Home improvement loans: right to cancel contracts.

Plain English Breakdown

The bill summary and digest do not provide specific details on how lenders must respond to borrower requests for information or what happens if a borrower waives their right to cancel.

Home Improvement Loans: Right to Cancel Contracts

This law changes rules for home improvement loans by requiring lenders to confirm key terms verbally before signing and extending the cancellation period from three days to five days, with seven days for senior citizens.

What This Bill Does

• Requires lenders to obtain oral confirmation of key terms of a home improvement loan contract before it is signed.
• Extends the cancellation period from three days to five days for all borrowers.
• Increases the cancellation period to seven days for senior citizens.

Who It Names or Affects

• Homeowners getting loans for home improvements
• Lenders providing home improvement loans

Terms To Know

Consumer credit contracts

Agreements between a lender and borrower where the borrower gets money to buy goods or services, usually with interest.

Home solicitation contract

A contract made when someone visits your home to sell you something like home improvement services.

Limits and Unknowns

• The bill does not specify what happens if a borrower waives their right to cancel the loan.
• It is unclear how this law will be enforced and monitored by regulatory agencies.
• This legislation has passed both chambers but its final status, including whether it becomes law after executive action, remains uncertain.

Official Summary Text

SB 784, as amended, Durazo.
Home improvement loans: right to cancel contracts.
(1) Existing law generally regulates various types of consumer credit contracts and transactions, including consumer loans, home solicitation contracts and offers, and home improvement businesses and contracts.
This bill would regulate home improvement loans. The bill would require a lender to take specified actions before a consumer executes a contract for a home improvement loan, including obtaining oral confirmation of key terms of the home improvement loan contract, as defined and specified. The bill would require a lender that offers or provides a home improvement loan to make certain information available to the consumer and would prescribe how a lender must respond to requests for information from a consumer. The bill would prohibit a consumer’s repayment obligations under a home improvement
loan
loan, as specified,
until the lender has taken specified actions.
(2) Existing law authorizes a buyer to cancel certain home solicitation contracts or offers until midnight of the 3rd business day after the day on which the buyer signs an agreement or offer to purchase that complies with specified requirements. Existing law authorizes a buyer to cancel a home solicitation contract written for certain home improvement work until midnight of the 3rd business day after the buyer receives a signed and dated copy of the contract or offer to purchase that complies with specified requirements. Existing law requires contracts for a home solicitation contract or offer to include a notice of cancellation form with specified statements as to the buyer’s right to cancel. Existing law permits a buyer to provide a seller an express waiver to this right to cancel, if the contract meets other specified requirements.
Existing law requires specific provisions and requirements for home improvement contracts, as defined, that are not governed by the provisions described above. Existing law requires these contracts to include a notice regarding the buyer’s 3-day right to cancel.
Existing law provides an alternate 5-day period of time to cancel the contracts or offers described above if the buyer or property owner is a senior citizen, as defined, for contracts entered into, or offers to purchase conveyed, on or after January 1, 2021.
This bill would extend those 3-day and 5-day periods to 5-day and 7-day periods, respectively. The bill would also make conforming changes. The bill would apply these new extended periods to transactions on or after January 1, 2026.

Current Bill Text

Download Bill PDF