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.

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.

 THIRD READING  

Bill No: AB 559

Author: Berman (D), et al.

Amended: 3/27/25 in Assembly

Vote: 21

SENATE BUS., PROF. & ECON. DEV. COMMITTEE: 10-0, 6/30/25

AYES: Ashby, Choi, Archuleta, Arreguín, Menjivar, Niello, Smallwood-Cuevas, Strickland, Umberg, Weber Pierson

NO VOTE RECORDED: Grayson

SENATE JUDICIARY COMMITTEE: 13-0, 7/8/25

AYES: Umberg, Niello, Allen, Arreguín, Ashby, Caballero, Durazo, Laird, Stern, Valladares, Wahab, Weber Pierson, Wiener

SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/29/25

AYES: Caballero, Seyarto, Cabaldon, Dahle, Grayson, Richardson, Wahab

ASSEMBLY FLOOR: 76-0, 5/1/25 (Consent) - See last page for vote

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

SOURCE: Contractors State License Board

DIGEST:

This bill adds contracts to build accessory dwelling units (ADUs) on residentially zoned property to the definition of “home improvement,” in the Contractors State License Law (License Law). This bill applies HIC requirements to ADU contracts and subjects violators to enforcement by the Contractors State License Board (CSLB). This bill provides that fines for specified violations resulting in consumer financial harm may be assessed up to $10,000.

ANALYSIS:

Existing law:

1. Establishes the CSLB to implement and enforce the License Law. (Business and Professions Code (BPC) §§ 7000 et seq.)
   
2. Defines “home improvement” as 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, or for which an emergency or major disaster is declared by the President of the United States, as specified. (BPC § 7151(a))
3. Defines “home improvement contract” to mean an agreement, whether oral or written, or contained in one or more documents, between a contractor and an owner or between a contractor and a tenant for the performance of a home improvement, and includes all labor, services, and materials to be furnished and performed thereunder. (BPC § 7151.2)
   
4. Identifies projects for which an HIC is required, outlines the contract requirements, and lists the items and notifications that shall be included in the contract or may be provided as an attachment. (BPC § 7159)
   
5. Sets forth HIC requirements, including that:
   
   1. If a downpayment will be charged, the downpayment shall not exceed $1,000 or 10 percent of the contract amount, whichever amount is less.
      

c) If, in addition to a downpayment, the contract provides for payments to be made prior to completion of 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.

d) 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 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. (BPC § 7159.5(a)(1), (3), (4), (5))

8) Exempts a contractor furnishing a performance and payment bond or other bond equivalents covring full performance and payment from the requirements of 5 above. (BPC § 7159.5(a)(8))

1. Specifies that a violation of 5a) and 5c) above is a misdemeanor punishable by a fine of up to $5,000, or by imprisonment in county jail not exceeding one year, or by both that fine and imprisonment. (BPC § 7159.5(b))
2. Exempts from the License law any person who only furnishes materials or supplies without fabricating them into, or consuming them in the performance of, the work of the contractor. (BPC § 7052)
   
3. Defines ADU as an attached or a detached residential dwelling unit that provides complete independent living facilities for one or more persons and is located on a lot with a proposed or existing primary residence. An ADU must include permanent living, sleeping, eating, cooking, and sanitation provisions on the same parcel where the single-family or multifamily dwelling is or will be situated. (Government Code § 66313(a))

This bill:

1. Adds building ADUs to the definition of “home improvement,” thereby applying all HIC requirements to ADU projects.
   
2. Specifies that a licensed contractor who requests or accepts payment in violation of HIC requirements that results in consumer financial loss greater than 10 percent of the contract amount is subject to license revocation.
   
3. Specifies that a licensed or unlicensed contractor who requests or accepts a down payment 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 and a civil penalty of at least ten thousand dollars ($10,000).

Background

The CSLB is responsible for the implementation and enforcement of the License Law, which governs the licensure, practice, and discipline of contractors in California. The CSLB may impose an escalating scale of penalties ranging from citations and fines to license suspension and revocation to contractors who violate the License Law.

The CSLB recently revoked the license of Anchored Tiny Homes, a Sacramento-based ADU builder, after it received more than 400 complaints, primarily from consumers alleging that they paid for ADUs that were never completed. Unlike new construction, home improvement projects are subject to contract and payment rules to protect consumers from unscrupulous contractors. For example, contractors are prohibited from requesting or accepting progress payments that exceed the value of the work completed or the cost of materials delivered. Existing law does not expressly include ADUs in the definition of home improvement, so while Anchored Tiny Homes did not contest the revocation of their license, another contractor could argue that contracts for ADUs are not subject to the same payment restrictions, thus illuminating the need to clarify existing law.

This bill would include ADUs in the definition of “home improvement,” in the same way that swimming pools, fences, and garages are, therefore subjecting the construction of ADUs to stricter contract and payment rules. Additionally, this bill would boost the CSLB’s enforcement capability by subjecting a contractor to license revocation (or citation if the individual is unlicensed) and a $10,000 fine if they request or accept a down payment or progress payment for work and materials that are not performed or supplied, resulting in a consumer’s financial loss greater than 10 percent of the contract amount.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

CSLB reports minor workload increase to the CSLB Testing Division to update licensing exams to include questions on the topic of ADUs; unknown increased workload, ranging in the low thousands of dollars, to the CSLB Enforcement Division to review violations of downpayment or progress payment provisions specific to home improvement contracts (Contractors License Fund); unknown potential increase in cases referred to the Attorney General’s (AG) Office due to a potential increase in civil penalty appeals. Penalty revenue is anticipated to offset costs for the increased volume of enforcement workload and any subsequent AG appeals review; however, to the extent that there is a significant number of new violations above CSLB’s projections, then there may be a fiscal impact to CSLB.

