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you're going to deal with in the construction industry the first one is the original construction contract which we're going to go through in just a moment in detail the second one is called a home-improvement contract and the third one is a service and repair contract these are the three basic type of contracts that you guys will be dealing with in the construction industry and these are the kind of things that the stick is gonna want you to know about all right so the first one your original construction contract is basically pretty simple as you'll notice here in these notes there's a few things that makes it a legal binding contract and here they are the first thing here is it must contain the California state licensing board address on that contract a lot of handyman will go and they will pick up a an application or a what is it call one of those those forums of staples what is it like not a contract but a a bid thing or stuff like that and they'll go okay well this is just an estimate so just sign this and this will be our contract actually it's not a legal binding contract as a legal binding contract must contain California state licensing boards address on it if you make up your own contracts and you don't have that address on there it's not a legal binding contract you must have that address on there that way it informs your client hey if you need to know information about me you can call the California state licensing board who governs all of construction for California and you can get information about me whether I'm license or not licensed whether my insurance is valid or not valid or whether I'm bonded or not you can find that out right there because they'll track your number and they put it right there on their website you'll forever be listed on their website in good standing or not gonna standing okay so that's supposed to be on there another thing is supposed to be on original construction contract is the owner's name and address so you have to have the owner's name and obviously their address now when it comes to your address as an a business order just so you know you can't use peel boxes you have to have your physical address of where your business is if it's in your home it has to have your home business address on there as your home address okay so make sure you recognize that and realize that you have to have company name address and license number on that contract just a real quick thing to remember that license number really needs to be on everything once you're issued that license number you put it on every flyer it has to get you required by law to be on the magnets on your car it must be on every business card you hand out slap down there kids four hits in the school you know write it on your right foot whatever you got to do make sure that license is everywhere but basically you want to get that on all the paperwork that you do and that basically gives you the authority governed by the state of California new construction in the state of California okay the other thing is it must contain a description of work to be accomplished we'll deal with that a little bit more in detail and also a payment schedule now there's two different types of work primarily there's your residential and you set the payment schedule generally it's I'm going to start the job this date I want to deposit and I need a payment progressive payment on this date this date and this date and then they have to give you a payment on that date once they say in the contract it doesn't matter how much of the work you got done and then there's usually commercial does this kind of contract where it's paid by percentage where you know percentage of work done if you complete twenty percent of work then you get twenty percent of money you can play the 50 percent of the work you get fifty percent of the money but you can't get fifty percent of the money if you've only done ten percent of the work that's just the way a lot of commercial projects are done any time you do a mall or hotel or things like that okay so that will be determined by the kind of work you're doing also not only does that have a payment schedule but the approximate start dates and completion dates need to be on this original construction contract and finally it also lists and details the warranty from which you're given now we're going to go over towards the end of this class what the state requires does the state require you longer than one year even if you give them a one year warranty well we'll find out later on you know what the answer is to that so let's go ahead any questions on a regional construction contract before we go on to the next one all right good the next contract is what's called your home improvement contractor lis these contracts are used when you are doing any kind of work obviously in a home it says residential stuff it's a little bit more complex it's a little bit more detailed usually it's about six or seven pages long and it will have not only the information that was listed on the original construction contract but there's a few other things that you will have one of those things is it will need to be preceded by a notice of mechanic's lien rights okay which explains the California lien law in other words you are going to actually put in their hands and they're going to check the box that you gave that to them and sign that you gave them this notification what does that notification do good questions I'm glad you asked what it does is it gives you the legal right to lien their home if they don't pay you now if you do not give them this notice and they don't pay you you can't walk away and say fine I'm just going to lean your home whatever guess what you can lean their home because you never gave them this at the signing of the contract you will never be able to lean their home you'll never be able to recoup that unless you go to court okay and fight with lawyers but make sure the balance is high enough because usually a lawyer to retain is about three to five thousand dollars if they only only had twenty two hundred bucks you're probably just going to walk away and not get your money okay there is another option which we'll talk about later it's called small claims court so a home-improvement contract is always preceded by a notice of mechanic's liens rights so these are things that you're going to have to have in your filing cabinet that you're going to give out every time you do and write a contract the other thing that you're required to give out when doing a home improvement contract is an owner's 3des right to cancel now many of you I'm sure you've you've went somewhere to purchase something and you had that really pushy salesman anybody do that I've had that happen in a car dealership guy won't let you leave when I don't want the car he's trying to throw every deal at me and try to convince me I really need this car or this truck well the thing with the state of California is they give the legal rights that if we were pushy and we forced the sell and then once we walk out of their house that person goes you know what I just had a bad taste in the mouth I didn't like this person you know I don't feel comfortable with this they don't have to look at our ugly mug again right they just sign this piece of paper for which you provided by law you have to provide it to them within three days of signing that contract if they sign that piece of paper and get it in the mail that contract is now null and void and so they don't have to look at you smelly I see here you call you talk to your email yeah contract