Home Improvement Construction Contract Changes
Diane Dennis Enterprises © December 2005

Well, they've gone and done it again...

Our wonderful lawmakers have made LOTS of changes to various codes, such as the Business and Professions Codes and the Civil Codes, and these changes will require that you have a brand new construction contract drawn up, or at the very least to have some serious additions made to your current contract(s).

Several code sections are going to be repealed effective January 1 2006 and many others will be going into effect on the same day. Many of these changes directly affect your contract(s).

If your 2006 construction contracts don't contain the newly required notices and other items then you can be subject to disciplinary action by the license board! Happy New Year, eh? ;)

But wait! It gets even better! Some of the new wording that's supposed to go into effect Jan 1 2006 has already been repealed and/or changed itself!

Minimum Size Type Now Required

All text on the contract MUST be a minimum 10-point typesize and all headings must be a minimum 10-point typesize BOLD. This minimum text size is required UNLESS a different size (read "larger" size) is otherwise specified.

Some contractors use small type on their contract because it helps to keep down the number of pages in the contract. An unfortunate other reason for small type is to "help" the customer to "miss" the information while reviewing the contract.

No matter the reason for small type though, it's now no longer allowed. This will cause the overall size of contracts to grow.

Mechanic's Lien Notice to Owner

The 2005 B&P code required a mechanic's lien notice and it allowed the notice to be an attachment to the contract.

However, this will be repealed Jan 1 2006 and the new B&P Code that goes into effect Jan 1 2006 requires that a) the text of the mechanic's lien notice be revised and b) the text MUST appear directly on the contract and NOT as an attachment and c) as in the past, it MUST be verbatim to the text in the "new" code.

This is a significant notice, approximately 300 words, and it will take up a sizeable amount of space on your contract, probably causing you to have to add another page.

Newly Required 2006 Notices Already Revised, Again and Again!

Interesting thing here, and this is where it can get really confusing...

As mentioned above, the new 2006 code that was supposed to replace the 2005 code has already gone through several changes.

The mechanic's lien notice had its wording changed, and the new requirement that it be added to the contract was added, but then the new code was repealed and replaced with even more new code.

That newest new code left out the new mechanic's lien notice requirement.

But alas "they" weren't done there... that newest new code that left out the mechanic's lien notice requirement has already been repealed itself and now there's even newer newest code (and it has the mechanic's lien requirement back in it)!

AND, on top of everything...

The code listed at the government legislative website as being effective Jan 1 2006 is NOT accurate!

The text has been changed and changed again and what's posted at the government legislative website does NOT contain the latest updates.

It's absolutely ridiculous, how do "they" expect a contractor to have a legal contract when "they" can't even get it straight themselves?

Description of License Classification Now Required

Another new code requires the contract to contain the name, business address, license number of the contractor and the DESCRIPTION of the license classification relevant to the project.

Presumably this requirement is to help the customer to know whether or not the contractor bidding/contracting to do the work is actually licensed to do that specific work.

Workers Comp Insurance Notice Now Required

Another new code requires that you notify your customer concerning BOTH general liability insurance AND Worker's Comp insurance. You're required to state whether or not you have these insurances and the insurer's contact info if you do have the insurance.

It used to be that it was just general liability insurance that you had to do this for but now it has to be done for worker's comp insurance as well.

New Headings Now Required

Another new code requires the addition of several headings and, as mentioned above, these headings must be no less than 10-point size type and they must be bold.

Here's a partial list:

• The contract price now has to have a heading "Contract Price".
• If there'll be a finance charge then there's a heading required "Finance Charge".
• The heading "Description of the Project and Description of the Significant Materials to be Used and Equipment to be Installed" is now required.
• If there's a downpayment required then the heading "Downpayment" is required, along with another notice in 12-point typeface BOLD written verbatim to the code.
• If there'll be progress payments, the heading "Schedule of Progress Payments" is now required, along with specific text in 12-point typeface BOLD written verbatim to the code
• The headings "Approximate Start Date" and "Approximate Completion Date" are now required
• If applicable, the heading "List of Documents to be Incorporated into the Contract"
• A new heading "Note about Extra Work and Change Orders" along with specific text written verbatim to the code.
• A new statement must be added to the contract, exactly as written in the code, in minimum 12-point typesize BOLD, that tells the customer that he is entitled to a completely filled in copy of the agreement.

