Service & Repair vs HIC limits, Bid Limits for Licensing Requirements & Pocket Cards

When there is a question of what the law actually says people will try to exploit it to their advantage. This is important to both sides of a contract- consumer and contractor. A recent case prompted the CSLB to issue a News Release highlighting the need for consumers to understand the difference between a service and repair contract and a home improvement contract.  This distinction is also crucial for licensed contractors…

CSLB says, “A ‘service and repair’ contract is used when immediate or emergency work is needed and the total cost will be under $750, such as for a broken air conditioner or plumbing issue; and the ‘home improvement contract,’ which is any job that is not an emergency and will cost $500 or more in combined labor and material costs.”

Concerned with confusion among both contractors and the communities in California, the Contractor’s State License Board noted, “It’s important that consumers understand which type of contract they’re entering before signing. A service and repair contract is for immediate work and has no cancellation clause, but a home improvement contract provides the consumer with a three-day right to cancel, which enables time to obtain estimates from other contractors.”

The Board’s release states that, as homeowners often learn, and as contractors know from experience, one ‘thing’ leads to another and another contract may become necessary to address new found issues. “If, during a repair visit, the technician identifies other non-immediate mechanical or safety concerns, CSLB recommends getting additional bids from other licensed contractors before hiring someone. If the work happens to be immediately necessary and is more than $750, keep in mind that the contract you sign should be a home improvement contract, which provides additional consumer protections, such as who will pull the necessary construction permits from the local building department.”

As our reader’s may recall and the Board’s release emphasized, “Also be aware that a home improvement contract can only be negotiated by the license’s personnel of record, or a registered home improvement salesperson (HIS). If the work is part of a home improvement contract, the contractor is not allowed to charge more than 10 percent of the total cost or $1,000, whichever is less, as a down payment.”


Charged by the State Legislature to protect consumers in the Golden State as part of the Department of Consumer Affairs, the media release by CSLB Registrar Cindi A. Christenson stressed that,  “In California, any contractor who offers a bid that is $500 or more in combined labor and material costs must be licensed with CSLB in their specific trade. If a contractor uses salespeople to represent the company, each must be registered with CSLB as an HIS. Both contractors and salespeople are issued pocket cards by CSLB with their license or registration information. Consumers can ask to see the pocket card and a photo identification to make sure the information is accurate.”

CSLB encourages consumers to always “Check the License First” by visiting or calling CSLB’s toll-free automated line 800.321.CSLB (2752). Also, visit CSLB’s website for tips about how to hire a contractor and to sign up for CSLB email alerts.