SUPPORT: (Verified 8/29/25)

Contractors State License Board (Source)

Associated General Contractors, California Chapters

California Low-income Consumer Coalition

OPPOSITION: (Verified 8/29/25)

Casita Coalition

Natomas Labs, INC. DBA Villa Homes

Samara Living, INC.

Snapadu

Tentmakers INC

ARGUMENTS IN SUPPORT: CSLB writes, “AB 559 would add accessory dwelling units on residentially zoned property into the existing definition of “Home Improvement” in Contractors State License Law and would increase penalties on contractors who violate progress payment provisions resulting in consumer harm. This bill clarifies that engaging in ADI construction projects are subject to progress payment rules and will discourage contractors from failing to complete construction projects despite receiving payment.”

The Associated General Contractors, California Chapter states, “With the potential revocation of licenses and significant penalties for violations, AB 559 establishes a clear deterrent against malpractice, ensuring that quality and diligence are prioritized in contractor services.”

The California Low-Income Consumer Coalition writes, “This bill strengthens consumer protection by adding ADUs to the existing definition of “Home Improvement” in Contractors State License Law and increasing penalties on contractors who violate progress payment provisions resulting in consumer harm.”

ARGUMENTS IN OPPOSITION: The Casita Coalition opposes unless amended citing “the blanket limitation of a max deposit of $1,000 for all types of ADUs creates an unworkable standard for smaller builders and factory-built ADU companies, imposing unacceptable financial burdens and risk that will lead many to stop building ADUs… We propose an amendment specifying that the bill applies only to attached ADUs and those created from conversion of existing interior space of the primary residence.”

Villa Homes, Samara Living, Inc., and Tentmakers Inc., cite similar concerns, but add, “We recommend an amendment to add an exemption for ADU builders who use a funds-controlled escrow.”

SnapADU cites similar concerns, but instead suggests that the bill, “Require clear project disclosures before collecting significant payments… Tie payments to meaningful project milestones… Create a public CSLB registry or endorsement for ADU-qualified builders.”

ASSEMBLY FLOOR: 76-0, 5/1/25

AYES: Addis, Aguiar-Curry, Ahrens, Alanis, Alvarez, Arambula, Ávila Farías, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Caloza, Carrillo, Castillo, Connolly, Davies, DeMaio, Dixon, Elhawary, Ellis, Flora, Fong, Gabriel, Gallagher, Garcia, Gipson, Jeff Gonzalez, Mark González, Hadwick, Haney, Harabedian, Hart, Hoover, Irwin, Jackson, Kalra, Krell, Lackey, Lee, Lowenthal, Macedo, Muratsuchi, Nguyen, Ortega, Pacheco, Patel, Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Ransom, Celeste Rodriguez, Michelle Rodriguez, Rogers, Blanca Rubio, Sanchez, Schiavo, Schultz, Sharp-Collins, Solache, Soria, Stefani, Ta, Tangipa, Valencia, Wallis, Ward, Wicks, Wilson, Zbur, Rivas

NO VOTE RECORDED: Chen, McKinnor, Papan

Prepared by: Yeaphana La Marr / B., P. & E.D. /

8/29/25 20:47:02

**** END ****

SENATE COMMITTEE ON

Senator Anna Caballero, Chair

2025 - 2026 Regular Session

AB 559 (Berman) - Professions and vocations: contractors: home improvement contracts: prohibited business practices

Bill Summary:

AB 559 expands the definition of “home improvement” under the Contractor State License Law to include accessory dwelling units (ADUs) on residentially zoned property and establishes penalties for individuals who violate specified downpayment or progress payment provisions for home improvement contracts.

Fiscal Impact:

The Contractors State License Board (CSLB) reports:

• Minor workload increase to the CSLB Testing Division to update licensing exams to include questions on the topic of ADUs.
• Unknown increased workload, ranging in the low thousands of dollars, to the CSLB Enforcement Division to review violations of downpayment or progress payment provisions specific to home improvement contracts (Contractors License Fund).
• Unknown potential increase in cases referred to the Attorney General’s (AG) Office due to a potential increase in civil penalty appeals. The bill establishes a minimum $10,000 penalty for violations of downpayment or progress payment provisions for both licensed and unlicensed individuals, which may result in more violators choosing to appeal their civil penalties because of the higher penalty amount. CSLB estimates an approximate increase of 11 percent in AG case referrals, or an additional 57 citations.

Penalty revenue is anticipated to offset costs for the increased volume of enforcement workload and any subsequent AG appeals review; however, to the extent that there is a significant number of new violations above CSLB’s projections, then there may be a fiscal impact to CSLB.

Background:

Unlike new construction, home improvement projects are subject to contract and payment rules. These rules include a prohibition for contractors to request or accept progress payments that exceed the value of the work completed or the cost of materials delivered. Contractors are also prohibited from charging a downpayment that exceeds $1,000 or 10 percent of the contract amount, whichever amount is less.

Existing law does not expressly include ADUs in the definition of home improvement. CSLB, the sponsor of this bill, asserts that the ambiguity in the home improvement contract provisions of the Contractor State License Law may not subject ADUs to the same payment restrictions as other home improvement contracts. According to the CSLB, the increased popularity of ADUs has led to a corresponding rise in consumer complaints to the CSLB about contractors performing ADU-related work. Many of these complaints alleged that a company accepted payment for ADUs that went unfinished, leaving consumers with substantial losses.