The above items are just a partial list of required changes and who knows how many times the codes will change again (and again)...

Already have a contract and want to keep using it?

If you have already invested the time and/or attorneys’ fees into preparing a contract form for your business, and your only concern is to ensure that your contract form complies with all rules after January 1, 2006, then I am excited to tell you about an arrangement that I have reached with David Barnier, a construction litigation attorney and the brilliance behind the “Ask Dave” feature at our website and in our newsletter.

One of David’s practice areas involves the drafting and modification of his clients’ form contracts, which, he explains, comes after a discussion of each individual client’s business and which incorporates his own substantial litigation experience. David typically charges his clients by the hour for both the review of existing contracts as well as his efforts in determining and incorporating the appropriate modifications.

We've made arrangements with David to provide a "Contract Tune-Up" for you, at a very special price, that will include the following:

Updating your contract by incorporating new requirements into your contract
As mentioned above, there are many, many new requirements going into effect on January 1, 2006. Miss just one of these requirements and you risk discipline by the license board.

Customized review and improvement of your contract
David will speak with you to analyze problems that you have had in the past and to prepare terms that address these problems for your future contracts. David will also draw upon his own construction litigation experience to supplement your existing contract with additional terms and/or contract language that he believes will further strengthen your ability to be timely paid and to avoid liability when an issue arises on a job.

Recommendations for changes based upon his review
Once David has identified the areas that need to be addressed, he will recommend changes and will discuss with you each of these changes as well as explain why these changes will improve your contract.

Incorporation of the agreed changes into your contract
If you have a word processing version of your contract that you can email to David, he will incorporate the agreed changes into your contract and provide you with an updated word processing document. If your contract is only available in hard copy, David will give you the option of making these changes yourself or having David re-draft your entire contract (with an additional fee according to the clerical time necessary to re-draft the contract).

David will provide an initial review of your current contract 100% free with NO strings attached

David will review your contract and discuss with you the types of changes that he believes are appropriate, and he will quote you TheContractorsGroup "Contract Tune-Up Special" price (see below) for the steps that he recommends.

As any of you who have spoken with David in the past know, he is always more than willing to answer your questions and to ensure that you understand the benefits and rationale behind the steps that he recommends.

TheContractorsGroup "Contract Tune-Up" Special price

Assuming that you are coming to David with an existing contract form that will require only the newly required language plus the “tweaks” and additions that David recommends after speaking with you regarding your specific business, then your price for this "Contract Tune-Up" Special, David’s analysis and his efforts in revising the word processing version of the contract form, will be only $500.

If, for whatever reason, David determines that the work needed is unusually large, he may quote you a higher fee for his efforts, however BEFORE you incur any charges he will explain everything that will be done for your contract and he will also explain why your situation is more complex than the typical contract tune-up.

Again, there are no strings attached—you may do what you like with the information that David compiles from his initial review and gives to you and you have no obligation to pay David for his time spent even if you decide to incorporate the recommended changes yourself.

Why wouldn’t you take David up on this wonderful offer when others are paying FULL PRICE?

This is a great opportunity to get your contract reviewed to make sure it's in compliance with all laws. Please don't put this off, others will be paying David FULL PRICE at David’s hourly rate for both his consultation and contract preparation, only our readers get TheContractorsGroup Contract Tune-Up Special Price. Don't delay, call David today, and be sure to mention "TheContractorsGroup Contract Tune-Up Special"! :)

David may be reached by telephone directly:

David Barnier
Barker Law Group APLC
619.682.4842

You may also review David’s firm’s website at www.barkerlawgroup.com. David’s personal webpage (www.barkerlawgroup.com/about/attorneys/david_barnier.php) includes links to many of David’s construction law articles and other construction law resources.

Here's wishing you LOTS of good things in 2006!
Diane Dennis
TheContractorsGroup.com

P.S. David is located in San Diego but represents clients throughout California. With the Internet, the telephone, and email, distance is no concern with regards to revising your contract. And we can tell you that David is one heck of a guy and that he will definitely take care of you.

Be sure to mention "TheContractorsGroup Contract Tune-Up Special" when you contact him.

David Barnier
Barker Law Group APLC
619.682.4842