Reading a Construction Contract Before You Sign It
What a California home improvement contract should spell out: scope, exclusions, payment milestones, change orders, and the clauses worth rereading.
A contract is not paperwork you sign at the end of the sales visit. It is the project. Six weeks in, when you remember the tile running to the ceiling and the crew remembers it stopping above the counter, the written scope decides who is right. Read it while you still have room to change it.
This is how a contractor reads these documents. It is not legal advice, and we do not practice law. On a large project, or any clause you do not follow, pay an attorney for an hour of their time.
Read the scope first, then the exclusions
Most people go straight to the number and skim everything above it. Reverse that. A scope of work either describes your house or describes a generic one, and you can usually tell inside a paragraph which you are holding. Relocating the sink is a scope item. So is who patches the ceiling after the recessed lights go in.
Then find the exclusions. Every honest contract has them, and they are more informative than the inclusions. A bid with no exclusions is not more generous, it is less specific, and the missing items reappear later as change orders. Worth confirming in writing: asbestos and lead abatement, structural work discovered after demolition, permit fees, upgrades triggered by inspection, appliances, landscape repair.
What California generally requires
Home improvement contracts in California are governed by statute. The list below is what we generally see required, offered so you know what to look for, not as a legal checklist. Confirm the current requirements at cslb.ca.gov, and have an attorney review the contract itself:
- Contractor name, business address, and license number
- Description of the work and the materials to be used
- Approximate start date and completion date
- Payment schedule tied to work performed
- Written change order provision
- Required notices regarding mechanics liens and the Contractors State License Board
- Your right to cancel, with the deadline stated and a cancellation form attached
State law also caps what a contractor may collect as a down payment on a home improvement contract, (delete the clause) State law also caps what a contractor may collect as a down payment on a home improvement contract.. Confirm the current limit at cslb.ca.gov rather than taking any contractor's word for it, ours included. You should have a signed copy before anyone starts work.
Payments should follow completed work
Milestones beat dates. A schedule tied to progress reads like this: demolition complete, rough plumbing and electrical passed inspection, drywall hung, cabinets set, punch list closed. Each payment names the condition met first, so nobody argues about what month it is.
Watch for a schedule that runs ahead of the visible work. If you are paid up past what has actually been built, you have nothing left to hold when a problem needs attention. Keep a meaningful final payment until the punch list is closed.
Clauses worth reading twice
Change orders
Written, priced, and signed by both parties before the work happens. Verbal changes are a frequent source of billing disputes, in our experience. A contractor who treats that as a formality during the sale will treat it the same way later.
Hidden and unforeseen conditions
Older houses in Los Angeles hide things. Knob and tube wiring, failed cast iron drains, framing altered without a permit, dry rot behind stucco. Read how your contract prices that work, and whether your approval is required before it proceeds.
Substantial completion
Define what finished means. Substantial completion usually means the space is usable, which is not the same as every item closed out. The contract should separate that moment from final payment and spell out how the punch list gets handled.
Warranty
Look for duration, coverage, and exclusions. Manufacturer coverage on fixtures and appliances is separate from a contractor's workmanship warranty. Ask who you call in month fourteen.
Dispute resolution
Arbitration clauses, venue, and attorney fee provisions decide what happens on the worst day of the project. Almost nobody reads them. An attorney can tell you quickly what they cost you if things go badly.
Where this commonly goes wrong
- Allowances set unrealistically low, which makes a bid look competitive until you pick real tile
- Blank start and completion dates, or dates written as "to be determined"
- Plans and specifications referenced in the contract but never attached to it
- Promises made during the walkthrough that never reached the document
- Final payment released without lien releases from subcontractors and suppliers
Preliminary notices from suppliers and subs are routine, not a warning sign. They preserve lien rights on almost every job. Ask how signed releases get collected as payments go out.
Take a couple of days
Ask for the contract before the day you plan to sign it. Read it at your kitchen table, mark what you do not understand, and send the questions back in writing. A good contractor answers them and revises the document. Anyone pushing you to sign in the room is telling you how the rest of the project will go.