This bill would include ADUs in the definition of “home improvement,” thereby subjecting ADU-related construction projects to the same payment restrictions as other home improvement contracts.

Proposed Law:

• Includes ADUs on residentially zoned property in the definition of “home improvement.”
• Specifies that a licensee or their agent or salesperson, or an unlicensed person who violates downpayment restrictions that result in a financial loss to a consumer greater than 10 percent of the contract amount is subject to license revocation or citation by the registrar and a civil penalty of at least $10,000.

-- END --

SENATE COMMITTEE ON

BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT

Senator Angelique Ashby, Chair

2025 - 2026 Regular

Bill No: AB 559 Hearing Date: June 30, 2025

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

SUMMARY:

Adds accessory dwelling units (ADUs) to the definition of “home improvement,” for the purposed. Extends “home improvement contract” requirements to accessory dwelling units (ADUs) on residentially zoned property.

NOTE:

This bill is double-referred to Committee on Judiciary, second.

Existing law:

1. Establishes, until January 1, 2029, the Contractors State License Board (CSLB) under the Department of Consumer Affairs (DCA) to implement and enforce the Contractors State License Law (License Law), which includes the licensing and regulation of contractors and home improvement salespersons. (Business and Professions Code (BPC) §§ 7000 et seq.)
   
2. Authorizes the Board to appoint a registrar of contractors to be the executive officer and secretary of the CSLB. (BPC § 2011)
   
3. Exempts from the License Law a work or operation on one undertaking or project by one or more contracts if the aggregate price for labor, materials, and all other items is less than $1,000 that work or operation being considered of casual, minor, or inconsequential nature, and the work or operation does not require a building permit. (BPC § 7048)
   
4. Defines “home improvement” to mean 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, or for which an emergency or major disaster is declared by the President of the United States, and includes, but is not 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, and other improvements of the structures or land which is adjacent to a dwelling house. “Home improvement” also means installing home improvement goods or furnishing home improvement services. (BPC § 7151(a))
   
5. Defines “home improvement contract” to mean an agreement, whether oral or written, or contained in one or more documents, between a contractor and an owner or between a contractor and a tenant for the performance of a home improvement, and includes all labor, services, and materials to be furnished and performed thereunder. “Home improvement contract” also means an agreement, whether oral or written, or contained in one or more documents, between a salesperson, whether or not they are a home improvement salesperson, and an owner or a tenant which provides for the sale, installation, or furnishing of home improvement goods or services. (BPC § 7151.2)
   
6. Identifies the projects for which a home improvement contract is required, outlines the contract requirements, and lists the items and notifications that shall be included in the contract or may be provided as an attachment. (BPC § 7159)
   
7. Sets forth requirements for home improvement contracts and specifies that failure to comply is cause for discipline by the CSLB, including:
   
   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 a downpayment will be charged, the downpayment shall not exceed $1,000 or 10 percent of the contract amount, whichever amount is less.
      

c) 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.

d) 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 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.

(BPC § 7159.5(a)(1), (3), (4), (5))

8) Exempts a contractor furnishing a performance and payment bond, lien and completion bond, or a bond equivalent or joint control covering full performance and payment from the requirements of 7b) through 7d) above, and exempts the contractor from including specified information as part of the contract. Authorizes a contractor furnishing these bonds, bond equivalents, or a joint control approved by the registrar to accept payment prior to completion. Requires a licensee to 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. (BPC § 7159.5(a)(8))

1. Specifies that a violation of 7a), 7b), and 7d) above is a misdemeanor punishable by a fine of not less than $100 nor more than $5,000, or by imprisonment in county jail not exceeding one year, or by both that fine and imprisonment. If a violation occurs in a location damaged by a natural disaster for which a state of emergency is proclaimed by the Governor or for which an emergency or major disaster is declared by the President of the United States, the court must impose the maximum fine. (BPC § 7159.5(b))
   
2. Exempts from the License law any person who only furnishes materials or supplies without fabricating them into, or consuming them in the performance of, the work of the contractor. (BPC § 7052)
   
3. Defines ADU as an attached or a detached residential dwelling unit that provides complete independent living facilities for one or more persons and is located on a lot with a proposed or existing primary residence. An ADU must include permanent living, sleeping, eating, cooking, and sanitation provisions on the same parcel where the single-family or multifamily dwelling is or will be situated. (Government Code § 66313(a))

This bill:

1. Adds building ADUs to the definition of “home improvement,” thereby applying all requirements of a home improvement contract to ADU projects.
   
2. Specifies that a licensed contractor who requests or accepts a down payment 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 license revocation.
   
3. Specifies that a licensed or unlicensed contractor who requests or accepts a down payment 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 and a civil penalty of at least ten thousand dollars ($10,000).
4. Makes a technical amendment remove an obsolete operative date.

FISCAL EFFECT:

According to the Assembly Committee on Appropriations, CSLB anticipates minor and absorbable staff costs of approximately $5,000, including one-time staffing costs of approximately $1,000 to update the Law and Business exam and ongoing staffing costs of approximately $4,000 annually to manage an increase in appeals related to violations.

COMMENTS:

1. Purpose. This bill is sponsored by the CSLB. The Author states, “A recent high-profile case in which a contractor defrauded homeowners out of hundreds of thousands of dollars for uncompleted ADUs shed light on the need to strengthen payment rules for ADUs and toughen penalties for crooked contractors. AB 559 responds directly to the more than 400 complaints received by the Contractors State License Board by prohibiting ADU builders from charging more than a $1,000 down payment and accepting payment for work or materials that have not been completed or delivered. AB 559 will also stiffen penalties for violating these rules.”
2. Background.

