As of January 1, 2026, California home improvement contracts need a new set of disclosures. California Business and Professions Code Section 7159(c)(7) now requires disclosure of subcontracted work. Here’s the new code:
(c) In addition to the specific requirements listed under this section, every home improvement contract and any person subject to licensure under this chapter or their agent or salesperson shall comply with all of the following:
(7)(A) The contract shall contain a statement regarding whether or not a subcontractor will be used on the project, including a portion to be checked in response, as follows:
[__] Yes
[__] No
(B) If checked “Yes,” indicating that a subcontractor will be used on the project, the contract shall contain a disclaimer that states the following:
“One or more subcontractors will be used on this project, and the contractor is aware that a list of subcontractors is required to be provided, upon request, along with the names, contact information, license number, and classification of those subcontractors.”
(C) If there is a change order during the project, the same disclaimer set forth in subparagraph (B) shall be on each change order.
You probably see a problem here. An owner who knows the names and numbers of your subs may be tempted to strike separate deals with each. That could cut you out of the job. Nothing in the new California law prevents that. But nothing in the law requires disclosure of names in the contract. The contract has to disclose only your intent to use subs, not the names of subs. Change orders for home improvement projects require the same disclosure.
California is the second state to require disclosure in the contract that work will be done by subs. Texas was the first. Texas Property Code Section 53.256 requires disclosure in the contract of names of subs and suppliers the prime intends to use. California doesn’t go that far. My interpretation of the new California law: Names and numbers aren’t required until a sub starts work – and then only after a request from the owner. By that time any sub’s name is no secret. It’s probably on the side of the truck parked curbside.
More Changes to B&P Section 7159
California home improvement contracts now must disclose:
- The name, address, and email address for delivery of any notice of cancellation, and
- The telephone number of a representative who can help the buyer locate and fill out the notice of cancellation.
An owner who doesn’t get the notice of cancellation can now file a complaint with the Contractors State License Board.
Change to Retainage
California Public Contract Code Section 7201 limits retainage to 5% on most public works projects. But until last week there was no limit to retainage on commercial and residential jobs. As of January 1, 2026 California Civil Code Section 8811 limits retainage to 5% on commercial projects and larger private residential jobs. The limit applies to both prime contracts and subcontracts, with some exceptions. Attorney fees can be awarded for breach of this 5% limit.
This Isn’t Simple
Staying legal isn’t easy. California home improvement contracts require at least 36 separate notices and disclosures. The new law for 2026 adds even more. The California's state license board could help California contractors by flagging these new 2026 code sections. That hasn’t happened yet – at least that I could find on the CSLB site. If you’re serious about drafting legal contracts for California home improvement work, there’s one clear choice: Construction Contract Writer. It’s up to date. And the trial version is free.
