California Business & Professions Code (“B&P) Section 7159 provides contract and disclosure requirements for contractors who perform residential home improvement projects. Section 7159 was last amended by the California Legislature in 2010 and became effective on January 1, 2011.
Due to the growing use of solar energy systems and their increasing use in residential homes over the past several years, the Legislature enacted B&P Section 7169. B&P Section 7169 specifically governs the installation of residential solar energy systems and sets forth specific disclosure requirements for contractors performing that kind of work. B&P Section 7169 was amended last year and became effective in its current form on January 1, 2018. It provides specific requirements which must be followed by contractors who install residential solar energy systems.
Section 7169 defines the type of residential system which is subject to its requirements. The law provides that it applies to, “a solar energy device to be installed on a residential building that has the primary purpose of providing for the collection and distribution of solar energy for the generation of electricity, that produces at least one kW, and not more than five MW, alternating current rated peak electricity, and that meets or exceeds the eligibility criteria established pursuant to Section 25782 of the (California) Public Resources Code.” The law relates to the installation of solar energy systems on existing homes, condominiums, and apartments only, and does not apply to, “a solar energy system that is installed as a standard feature on new construction.”
Section 7169 requires that all contracts for the installation of residential solar energy systems include the following information:
- The total cost and payments for the system, including financing costs;
- Information on how and to whom customers may provide complaints; and
- The consumer’s right to a cooing off period of three days, as set forth in Section 7159.
Beyond these core requirements, the Legislature also provided a list of suggested disclosure requirements, which the Contractor’s License Board is permitted, but not required, to include in its rules for disclosure by solar energy contractors. The permitted requirements include, but are not limited to:
- Amounts and sources of financing for the project;
- The salesperson’s calculations used to determine the size of the system to be installed;
- The salesperson’s calculations regarding energy output of the system;
- Any fees which may be charged by the homeowner’s electric company and all other known fees and charges, including activation or monitoring charges;
- Terms and conditions of any related rebate payment;
- The contractor’s license number;
- Information regarding the impact of systems not installed according to the building code and types of system malfunctions;
- The differences between a solar system lease and a purchase.
Furthermore, the State Contractor’s License Board has collaborated with the California Public Utilities Commission in order to develop a standard disclosure form providing the required information, and publish that form on its website by July 1, 2018. The disclosure form was posted by the deadline and is linked here. It requires a residential solar installation contractor to print the disclosure form’s information on the front or cover page of every contract for the installation of a solar energy system on a residential building. As required by Section 7169, the form requires disclosure of 1) the total cost of the project, 2) internet, phone, and mailing address information for the Contractor’s License Board for the submission of complaints, and 3) explicit notice of the three-day “cooling off” period for solar system installation contracts. Most significantly, the three-day period does not apply to contracts which are negotiated and signed at the contractor’s place of business. Rather, the three-day period requirement was likely instituted to protect homeowners who are approached by door-to-door salespersons.
As the cost of energy increases and concerns grow over the evidence of worldwide climate change, many California homeowners are opting to retrofit their homes with solar energy systems. While the installation of solar systems presents a promising source of work for qualified contractors, they must educate themselves on the state’s laws, specifically on the disclosure requirements listed in B&P Code 7169, and they must incorporate the Contractor’s State License Board disclosure language in their contracts for residential installation work. Following these requirements will reduce the risk of litigation related to a residential project and, if a dispute arises, increase a contractor’s chances of prevailing in such a dispute.