CSLB and the License Law. The CSLB is responsible for the implementation and enforcement of the License Law, which governs the licensure, practice, and discipline of contractors in California. A license is required for construction projects valued at $1,000 or more, including labor and materials. The CSLB issues licenses to business entities and sole proprietors. Each license requires a qualifying individual (a “qualifier”) who satisfies the experience and examination requirements for licensure and directly supervises and controls construction work performed under the license.

The CSLB is authorized to take disciplinary action against licensed and unlicensed contractors who have violated the License Law and is empowered to use an escalating scale of penalties, ranging from citations and fines (referred to as civil penalties) to license suspension and revocation.

The CSLB recently revoked the license of Anchored Tiny Homes, a Sacramento-based ADU builder, after it received more than 400 complaints, primarily from consumers alleging that they paid for ADUs that were never completed. Unlike new construction, home improvement projects are subject to contract and payment rules to protect consumers from unscrupulous contractors. For example, contractors are prohibited from requesting or accepting progress payments that exceed the value of the work completed or the cost of materials delivered. Existing law does not expressly include ADUs in the definition of home improvement, so while Anchored Tiny Homes did not contest the revocation of their license, another contractor could argue that contracts for ADUs are not subject to the same payment restrictions, thus illuminating the need to clarify existing law.

This bill would include ADUs in the definition of “home improvement,” in the same way that swimming pools, fences, and garages are, therefore subjecting the construction of ADUs to stricter contract and payment rules. Additionally, this bill would boost the CSLB’s enforcement capability by subjecting a contractor to license revocation (or citation if the individual is unlicensed) and a $10,000 fine if they request or accept a down payment or progress payment for work and materials that are not performed or supplied, resulting in a consumer’s financial loss greater than 10 percent of the contract amount.

1. Related Legislation. SB 757 (Limón, Chapter 249, Statutes of 2021) adds solar energy improvements to the definition of “home improvement.”

SB 1189 (McGuire, Chapter 364, Statutes of 2020) revised the definition of "home improvement" to include 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 or for which an emergency or major disaster is declared by the President of the United States.

SB 601 (McGuire, Chapter 403, Statutes of 2023) requires courts to impose the maximum fine when a contractor violates specified home improvement contract requirements in a declared disaster area.

AB 2622 (Juan Carrillo, Chapter 240, Statutes of 2024), authorizes a person who does not have a contractor's license to both advertise for and perform construction work or a work of improvement if the total cost of labor, materials, and all other items, is less than $1,000, and if specified conditions are met.

1. Arguments in Support. The Contractors State License Board (sponsor) writes, “AB 559 would add accessory dwelling units on residentially zoned property into the existing definition of “Home Improvement” in Contractors State License Law and would increase penalties on contractors who violate progress payment provisions resulting in consumer harm. This bill clarifies that engaging in ADI construction projects are subject to progress payment rules and will discourage contractors from failing to complete construction projects despite receiving payment.”

The Associated General Contractors, California Chapter states, “By explicitly defining ‘home improvement’ and introducing robust penalties for unscrupulous practices, this bill strengthens the integrity and reputation of licensed contractors. This measure will lead to enhanced consumer confidence and a more robust demand for professional contractor services. The bill also emphasizes the importance of adhering to payment prohibitions, which protect both consumers and reputable contractors from unethical behavior. With the potential revocation of licenses and significant penalties for violations, AB 559 establishes a clear deterrent against malpractice, ensuring that quality and diligence are prioritized in contractor services.”

1. Comments. An Oppose Unless Amended letter was received from a prefabricated ADU builder. The stakeholder, Casita Coalition, cited the $1,000 down payment and progress payment requirements of a home improvement contract as too burdensome on their business because of the high carrying costs of the materials. Additionally, CSLB reports the prefab builder could not charge progress payments while the unit is being built at the factory because existing law requires delivery of those materials to charge the consumer.
   
   The primary recommendation of the Casitas Coalition to resolve this problem is to apply this bill only to attached ADUs and exempt detached ADUs from the definition of “home improvement.” Under their proposal, detached ADUs would be regulated as a new build.

Contractors whose work falls under the definition of a home improvement contract have the option to obtain approval from the Registrar to file a performance and payment bond. This bond allows contractors to avoid compliance with the down payment and progress payment restrictions, yet serves as a consumer protection tool because if the work is not done and/or materials not provided, the consumer can file a claim against the bond for up to the entire value of the project. This solution provides meaningful consumer protection while not raising costs for all contractors. The performance and payment bond is used by many businesses that offer products that they charge full price for before installing, such as those that sell sheds, pergolas, and other items that must be installed after purchase.

Additionally, the License Law provides an exemption for businesses that sell the product without performing the installation (BPC § 7052). A company could build a prefabricated home and contract with a contractor to conduct the installation. Sale of the ADU would not require compliance with the License Law.

The Committee understands that the Casitas Coalition is a non-profit and any additional costs could impact their ability to serve lower income Californians. However, the large scale harm to consumers that was imposed by only one unscrupulous contractor demonstrates the need for this bill and the increased consumer protection and enforcement ability it provides. The Author should continue to work with Casitas Coalition on amendments that address its status as a non-profit, balancing the necessary protection this bill would provide all consumers.

