Step 2: Warnings and Exceptions
This section explains what warnings are required in home improvement contracts and some of the exceptions to the rules. It also explains "Service and Repair" contracts and how they differ from regular contracts.
Consumers are required to receive a "Notice to Owner" warning about property liens. Anyone who helps improve property, but who is not paid like subcontractors, suppliers or workers, may place what is called a mechanics lien on the property. A mechanics lien is a claim made against the property and recorded with the county.
For other ways to prevent liens, review CSLB's publication, A Homeowner's Guide to Preventing Mechanics' Liens.
Three-day right to cancel
- Unless the contract is negotiated at the contractor's place of business, and/or the contract price is under $25, the buyer qualifies for a three-day right to cancel. The contractor must provide you with information on your three-day right to cancel under the "Home Solicitation Sales Act" with your contract. This notice requires a seller of home goods or services to give the buyer three days to think about whether to buy the offered goods or services.
- To cancel, the buyer need only give the contractor written notice of their intent not to be bound by the contract. Under the law when the contract is canceled the seller can be required to return the entire contract amount and restore a consumer's property to the way it was before the contract.
ALERT The exception to the three-day rule: Service and Repair contracts
- One major exception to the three-day right to cancel is a "Service and Repair" contract that covers emergency repairs or services that are requested by the consumer on short notice.
- The right to a three-day notice automatically is canceled the moment the contract is signed and the contractor begins working on a "Service and Repair" contract.
- The contract should indicate that it is a "service and repair" agreement, and the total contract price for labor and materials must be under $750.
Five-day right to cancel
- Starting in 2021, seniors (those 65 and older) will have five days to cancel the following transactions: home solicitation contracts, home improvement contracts, Property Assessed Clean Energy assessment contracts, service and repair contracts, and seminar sales contracts (AB 2471).
Dept. of Consumer Affairs Legal Guide