business and Professions Code for the repair or
restoration of residential premises damaged by a disaster that is
subject to subdivision (c) of Section 1689.6, be written in the same
language, e.g. Spanish, as principally used in the oral sales
presentation. The
contract, or an attachment to the contract that complies with
subdivision (k) of Section 7159.4 of the Business and Professions
Code shall include, in immediate proximity to the space reserved for
his or her signature, the following statement in a size equal to at
least 12-point boldface type, which shall be signed and dated by the
buyer:
"YOUR RIGHTS TO CANCEL BEFORE WORK BEGINS
You, the buyer, have the right to cancel until both of the
following events have occurred:
1. You receive a copy of this contract, signed and dated by you
and the contractor; and
2. The contractor starts work.
However, even if the work has begun, you, the buyer, may still
cancel the contract within seven business days if the contract price
is more than seven hundred fifty dollars ($750), or if you did not
initiate the contact with the contractor to request the work, or if
the contractor sold you goods or services beyond those reasonably
necessary to take care of the particular problem that caused you to
contact the contractor, or if the payment was due before the work was
complete.
If any of these reasons for canceling occurred, you may cancel the
contract by e-mailing, mailing, faxing, or delivering a written
notice to the contractor at the contractor's place of business within
seven business days of the date you received a signed and dated copy
of the contract that includes this notice. Include your name, your
address, and the date you received a signed copy of the contract and
this notice.
(f) The seller shall provide the buyer with a copy of the contract
or offer to purchase and the attached notice of cancellation, and
shall inform the buyer orally of his or her right to cancel and the
requirement that cancellation be in writing, at the time the home
solicitation contract or offer is executed.
(g) Until the seller has complied with this section the buyer may
cancel the home solicitation contract or offer.
(h) "Contract or sale" as used in subdivision (c) means "home
solicitation contract or offer" as defined by Section 1689.5.
SEC. 18. Section 1689.13 of the Civil Code is repealed.
SEC. 19. Section 1689.13 is added to the Civil Code, to read:
1689.13. Sections 1689.5, 1689.6, 1689.7, 1689.10, 1689.12, and
1689.14 do not apply to a contract that meets all of the following
requirements:
(a) The contract is initiated by the buyer or his or her agent or
insurance representative.
(b) The contract is executed in connection with making of
emergency or immediately necessary repairs that are necessary for the
immediate protection of persons or real or personal property.
(c) The buyer gives the seller a separate statement that is dated
and signed that describes the situation that requires immediate
remedy, and expressly acknowledges and waives the right to cancel the
sale within three or seven business days, whichever applies.
SEC. 20. Section 1689.15 is added to the Civil Code, to read:
1689.15. Notwithstanding any other provision of law, a contractor
who is duly licensed pursuant to Chapter 9 (commencing with Section
7000) of Division 3 of the Business and Professions Code may commence
work on a service and repair project as soon as the buyer receives a
signed and dated copy of a service and repair contract that meets
the contract requirements found in Section 7159.10 of the Business
and Professions Code. The buyer retains any right of cancellation
applicable to home solicitations under Sections 1689.5 to 1689.14,
inclusive, until such time as the buyer receives a signed and dated
copy of a service and repair contract that meets the contract
requirements found in Section 7159.10 of the Business and Professions
Code and complies with Section 1689.7, and the licensee in fact
commences that project, at which time the buyer is deemed to have
waived, and has waived, any cancellation right provided in Sections
1689.5 to 1689.14, inclusive.
SEC. 21. This act shall become operative on July 1, 2005.
SEC. 22. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.