Hiring subs on California home improvement jobs: what changes for the GC

Short answer

On a home improvement job, the contract with the homeowner has to follow B&P §7159 when the price is over $500. Those rules sit on the prime's contract, not on your subcontracts.
The contract has to say whether subs will be used. If yes, the owner can ask for a list with each sub's name, contact details, license number and classification.
The down payment can't exceed $1,000 or 10% of the price, whichever is less, and payments can't get ahead of the work done (B&P §7159.5). Plan sub payments around that.
Anyone who sells home improvement contracts for you generally has to be a registered home improvement salesperson, and you have to notify CSLB before they start.

What counts as home improvement

"Home improvement" means repairing, remodeling, altering, converting or modernizing residential property, or adding to it. It also covers driveways, pools, fences and similar work next to a home, and residential solar (B&P §7151). Commercial jobs don't fall under these rules, so a GC who does both should know which set of paperwork each job needs.

This is a plain-language summary, not legal advice. Use contract forms reviewed by a construction lawyer.

The rules sit on your contract with the owner

B&P §7159 sets out what a home improvement contract has to contain. It applies to contracts between a contractor and an owner, or a tenant, when the total price is over $500. Some service and repair contracts and some alarm work are carved out.

Your subcontracts aren't home improvement contracts under that definition. But the section makes the prime or direct contractor responsible for completion of the project for CSLB discipline purposes, while still allowing discipline against a sub or salesperson. Missing information, notices or disclosures in the contract is cause for discipline (§7159(a)(5)). On a residential remodel, your subs' work runs through your contract.

What the contract says about subs

Will subs be used? The contract has to have a "Yes" and a "No" box. If "Yes" is checked, it has to say that subs will be used and that the owner can ask for a list of them with names, contact information, license numbers and classifications. Each change order has to repeat that statement (§7159(c)(7)).
Lien releases. The contract has to say that once the owner pays for a portion of the work, the contractor will give a full and unconditional release from potential lien claimants for that portion before any further payment (§7159(c)(4)). Under B&P §7159.5, on request you have to provide those releases, and the owner may hold back further payments until you do.
Mechanics lien warning. The contract has to include a notice explaining that anyone who helps improve the property and isn't paid may record a lien, even if the owner paid the contractor. It also explains preliminary notices and joint checks (§7159(e)(4)).
Insurance and comp notices. The contract has to include a notice about the contractor's commercial general liability insurance and one about workers' comp (§7159(e)(1) and (e)(2)).
Your license. The contract shows your name, business address and license number, and the name and registration number of any home improvement salesperson who sold the job (§7159(d)).

In practice: keep a current list of subs for each home improvement job, with license numbers and classifications from CSLB, ready to hand the owner. Sub Check shows the classifications on a sub's record, and our guide to matching classifications to the work covers what each sub should hold.

Money: down payments and progress payments

Under B&P §7159.5:

The down payment can't exceed $1,000 or 10% of the contract amount, whichever is less.
Beyond the down payment, you can't ask for or accept payment that exceeds the value of the work performed or material delivered. Payments before completion have to follow a schedule in dollars and cents tied to the work.
Contractors that furnish certain bonds, or use joint control that meets the statute's conditions, can be exempt from those payment limits.
Breaking the contract-in-writing, down payment or progress payment rules can be a misdemeanor, and it's cause for discipline.

For a GC hiring subs, that changes cash flow. You can't collect much up front, so a sub that wants a big deposit for materials may need to be paid out of your own funds until the owner's next scheduled payment. Line up your sub payment terms with the owner's schedule before you sign either one. And remember the 7-day clock once the owner pays you: see paying subs: prompt payment and retention.

The owner's right to cancel

Most home improvement contracts need a three-day right to cancel notice, and contracts with a senior citizen entered into on or after January 1, 2021 use a five-day notice. Contracts negotiated at the contractor's place of business are an exception to the three-day notice. If the owner cancels, the contractor has to return payments within 10 days (§7159(e)(6) and (f)). Don't schedule subs to start, or let them order materials, until the cancel period has run.

Salespeople need HIS registration

A home improvement salesperson (HIS) solicits, sells, negotiates or executes home improvement contracts for a licensed contractor, and has to register with CSLB (B&P §7152). There are exceptions, including officers of record, general partners on the license and qualifying individuals. CSLB says contractors have to notify it in writing before employing a registered HIS, and within 90 days after the HIS stops working for them (CSLB).

A contractor who lets an unregistered person sell home improvement contracts, or doesn't file those notices, is subject to discipline (B&P §7154). If a sub or anyone outside your company is bringing you residential jobs and talking price with owners, ask how that fits these rules before it starts.

Checklist for each home improvement job

Use a §7159 contract with the ownerOver $500, with the required notices and the subcontractor box filled in.
Keep the sub list readyName, contact details, license number and classification for each.
Match sub payments to the owner's scheduleDown payment and progress limits apply to you.
Collect lien releases from subsThe owner can hold payments until you provide them. See preliminary notices and lien waivers.
Check licenses and comp before subs startHow to check a CSLB license and workers' comp and subs.

Common questions

Do my subcontracts on a remodel have to follow B&P §7159?

The home improvement contract rules in §7159 apply to contracts between a contractor and an owner or tenant. But for CSLB discipline, the section makes the prime or direct contractor responsible for completion of the project.

Do I have to tell the homeowner which subs I use?

The contract has to say whether subs will be used. If yes, it has to state that the owner can ask for a list with each sub's name, contact information, license number and classification (B&P §7159(c)(7)).

How much can I collect up front on a home improvement job?

Under B&P §7159.5, the down payment can't exceed $1,000 or 10% of the contract amount, whichever is less, and later payments can't exceed the value of the work performed or material delivered, unless a bond or joint control exemption applies.

Can the owner hold my payment until I get lien releases?

Yes. Under B&P §7159.5, on request the contractor has to provide a full and unconditional release from potential lien claimants for work already paid for, and the owner may withhold further payments until it does.

Who needs to register as a home improvement salesperson?

Generally anyone who solicits, sells, negotiates or executes home improvement contracts for a licensed contractor (B&P §7152), with exceptions such as officers of record, general partners and qualifying individuals. The contractor notifies CSLB before the HIS starts.

General information for California contractors, current as of November 4, 2026. It isn't legal advice; rules change, so check the official source linked above.