Home improvement and home solicitation: right to cancel contracts: loan financing regulation.

(1) Existing law, the Contractors State License Law, defines and regulates the activities of contractors and provides for their licensure, regulation, and discipline by the Contractors State License Board within the Department of Consumer Affairs. Existing law requires specific provisions and requirements for home improvement contracts, as defined. This bill would prohibit a contractor from requesting or accepting full payment from a lender or financier until the contractor, lender, or financier has received a written confirmation from the owner or tenant acknowledging that a home improvement project has been completed in accordance with the contract and is operational or fit for its intended use, and the lender has confirmed with the contractor that final approval has been provided by all permitting agencies. (2) Existing law provides that a contract is extinguished by its rescission and sets forth methods for the rescission of a contract. Existing law authorizes a buyer who cancels certain home solicitation contracts or offers until midnight of the 3rd business day after the day on which the buyer signs an agreement or offer to purchase that complies with specified requirements. Existing law authorizes a buyer to cancel a home solicitation contract written for certain home improvement work until midnight of the 3rd business day after the buyer receives a signed and dated copy of the contract or offer to purchase that complies with specified requirements. Existing law requires contracts for a home solicitation contract or offer to include a notice of cancellation form with specified statements as to the buyer's right to cancel. Existing law permits a buyer to provide a seller an express waiver to this right to cancel, if the contract meets other specified requirements. Existing law requires specific provisions and requirements for home improvement contracts, as defined, that are not governed by the provisions described above. Existing law requires these contracts to include a notice regarding the buyer's 3-day right to cancel. Existing law provides an alternate 5-day period of time to cancel the contracts or offers described above if the buyer or property owner is a senior citizen, as defined, for contracts entered into, or offers to purchase conveyed, on or after January 1, 2021. This bill would extend those 3-day and 5-day periods to 5-day and 7-day periods, respectively, for home solicitation contracts, as specified. The bill would also make conforming changes. The bill would apply these new extended periods to transactions on or after January 1, 2025. (3) Existing law, the California Financing Law, authorizes the office of the Commissioner of Financial Protection and Innovation to license, regulate, and discipline finance lenders and brokers making consumer loans. A willful violation of the California Financing Law is a crime, except as specified. This bill would require a finance lender, before a consumer executes a contract for a loan to pay for a home improvement and before the right-to-cancel time period expires for a home improvement contract that is being financed by a home improvement loan, to obtain a copy of the home improvement contract for the home improvement that is being financed by the loan and complete and document a call, as specified, to make oral confirmations relating to the contract, as prescribed. The bill would require a finance lender that engages in offering or providing a home improvement loan to make available to the consumer or property owner, or both, upon request, information in the control or possession of the lender concerning the home improvement loan that was provided to the consumer to finance the home improvement contract, as prescribed. The bill would prohibit a finance lender who makes a home improvement loan from releasing funds to the home improvement contractor and from seeking any payment from the property owner, except as specified, until the property owner has made prescribed oral and written certifications that the home improvements for which the payment is being made have been completed in accordance with the contract. The bill would prohibit more than 85% of the funds from being released to the home improvement contractor and prohibit the balance of funds to be paid to the contractor from being released, until the home improvements have been given final approval by all permitting agencies and are operational or fit for its intended use. The bill would not deem a solar energy system operational until after the property owner confirms the utility supplying electricity has been connected to the solar energy system, the utility supplying electricity grants permission to operate the solar energy system, and the property owner confirms the solar energy system is functioning. The bill would prohibit payment from being received from the consumer on the home improvement loan until the above-described conditions have been satisfied. Because a willful violation of these provisions would be a crime, the bill would impose a state-mandated local program. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason.