Professions and vocations: contractors: home improvement contracts: prohibited business practices.

Plain English Breakdown

The official source material does not provide specific details on enforcement mechanisms and exact penalties beyond the minimum fine.

Home Improvement Contracts: Prohibited Business Practices

This law updates the definition of home improvement to include accessory dwelling units and imposes penalties for contractors who take payments without providing work or materials, resulting in a financial loss greater than 10% of the contract price.

What This Bill Does

• Expands the definition of 'home improvement' to include construction, erection, installation, replacement, or improvement of accessory dwelling units on residentially zoned property.
• Makes it illegal for licensed or unlicensed contractors to request or accept downpayments or progress payments if they haven't done the work or provided materials, resulting in a financial loss greater than 10% of the contract price.
• Requires license revocation and a civil penalty of at least $10,000 for licensed contractors who violate these rules.
• Imposes a citation and assessment of a civil penalty of at least $10,000 on unlicensed individuals who break these rules.

Who It Names or Affects

• Contractors and home improvement companies
• Homeowners who hire contractors for home improvements

Terms To Know

Accessory dwelling unit

A small living space, like a granny flat or in-law suite, built on residential property.

Downpayment

An initial payment made before receiving goods or services.

Limits and Unknowns

• The bill does not specify when it will take effect.
• It is unclear how this law will be enforced and what the exact penalties for violations might be beyond the minimum $10,000 fine.

Official Summary Text

AB 559, as amended, Berman.
Professions and vocations: contractors: home improvement contracts: prohibited business practices.
Existing law, the Contractors State License Law, defines and regulates the activities of contractors and provides for their licensure, regulation, and discipline by the Contractors State License Board within the Department of Consumer Affairs (department). That law requires a home improvement contract, as defined, to be in writing and include the contract amount, as specified, and prohibits any downpayment for that contract from exceeding the lesser of $1,000 or 10% of the contract amount. Except for a downpayment, existing law prohibits the contractor from requesting or accepting payment that exceeds the value of the work performed or material delivered. Existing law makes the violation of these provisions a misdemeanor punishable by a fine of not less than $100 nor more than $5,000, by imprisonment in a county jail not exceeding one year, or by both that fine and imprisonment.
This bill would include in the definition of “home improvement” construction, erection, installation, replacement, or improvement of accessory dwelling units on residentially zoned property. The bill would also make a licensee, or an unlicensed person, who
requests or accepts a downpayment or progress payment for work or services not performed, or for materials or equipment not supplied, that results in financial loss to a consumer in an amount greater than 10% of the contract price
violates the above-described downpayment and payment prohibitions
subject to revocation of their license and a civil penalty of at least $10,000 in the case of a licensee, or, if the person is unlicensed, subject to a citation and assessment of a civil penalty of at least $10,000.

Current Bill Text

Download Bill PDF