Payment and cancellation

California protects residential clients, and this page says how

Residential construction in California is regulated in ways that commercial work is not, and most of those rules exist to protect you. A builder who is vague about them is a builder worth asking more questions of.

The essentials: a home improvement contract of any size must be in writing, signed before work begins. It must contain a description of the work, the price, the schedule of payments, and a notice explaining the role of the California Contractors State License Board. The down payment is limited by law — a home improvement contract may not require a down payment above the statutory limit, and any contractor asking for “half up front” on a residential job is asking for something the law does not allow. And you have a statutory right to cancel within a defined period after signing, which the contract must state.

This page describes our normal practice. It does not replace your contract, and where a contract and this page differ, the contract governs. Nothing here limits any right you have under California law, and nothing in a contract we write will either.

Nothing is charged before there is a signed contract

A first conversation costs nothing, whether it happens on the telephone or standing in the building. So does a rough order of magnitude.

A detailed estimate on a complex project sometimes carries a fee, because producing one properly means measuring, opening things up and involving a structural engineer. Where that applies we say so in advance and in writing, and the fee is credited against the contract if you proceed.

No work of any kind begins before there is a written, signed contract.

The deposit

Whatever the contract says, within the statutory limit on residential work. It covers mobilisation and initial ordering, and it is invoiced on signature.

If somebody in this trade asks you for a large percentage up front on a residential job, that is a warning rather than a negotiating position. The limit exists because the failure mode it prevents — a contractor taking a large deposit and disappearing — is a real one that has happened to a great many people.

Progress payments and the schedule of values

The contract carries a schedule of values: the work broken into stages, with a sum against each, agreed before anything starts. Payments follow completion of those stages, not the calendar.

That distinction matters. A payment tied to a date pays for time. A payment tied to a completed stage pays for work, and if the work has not happened, neither has the payment. Every application is supported by what was actually done, and you are entitled to see it before you pay.

On longer projects a retention is normally held from each payment and released at completion. The percentage and the release conditions are in the contract.

Allowances, and what happens when they are exceeded

An allowance is a sum carried in the contract for something that cannot be priced yet — tile you have not chosen, appliances not yet selected, or framing behind a wall that has not been opened. It is reconciled against actual cost when it is known, and it moves in both directions: if the actual cost is lower, the contract sum reduces.

Every allowance in our contracts is identified as an allowance, with the assumption behind it written down — what grade of tile, what quality of appliance, what condition we are assuming behind the wall. That way, when it is exceeded, there is nothing to argue about: you can see what was assumed and what was found.

An estimate for work on a hundred-year-old building with no allowances in it is not a more confident estimate. It is a less honest one, and the difference reappears as change orders.

Change orders

A change to the scope is priced and agreed in writing, before it is carried out. That is both our practice and, for residential work in California, a legal requirement: a change order has to be in writing and signed.

We will not do work on a verbal “while you are in there”. It is how disputes start, and the person it hurts most is the owner, who ends up with an invoice for something they remember differently. Ask for the change order; we will already be writing it.

Three things reliably generate change orders on an old building: a condition nobody could see, a design change you decide on, and a correction required by an inspector. The first is shared, the second is yours, and the third depends on why. The contract says how each is handled and it says so before any of them happen.

Delay, and whose it is

Time in city review is an excusable delay. The schedule moves, the contract sum does not. There is no version of a residential contract in this city where a builder can guarantee a date that depends on Planning, and one who offers to is offering something they cannot deliver.

Weather, and conditions nobody could have known about, are excusable. The schedule moves; costs are dealt with under the differing-conditions provisions of the contract.

A design change or a slow decision is the owner’s delay. We will tell you at the time what a decision is holding up, so that it is a choice rather than a surprise.

Our own delay — a subcontractor we failed to schedule, a long-lead item we failed to order in time — is ours, and it does not extend the contract. We would rather write that down than argue about it later.

Your right to cancel, and to stop

California gives you a statutory right to cancel a home improvement contract within a defined period after signing, and the contract will state that right and how to exercise it. If you cancel within that period, any deposit is returned.

Beyond that period, cancellation is governed by the contract. In practice: work actually performed and materials already ordered or fabricated for your project are payable, together with the cost of demobilising and leaving the building safe and weathertight. We do not charge a penalty for a cancelled project and we never have.

You may also suspend the work. That has real costs — protecting what is in place, remobilising, and possibly losing a subcontractor’s slot — and the contract deals with them. Tell us early and those costs are much smaller.

Liens, and how we protect you from them

In California, subcontractors and suppliers who are not paid can record a mechanics lien against your property, even where you have paid your contractor in full. It is one of the genuinely frightening features of residential construction and most owners have never heard of it until it happens.

What protects you: we provide conditional and unconditional lien releases from ourselves and from our subcontractors and suppliers with each payment, so you have a paper trail showing everybody was paid. You are entitled to ask for those, and you should, of every contractor. If a builder is reluctant to provide them, that tells you something important.

You are also entitled to request a list of the subcontractors and suppliers on your project. We will give you one.

Insurance, and what to check

We carry general liability insurance and workers’ compensation for our employees, and we will provide certificates naming you and your property on request — before the contract is signed, not after.

Two things worth checking with every builder, because the consequences of getting them wrong land on you. First, that workers’ compensation is actually in place: an uninsured injury on your property can become your problem. Second, that the licence is current, which you can verify with the California Contractors State License Board in about a minute.

Our licence number is given on request for exactly that reason, and we would encourage you to check it.

If something is wrong with the work

Tell us, as early as you notice it. Workmanship defects in work we performed are corrected at our cost, and that is not contingent on a form or a window — it is what a warranty on construction work means. The specific warranty period is in your contract, and California law provides statutory periods for construction defects that run considerably longer.

The single best thing you can do is raise it immediately rather than at the end. A problem raised during construction is fixed by the crew who are already there. The same problem raised at the final walkthrough is a return visit, and one raised a year later is an investigation.

How to raise any of this

Telephone (415) 543-2100, Mon–Fri 8:00 AM–5:00 PM PT. Or email [email protected]. The project address is enough to find everything.

If you are not satisfied with how we have handled something, the California Contractors State License Board has its own complaint process and you are entitled to use it. We would rather you told us first, and we will not be offended if you do both.