SUPPORT AND OPPOSITION:

Support:

Contractors State License Board (sponsor)

Associated General Contractors, California Chapter

Opposition:

Casitas Coalition

-- END --

Date of Hearing: April 23, 2025

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

ABPCA Bill Id:AB 559

Author:(Berman) – As Amended Ver:March 27, 2025

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill expands the definition of “home improvement” under the contractors state license law to include accessory dwelling units (ADUs), thereby subjecting the construction of ADUs to specific contract and payment rules. This bill also enhances existing civil penalties for violations related to home improvement and home improvement contracts that result in financial loss to a consumer.

Specifically, this bill:

1. Expands the definition of “home improvement” under the contractors state license law to include the construction, erection, installation, replacement, or improvement of an ADU on residentially zoned property.
2. Provides that a licensee of the Contractors State License Board (CSLB) or their agent or salesperson who requests or accepts a downpayment, progress payment, or some combination of the two, in violation of the contractors state license law, resulting in financial loss to a consumer greater than 10% of the contract amount is subject to revocation of their license and a civil penalty of at least $10,000.
3. Provides that an unlicensed individual who should be subject to licensure by CSLB who requests or accepts a downpayment, progress payment, or some combination of the two, in violation of the contractors state license law, resulting in financial loss to a consumer greater than 10% of the contract amount is subject to citation and a civil penalty of at least $10,000.

FISCAL EFFECT:

Minor one-time and ongoing costs to CSLB (special funds).

CSLB anticipates minor and absorbable staff costs of approximately $5,000, including one-time staffing costs of approximately $1,000 to update the Law and Business exam and ongoing staffing costs of approximately $4,000 annually to manage an increase in appeals related to violations (special funds).

CSLB anticipates a rise in cases referred to the Attorney General’s office due to the potential increase in licensee and unlicensed violators appealing the higher civil penalties. CSLB assumes an approximate increase of 11% in additional referrals, which equates to approximately 57 additional citations referred to the Attorney General’s office. CSLB assumes the increase in civil penalty minimums collected in revenue will completely offset any additional Attorney General costs related to appeals.

COMMENTS:

1. Purpose. This bill is sponsored by CSLB. According to the author:

A recent high-profile case in which a contractor defrauded consumers out of hundreds of thousands of dollars for uncompleted ADUs shed light on the need to strengthen payment rules for ADUs and toughen penalties for crooked contractors. [This bill] responds directly to the more than 400 complaints received by [CSLB] by prohibiting ADU builders from charging more than a $1,000 downpayment and from accepting payment for work or materials that have not been completed or delivered. [This bill] will also stiffen penalties for violating these rules.

1. Background. CSLB, within the Department of Consumer Affairs, licenses and regulates construction contractors working in California. Existing law requires any contractor performing residential construction or home improvement work valued at over $1,000 to obtain a license and submit a surety bond to CSLB. Existing law also requires CSLB to develop a regulatory framework for imposing civil penalties against licensed and unlicensed contractors who harm consumers. CSLB uses an escalating scale of penalties, ranging from citations and fines (up to $8,000), to license suspension and revocation.

CSLB recently revoked the license of Anchored Tiny Homes, a Sacramento-based ADU builder, after it received more than 400 complaints, primarily from consumers alleging they paid for ADUs that were never completed. Existing law requires a contractor licensed by the state (which Anchored was) to obtain a surety bond, but in cases of widespread fraud the bond can be insufficient to compensate all aggrieved homeowners. For this reason, among others, existing law also authorizes CSLB to seek civil penalties against contractors on a per-violation basis for violations of the law governing home improvements and home improvement contracts. However, because the definition of a “home improvement” does not explicitly reference ADU construction, CSLB cannot meaningfully seek civil penalties to compensate consumers harmed by ADU contractors, such as those consumers defrauded by Anchored Tiny Homes.

This bill adds ADUs to the definition of a home improvement and enhances CSLB’s existing civil penalty authority for violations related to home improvement and home improvement contracts.

Analysis Prepared by: Jennifer Swenson / APPR. / (916) 319-2081

Date of Hearing: April 8, 2025

ASSEMBLY COMMITTEE ON JUDICIARY

Ash Kalra, Chair

ABPCA Bill Id:AB 559

Author:(Berman) – As Amended Ver:March 27, 2025

PROPOSED CONSENT

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

KEY ISSUES:

1. Should accessory dwelling units be included in the list of projects that constitute “home improvement” for the purpose of potentially obtaining civil penalties under the contractors STATE license law?
2. should the civil penalties imposed on persons who violate specified provisions of the contractors STATE license law be enhanced?

SYNOPSIS

In late 2024, a Sacramento-based accessory dwelling unit building company called “Anchored Tiny Homes” was shut down by the Contractors State License Board after the company was found to have repeatedly accepted consumer down payments for work that was never performed. Traditionally, existing law would permit the Contractors State License Board to seek civil penalties against the company. However, the existing definition of a “home improvement” omits accessory dwelling units, thus leaving the Board powerless to assist defrauded homeowners.

This bill would eliminate the loophole in existing law by explicitly adding accessory dwelling units to the list of projects that constitute a home improvement, thus allowing the Contractors State License Board to seek civil penalties for legal violations involving accessory dwelling unit construction. Additionally, this bill would enhance the existing authority for the Board to seek civil penalties by permitting the Board to seek penalties of up to $10,000 per violation.

This non-controversial bill is sponsored by the Contractors State License Board and is supported by the California Low-Income Consumer Coalition. In support of the bill, the Board highlights the need to ensure that its legal authority to regulate contractors is extended to the fast-growing accessory dwelling unit industry. This bill has no registered opposition and was previously heard and approved by the Committee on Business and Professions on consent.

