Bill Text: CA AB559 | 2025-2026 | Regular Session | Introduced
Bill Title: Professions and vocations: contractors: home improvement contracts: prohibited business practices.
Spectrum: Bipartisan Bill
Status: (Introduced) 2025-02-12 - Read first time. To print. [AB559 Detail]
Download: California-2025-AB559-Introduced.html
CALIFORNIA LEGISLATURE—
2025–2026 REGULAR SESSION
Assembly Bill
No. 559
| Introduced by Assembly Member Berman (Principal coauthor: Senator Niello) |
February 12, 2025 |
An act to amend Sections 7151 and 7159.5 of the Business and Professions Code, relating to professions and vocations.
LEGISLATIVE COUNSEL'S DIGEST
AB 559, as introduced, 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 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.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NOBill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 7151 of the Business and Professions Code is amended to read:7151.
(a) “Home improvement” means the repairing, remodeling, altering, converting, or modernizing of, or adding to, residential property, as well as the reconstruction, restoration, or rebuilding of a residential property that is damaged or destroyed by a natural disaster 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, and shall include, but not be limited to, the construction, erection, installation, replacement, or improvement of driveways, swimming pools, including spas and hot tubs, terraces, patios, awnings, storm windows, solar energy systems, landscaping, fences, porches, garages, fallout shelters, basements, accessory dwelling units on residentially zoned property, and other improvements of the structures or land(b) For purposes of this chapter, “home improvement goods or services” means goods and services, as defined in Section 1689.5 of the Civil Code, which are bought in connection with the improvement of real property. Such home improvement goods and services include, but are not limited to, carpeting, texture coating, fencing, air conditioning or heating equipment, and termite extermination. Home improvement goods include goods which are to be so
affixed to real property as to become a part of real property whether or not severable therefrom.
(c) For purposes of this article, “solar energy system” means a solar energy device to be installed on a residential building or residential property that has the primary purpose of providing for the collection and distribution of solar energy for the generation of electricity, that produces at least one kilowatt, and not more than five megawatts, alternating current rated peak electricity, and that meets or exceeds the eligibility criteria established pursuant to Section 25782 of the Public Resources Code.
SEC. 2.
Section 7159.5 of the Business and Professions Code is amended 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, that 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 their agent or salesperson, to comply with the following provisions is cause for discipline:
(1) The contract shall be in writing and 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 downpayment will be charged, the downpayment shall not exceed one thousand dollars ($1,000) or 10 percent of the contract amount, whichever amount is less.
(4) If, in addition to a downpayment, 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 downpayment, the contractor shall neither request nor accept payment that exceeds the
value of the work performed or material delivered. The prohibition prescribed by this paragraph extends to advance payment in whole or in part from any lender or financier for the performance or sale of home improvement goods or services.
(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 mechanics lien authorized pursuant to Sections 8400 and 8404 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 statement regarding the downpayment specified in subparagraph (C) of paragraph (8) of subdivision (d) of Section 7159, the details and statement regarding progress payments specified in paragraph (9) of subdivision (d) of Section 7159, or the Mechanics Lien Warning specified in paragraph (4) of subdivision (e) of Section 7159. 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. Notwithstanding any other law, a licensee shall be licensed in this state in an active status for not less than two years prior to submitting an Application for Approval of Blanket Performance and Payment Bond as provided in Section 858.2 of Title 16 of the California Code of Regulations as it read on January 1, 2016.
(b) (1) 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 their 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 that fine and imprisonment. If
(A) If a violation occurs in a location damaged by a natural disaster 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, the court shall impose the maximum fine.
(B) (i) A licensee 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 greater than 10 percent of the contract amount is subject to revocation of their license by the registrar and a civil penalty of at least ten thousand dollars
($10,000).
(ii) 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 greater than 10 percent of the contract amount is subject to citation by the registrar pursuant to subdivision (c) of Section 7028.7 and assessment of a civil penalty of at least ten thousand dollars ($10,000).
(2) (A) 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, in accordance with paragraph (4) of subdivision (d) of Section 802 of the Penal Code, within four
years from the date of the contract or, if the contract is not reduced to writing, from the date the buyer makes the first payment to the contractor.
(B) 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, in accordance with paragraph (2) of subdivision (d) of Section 802 of the Penal Code, within two years from the date of the contract or, if the contract is not reduced to writing, from the date the buyer makes the first payment to the contractor.
(C) The limitations on actions in this subdivision shall not apply to any administrative action filed against a licensed contractor.
(c) (1) 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, defined as the overall capability of the defendant to reimburse the costs, or a portion of the costs, including consideration of, but not limited to, all of the following:
(A) The defendant’s present financial position.
(B) The defendant’s reasonably discernible future financial position, provided that the court shall not consider a period of more than one year from the date of the hearing for purposes of determining the reasonably discernible future financial position of the defendant.
(C) The likelihood that the
defendant will be able to obtain employment within one year from the date of the hearing.
(D) Any other factor that may bear upon the defendant’s financial capability to reimburse the county for costs.
(2) 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.
(d) This section shall become operative on July 1, 2021.
