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Educational Consumer Tips

Hiring a Contractor in California: Essential Tips

Author: Better Business Bureau
Category: Home Improvement

Hiring a contractor is never easy, but if you have a job that costs more than $500 (labor and materials) the “provider” is required by California Law to have a Contractor’s License. Licensed contractors have demonstrated experience and passed competency tests to obtain the license. Moreover, they’re required to maintain a surety bond which may help should things go wrong.

Unlicensed activity is defined as costing $500 or more in labor and materials. As a homeowner, you may place yourself at risk for sub-standard work when hiring contractors who do not have bonding or trade license training. Be sure the scope of your project meets these requirements when hiring the unlicensed. Pay only for materials in your possession or for work satisfactorily performed.

Get at least 3 bids for the same scope of work

Be sure all work to be performed is in writing. Ensure you thoroughly understand the reasoning behind each estimate - lowest is not always best. Also consider whether the contractor will obtain the needed permits. If you are responsible for obtaining building permits, realize that you are assuming the role of owner/builder. Before agreeing to secure any permits, read the CSLB advice on the risks of being an owner/builder.

Verify the credibility and reliability of the contractor

Visit and review their BBB Business Review, if available. Read other online review sites and verify any industry references. Request references from the contractor and be sure to contact them about the work performed and their satisfaction.

Research Licensing

If you are considering hiring an individual or company to complete repair or remodel work and the cost for labor and materials exceeds $500, it is important to verify the contractor is licensed by the California Contractor’s State License Board (CSLB) or call (800) 321-CSLB (2752). California requires contractor be licensed for the specific work they perform. Make sure the classification on their license matches the type of work the will be performing.

The CSLB offers 43 different classifications for contractor, including general building contractor. When choosing which classification to seek, consider the work to be done. If you are seeking just one single job to be completed, seek a contractor with that specific classification or a general contractor with a separate classification in that area. If there are several different projects in need of completion, a general contractor can subcontract any work that the general contractor is not classified to do.

You can look for a contractor’s license on the  Contractor’s State License Board website (

If the contractor has employees, ensure the company currently holds workers' compensation insurance. If a worker is injured on your property and the contractor does not have workers' compensation insurance, you may be held liable for any injuries incurred. You can verify the insurance policy by viewing the policy information on the CSLB licensing page.

Review the Contract

Before you sign and pay a deposit, be sure the contract includes a detailed description of work to be done including specific brands of products to be used if desired, color choices, quantities and model numbers. Your agreement should include an estimated start and finish date.

Your down payment should not exceed 10 percent of the contract price or $1,000, whichever is less. The only exception to this down payment maximum is if the contractor has obtained a Blanket Performance and Payment Bond, which can be viewed on the contractor’s license. If this bond is secured, the contractor may exceed the down payment requirements.

If payments are to be made before the project is completed, a schedule of these progress payments should be stated in the contract, along with the date and amount of work to be completed or materials delivered when the progress payments are made. Check all work and confirm the contractor is meeting the terms of the contract before making payments. Do not make the final payment until you are satisfied with the job.

Finally, contractors are required to produce change orders in writing when the scope of the project changes, additional work is performed, or additional materials are provided.

Familiarize yourself with the Contractors State License Boards Consumer Guide to learn more about Contracts and laws regarding Contractors.

Your Right to Cancel

A home improvement contract must allow for a three-day right to cancel. An exception to the cancellation right requirement exists for service and repair contracts performed costing $750 or less in labor and materials.

According to California Law a buyer may waive their right to cancel, in part, when immediate repairs or services are required for the immediate protection of personal or real property. The contractor is also required to obtain a signed and dated statement from you which describes the situation that requires immediate remedy and that you are waiving your right to cancel the sale. However, these waivers are generally against public policy and may be void and unenforceable, meaning your right to cancel may still exist.

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