SUMMARY: Clarifies the State Contractor License Board’s authority of accessory dwelling unit construction and enhances the civil penalties that may be imposed on a contractor found to have violated the contractor state licensing law in a manner that results in financial loss to a consumer. Specifically, this bill:

1. Provides that a licensee of the State Contractors License Board or their agent or salesperson, who violates the contractor licensing law resulting in financial loss to a consumer greater than 10 percent of the contract amount is subject to revocation of their license and a civil penalty of at least $10,000.
2. Provides that an unlicensed individual who should be subject to licensure by the Contractors State License Board who requests or accepts a downpayment, progress payment, or some combination of the two, in violation of the contractor license law, resulting in financial loss to a consumer greater than 10 percent of the contract amount is subject to citation and a civil penalty of at least $10,000.
3. Clarifies that the definition of “home improvement” under the contractor state license law includes the construction, erection, installation, replacement, or improvement of an accessory dwelling unit on residentially zoned property.

EXISTING LAW:

1. Establishes the Contractors State License Board within the Department of Consumer Affairs to oversee the building contractor industry in California. (Business and Professions Code Section 7000 et seq.)
2. Authorizes the Contractors State License Board to appoint a Registrar of Contractors to serve as the executive officer and secretary of the Board. (Business and Professions Code Section 2011.)
3. Exempts work on projects with an aggregate cost of labor, materials, and other items valued at less than $1,000 from the contractors state license law. (Business and Professions Code Section 7048.)
4. Requires the Contractors State License Board to adopt regulations for the provision of civil penalties against contractors that adopt factors for determining the amount of a penalty to be assessed up to $8,000. (Business and Professions Code Section 7099.2.)
5. Provides that if the Contractors State License Board believes conduct is willful or deliberate, notwithstanding 4), the Board may seek penalties up to $30,000. (Ibid.)
6. Defines “home improvement” to mean 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, or for which an emergency or major disaster is declared by the President of the United States, and includes, but is not 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, and other improvements of the structures or land which is adjacent to a dwelling house. (Business and Professions Code Section 7151(a).)
7. Defines “home improvement contract” to mean an agreement, whether oral or written, or contained in one or more documents, between a contractor and an owner or between a contractor and a tenant for the performance of a home improvement, and includes all labor, services, and materials to be furnished and performed thereunder. “Home improvement contract” also means an agreement, whether oral or written, or contained in one or more documents, between a salesperson, whether or not they are a home improvement salesperson, and an owner or a tenant which provides for the sale, installation, or furnishing of home improvement goods or services. (Business and Professions Code Section 7151.2.)
8. Outlines the specific information that must be contained in a home improvement contract, including but not limited to rights of rescission, warnings about mechanics liens, and down payments. (Business and Professions Code Section 7159 (d).)

FISCAL EFFECT: As currently in print this bill is keyed fiscal.

COMMENTS: Home construction, be it building a new property, renovating a property, or adding an accessory dwelling unit, can be an expensive undertaking. To ensure that the contractors performing such work are both honest businesspersons and competent builders, existing law tasks the Contactors State License Board with overseeing the industry and licensing contractors. Existing law requires that any contractor performing residential construction or home improvement work valued at over $1,000 must obtain a license and submit a surety bond to the Board. The State Contractor License Board is also charged with developing a regulatory framework for the imposition of civil penalties against contractors who harm consumers. This bill enhances the penalty levels the Contractor State License Board may seek for violations of the law and clarifies the Board’s role in policing accessory dwelling unit contractors. In support of this measure, the author states:

A recent high-profile case in which a contractor defrauded consumers out of hundreds of thousands of dollars for uncompleted ADUs shed light on the need to strengthen payment rules for ADUs and toughen penalties for crooked contractors. AB 559 responds directly to the more than 400 complaints received by the Contractors State License Board by prohibiting ADU builders from charging more than a $1,000 downpayment and accepting payment for work or materials that have not been completed or delivered. AB 559 will also stiffen penalties for violating these rules.

The Anchored Tiny Homes case highlights deficiencies in existing contractor laws. In 2024, it became clear that “Anchored Tiny Homes” an accessory dwelling unit (ADU) contractor working in Sacramento and the Bay Area, was scamming homeowners across Northern California. News reporters from across the region detail that Anchored Tiny Homes would require homeowners to put down significant deposits for the construction of an ADU, only to see the company fail to complete a project. (Chris Chmura, ‘It's insane': California law leaves peanuts for ‘scammed' ADU buyers, NBC Bay Area (Aug. 23, 2024) available at: https://www.nbcbayarea.com/investigations/consumer/california-law-scammed-adu-buyers/3633629/.) In fact, by August of 2024, the company had completely shut down its Fair Oaks-based operations.

Although existing law requires contractors licensed by the state (which Anchored was), to obtain bonding, when a company commits a fraud as widespread as the acts by Anchored Tiny Homes, the existing bonding statutes are insufficient to compensate all aggrieved homeowners. Recognizing this, existing law also authorizes the Contractor State License Board to seek civil penalties against contractors on a per violation basis for violations of the law governing home improvements and home improvement contracts. However, the present definition of a “home improvement,” while expansive, does not explicitly reference ADU construction. Accordingly, the Contractors State License Board could not meaningfully seek civil penalties to compensate those defrauded by Anchored Tiny Homes. As California seeks to utilize ADUs as a relatively cost-effective way to develop new housing, it is imperative that consumer protections are in place.