is null and void you're done if you collect in a deposit at the signing of the contract legally you have 10 days to get that deposit back into their hands so you have to get that sent off to them okay so that's what you have to provide for them they are not expected to have that provide that if you don't provide it well then you will get in trouble by the state board and they will nullify that they can nullify the contract there can be some legal problems you can end up losing some money you know even have a fine so you're supposed to provide that okay so you provide that cancellation form basically that's what the next one is about now there have been and there are situations where a person may call you up Saturday right they found out your name from a friend then you go hey we heard you do good work I need this work done can you come in can you bring it in come bid it now so you go over there Saturday you've been at that look we want you to get started money Monday will you write an application or I'm sorry to contract and get it to us can you bring it tonight like all right we'll do it what you want to do then is you bring a waiver to that cancellation form okay that waiver form says I waive my rights to cancel this contract in three days I'm signing this down they sign it there in your presence you keep that for your own sake now they've waived their rights because from Saturday to Monday is not three days okay so now you can legitimately and legally start that job on Monday but keep in mind whether they sign that or that three days is up once that moment happens you guys are in a legal binding contract guess what you can't get out without their permission you can't go like this and go oh man I missed bit this job I'm gonna lose twenty five hundred bucks yeah forget option call up tell them I can't do it guess what you legally cannot get out of that contract you want a legally bound in that car to do that the only way you can get out is by bankruptcy or they allow you out but it's the same for them guess what if they find someone better after this three-day right has went by or they've signed the way for five days later they call you up and say you know what man and I found something I'll do it five hundred dollars cheaper I want out of this contract you can say I'm sorry they have no legal recourse they have to let you do the contract by law they cannot get any questions references the creek yeah a lot of time is on the truck what I do and which helps out is once you fill out your you send it off they like the proposal they go yeah let's do it you may run over there they'll initial it then you go okay I'm gonna go ahead and start writing up the contract I write up the contract and for my description in the contract instead of rewriting all that again I just slip that bit in there as an addendum and then I attach it once it's attached as a part of the contract okay so they've initialed a bid they know exactly what's going on now it's part of the contract they sign all the components necessary for a legal binding contract you see as a licensed contractor that's the benefit you have not not only our clients protected from bad contractors out of you've been seeing around here but there have been several contractors who and we just had a person who did this to a person who contacted me and I said you know anybody that can come do this work for me at my house I actually paid this guy a couple thousand dollars he never came back like Oh was he a licensed contractor look he came and he talked smooth everything was nice and I can't find him you know it's gone he collected a couple thousand bucks poof so the state's been looking for this guy but that happens so in order to protect clients you know there's there's a few legal legalities that we work through to protect them but also I believe it or not we're protected too because a client can't go and this has happened believe me they'll have you finished up all the work and if you're not illegal if you're not a licensed contractor and say they have an outstanding balance of $5,000 they can say see you later man and I'm not paying you jack you can say well you know what Warner illegal contract and you have to pay me and then you can either leave the home you go to small claims court or you get a lawyer in the code of course you know the thing I do like about small claims court that we will talk about this is one of those things I'm just gonna kind of give you now but we'll end up talking about a little bit more in detail is that small claims court cost about 75 bucks and you can sue someone for up to ten thousand dollars so if they owe you less than ten thousand dollars you're gold and you can get a court appearance you know within a month or two and if you plan it right you may be able to make some money by going on television and those are legal binding as well and so you know those are options for you okay another thing here is you do have to disclose on this home-improvement contract whether you do or do not have general liability insurance now I gave you my agents number there he's an incredible guy check them out give them a call let them just throw some numbers at you but general liability insurance is good because if you damage something insurance will protect you trust me it's a good thing to have just so you know insurance is about four a two million dollars insurance $9.00 anything less you won't wanna you won't want to get no explain it to you why later but you'll want to just so you know that's a good price the other thing that you will have to disclose is this whether you have workers compensation or not now that's important because if you disclose if you tell them look I don't have workers compensation it's only going to be me I'm not showing up on this job site with anybody else you have to let them know if you have that enough you can tell them I don't have workers compensation but I'm gonna bring a couple employees you can tell them that they may or may not hire you you know because technically if your worker gets hurt and they're home your workers not only gets the legality legal right to sue the homeowner for everything they own but they could sue you for everything you own because you don't have workman's comp and that's happened there's a gentleman works for a large real estate agency here in the community and he his son as my neighbor and he he had been picking up a bunch of guys off the streets to come do some work to reef AB these homes because he's trying to he would go in and take control of these homes right and they're missing countertops are missing electrical because you remember during the big huge foreclosure market everybody's ripping things out of their homes and take it off and then people had to go in and refurbish him and fix him up and get him back ready so they can either be rented or sold so this guy wouldn't picked up a bunch of people to keep his labor costs down well one of these guys was actually an illegal he went in there he was up on a ladder fell on the ladder and so the guy broke his leg not only did the state mandate that he paid for all his medical expenses here in California and get his leg mend and everything done whatever he had to get done cast everything but they also mandated that he give this illegal forty thousand dollars to cover anything for the future and illegal didn't get deported so even if he's an illegal off the streets and he gets hurt in that home that illegal gets to sue you for bringing him in so be careful you have to disclose whether you have workers compensation or not okay that's important all right any questions you