This bill closes the ADU loophole in existing law and authorizes enhanced civil penalties. Seeking to strengthen existing civil penalty authority and close the ADU Loophole in the state contractor license law described above, this bill advances two primary components. First, this measure clarifies that ADUs are included in the definition of a home improvement. Second, the bill enhances the existing civil penalty authority for violations of the laws related to home improvement and home improvement contracts. The bill would provide that a violation of the law triggers an automatic revocation of one’s contractor license and authorizes the Contractors State License Board to seek civil penalties of up to $10,000 per violation, up from the present $8,000 threshold.

ARGUMENTS IN SUPPORT: This bill is sponsored by the Contractors State License Board. In support of the bill, the Board writes:

With the demand for the construction of accessory dwelling units (ADU) rising in recent years, CSLB has received a significant increase in the number of consumer-filed complaints against contractors for failing to complete ADU construction projects. Most of the complaints allege considerable financial harm because the contractor abandoned the project after requesting and accepting payment for work that was not completed and materials that were not delivered.

This bill strengthens consumer protection by adding ADUs to the existing definition of “Home Improvement” in Contractors State License Law and increasing penalties on contractors who violate progress payment provisions resulting in consumer harm. These amendments clarify that contractors engaging in ADU construction projects are subject to progress payment rules and will discourage contractors from failing to complete construction projects despite receiving payment.

REGISTERED SUPPORT / OPPOSITION:

Support

Contractors State License Board (sponsor)

California Low-Income Consumer Coalition

Opposition

None on file

Analysis Prepared by: Nicholas Liedtke / JUD. / (916) 319-2334

Date of Hearing: April 1, 2025

ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS

Marc Berman, Chair

ABPCA Bill Id:AB 559

Author:Berman – As Amended Ver:March 27, 2025

NOTE: This bill is double referred and if passed by this Committee will be re-referred to the Assembly Judiciary Committee.

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

SUMMARY: Expands the definition of “home improvement” to include accessory dwelling units (ADUs) on residentially zoned property, thereby subjecting the construction of ADUs to specific contract and payment rules, and enhances penalties for violations that result in consumer financial harm, as specified.

EXISTING LAW:

1. Establishes, until January 1, 2029, the Contractors State License Board (CSLB) under the Department of Consumer Affairs (DCA) to implement and enforce the Contractors State License Law (License Law), which includes the licensing and regulation of contractors and home improvement salespersons. (Business and Professions Code (BPC) §§ 7000 et seq.)
2. Authorizes the Board to appoint a registrar of contractors to be the executive officer and secretary of the CSLB. (BPC § 2011)
3. Exempts from the License Law a work or operation on one undertaking or project by one or more contracts if the aggregate price for labor, materials, and all other items is less than $1,000 that work or operation being considered of casual, minor, or inconsequential nature, and the work or operation does not require a building permit. (BPC § 7048)
4. Requires the CSLB to promulgate regulations covering the assessment of civil penalties that consider the gravity of the violation, the good faith of the licensee or applicant for licensure being charged, and the history of previous violations. Except as otherwise provided, prohibits the CSLB from assessing a civil penalty that exceeds $8,000. Specifies that the CSLB may assess a civil penalty up to $30,000 for specified violations (e.g., willful or deliberate disregard and violation of state and local building laws; aiding or abetting an unlicensed person to violate the License Law; entering into a contract with an unlicensed person; and committing workers’ compensation fraud). (BPC § 7099.2)
5. Specifies that abandonment without legal excuse of any construction project or operation engaged in or undertaken by the licensee as a contractor constitutes a cause for disciplinary action. (BPC ֻ§ 7107)
6. Defines “home improvement” to mean 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, or for which an emergency or major disaster is declared by the President of the United States, and includes, but is not 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, and other improvements of the structures or land which is adjacent to a dwelling house. “Home improvement” also means installing home improvement goods or furnishing home improvement services. (BPC § 7151(a))
7. Defines “home improvement contract” to mean an agreement, whether oral or written, or contained in one or more documents, between a contractor and an owner or between a contractor and a tenant for the performance of a home improvement, and includes all labor, services, and materials to be furnished and performed thereunder. “Home improvement contract” also means an agreement, whether oral or written, or contained in one or more documents, between a salesperson, whether or not they are a home improvement salesperson, and an owner or a tenant which provides for the sale, installation, or furnishing of home improvement goods or services. (BPC § 7151.2)
8. Identifies the projects for which a home improvement contract is required, outlines the contract requirements, and lists the items that shall be included in the contract or may be provided as an attachment. (BPC § 7159)
9. Sets forth the following requirements for home improvement contracts and specifies that failure to comply is cause for discipline by the CSLB:
10. 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.
11. 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.
12. If a downpayment will be charged, the downpayment shall not exceed $1,000 or 10 percent of the contract amount, whichever amount is less.
13. 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.
14. 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 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.
15. 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 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.
16. 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, as specified.
17. A contractor furnishing a performance and payment bond, lien and completion bond, or a bond equivalent or joint control covering full performance and payment is exempt from paragraphs (c), (d), and (e) above, and need not include specified information as part of the contract. 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.
18. (BPC § 7159.5(a))
19. Specifies that a violation of paragraphs (a), (c), and (e) above is a misdemeanor punishable by a fine of not less than $100 nor more than $5,000, or by imprisonment in county jail not exceeding one year, or by both that fine and imprisonment. If a violation occurs in a location damaged by a natural disaster for which a state of emergency is proclaimed by the Governor or for which an emergency or major disaster is declared by the President of the United States, the court must impose the maximum fine.
20. Specifies that any person who violates the requirements in (5) above as part of a plan or scheme to defraud an owner or tenant of a residential or nonresidential structure, in connection with the offer or performance of repairs for 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, as specified. For natural disasters for which a state of emergency is proclaimed by the Governor or for which an emergency or major disaster is declared by the President of the United States, a court may impose a fine of $500 to $25,000, in addition to full restitution and imprisonment, based on the defendant’s ability to pay. (BPC § 7159.5(c))
21. Defines ADU as an attached or a detached residential dwelling unit that provides complete independent living facilities for one or more persons and is located on a lot with a proposed or existing primary residence. An ADU must include permanent living, sleeping, eating, cooking, and sanitation provisions on the same parcel where the single-family or multifamily dwelling is or will be situated. (Government Code § 66313(a))

THIS BILL:

1. Expands the definition of “home improvement” to include the construction, erection, installation, replacement, or improvement of an ADU on residentially zoned property.
2. Specifies that a licensee, or their agent or salesperson, who requests or accepts a downpayment, progress payment, or some combination of the two, in violation of the License Law, resulting in financial loss to a consumer greater than 10 percent of the contract amount is subject to revocation of their license and a civil penalty of at least $10,000.
3. Specifies that an unlicensed person who is subject to licensure by CSLB, or their agent or salesperson, who requests or accepts a downpayment, progress payment, or some combination of the two, in violation of the License Law, resulting in financial loss to a consumer greater than 10 percent of the contract amount is subject to citation and a civil penalty of at least $10,000.
4. Deletes an obsolete operative date and makes other technical and conforming changes.

FISCAL EFFECT: Unknown. This bill is keyed fiscal by the Legislative Counsel.

COMMENTS:

Purpose. This bill is sponsored by the Contractors State License Board. According to the author:

A recent high-profile case in which a contractor defrauded consumers out of hundreds of thousands of dollars for uncompleted ADUs shed light on the need to strengthen payment rules for ADUs and toughen penalties for crooked contractors. AB 559 responds directly to the more than 400 complaints received by the Contractors State License Board by prohibiting ADU builders from charging more than a $1,000 downpayment and accepting payment for work or materials that have not been completed or delivered. AB 559 will also stiffen penalties for violating these rules.

Background. The CSLB is responsible for the implementation and enforcement of the License Law, which governs the licensure, practice, and discipline of contractors in California. A license is required for construction projects valued at $1,000 or more, including labor and materials. The CSLB issues licenses to business entities and sole proprietors. Each license requires a qualifying individual (a “qualifier”) who satisfies the experience and examination requirements for licensure and directly supervises and controls construction work performed under the license.

The CSLB is authorized to take disciplinary action against licensed and unlicensed contractors who have violated the License Law and is empowered to use an escalating scale of penalties, ranging from citations and fines (referred to as civil penalties) to license suspension and revocation. The CSLB recently revoked the license of Anchored Tiny Homes, a Sacramento-based ADU builder, after it received more than 400 complaints, primarily from consumers alleging that they paid for ADUs that were never completed. Unlike new construction, home improvement projects are subject to contract and payment rules to protect consumers from unscrupulous contractors. For example, contractors are prohibited from requesting or accepting progress payments that exceed the value of the work completed or the cost of materials delivered. Existing law does not expressly include ADUs in the definition of home improvement, so while Anchored Tiny Homes did not contest the revocation of their license, another contractor could argue that contracts for ADUs are not subject to the same payment restrictions, thus illuminating the need to clarify existing law.

This bill would include ADUs in the definition of “home improvement,” in the same way that swimming pools, fences, and garages are, therefore subjecting the construction of ADUs to stricter contract and payment rules. Additionally, this bill would boost the CSLB’s enforcement capability by subjecting a contractor to automatic license revocation (or citation if the individual is unlicensed) and a $10,000 fine if they request or accept a downpayment or progress payment for work and materials that are not performed or supplied, resulting in a consumer’s financial loss greater than 10 percent of the contract amount. In doing so, this bill will help protect homeowners and tenants from being scammed and potentially losing their hard-earned savings.

Prior Related Legislation. SB 757 (Limón), Chapter 249, Statutes of 2021, added the installation of solar energy improvements to the definition of “home improvement.”

SB 1189 (McGuire), Chapter 364, Statutes of 2020, revised the definition of "home improvement" to include 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 or for which an emergency or major disaster is declared by the President of the United States.

SB 601 (McGuire), Chapter 403, Statutes of 2023 required, in part as it related to this bill, that the courts to impose the maximum fine when a contractor violates home improvement contract requirements in a declared disaster area.

AB 2622 (Juan Carrillo), Chapter 240, Statutes of 2024, authorized a person who does not have a contractor's license to both advertise for and perform construction work or a work of improvement if the total cost of labor, materials, and all other items, is less than $1,000, and if specified conditions are met.

ARGUMENTS IN SUPPORT:

As the sponsor of this bill, the CSLB writes in support:

With the demand for the construction of accessory dwelling units (ADU) rising in recent years, CSLB has received a significant increase in the number of consumer-filed complaints against contractors for failing to complete ADU construction projects. Most of the complaints allege considerable financial harm because the contractor abandoned the project after requesting and accepting payment for work that was not completed and materials that were not delivered. This bill strengthens consumer protection by adding ADUs to the existing definition of “Home Improvement” in Contractors State License Law and increasing penalties on contractors who violate progress payment provisions resulting in consumer harm. These amendments clarify that contractors engaging in ADU construction projects are subject to progress payment rules and will discourage contractors from failing to complete construction projects despite receiving payment.

REGISTERED SUPPORT:

Contractors State License Board (Sponsor)

California Low-Income Consumer Coalition

REGISTERED OPPOSITION:

There is no opposition on file.

Analysis Prepared by: Kaitlin Curry / B. & P. / (916) 319-3301