Last updated: August 31st, 2026
The Contractors State License Board (CSLB) reminds California contractors that residential solar installations are considered home improvement work and must comply with California’s home improvement contract requirements.
For solar contractors, this affects everything from down payments and progress payments to required disclosures, Home Improvement Salesperson (HIS) rules, cancellation rights, and project dates.
Failing to follow these requirements can expose a contractor to CSLB disciplinary action and, depending on the violation, possible criminal penalties.
California law limits the amount a contractor can request or accept as a down payment on a home improvement contract.
The maximum down payment is:
$1,000 or 10% of the contract price, whichever is less.
For example:
On a $5,000 solar project, the maximum down payment is $500.
On a $20,000 solar project, the maximum down payment is $1,000.
On a $50,000 solar project, the maximum down payment is still $1,000.
The contract must clearly identify the down payment amount.
There are limited statutory exceptions, such as certain contractors with an approved blanket performance and payment bond, but the standard rule for residential home improvement contracts remains $1,000 or 10%, whichever is less.
After the down payment, contractors generally cannot request or accept progress payments that exceed the value of:
Work already performed
Materials already delivered
For example, a solar contractor generally should not collect payment for solar panels that have not yet been delivered or installed.
The contract must include a detailed Schedule of Progress Payments.
Each payment should identify:
The amount of the payment
The work, materials, or services associated with that payment
The phase of the project that justifies the payment
Contractors should not structure a payment schedule that allows them to collect substantially ahead of the work.
Residential solar contracts must also comply with California’s solar disclosure requirements.
The required Solar Energy System Disclosure Document must be provided as part of the residential solar contract requirements and placed on the front page or cover page as required by California law.
The disclosure provides important information about subjects including:
Total system cost
Financing
Payments
Consumer complaints
Cancellation rights
Contractors should always use the current CSLB Solar Energy System Disclosure Document rather than relying on an old copy saved from a previous project.
You can also review CSLB’s current Solar Requirements for additional guidance.
Solar companies frequently use salespeople to solicit, negotiate, sell, or execute residential solar contracts.
California’s Home Improvement Salesperson rules have changed from the older system.
A Home Improvement Salesperson who is required to register with CSLB obtains one individual HIS registration.
The salesperson does not obtain a separate HIS registration for each contractor they represent.
A properly registered HIS can potentially work for multiple licensed contractors.
Before a registered HIS begins working for a licensed contractor, the contractor must notify CSLB of the employment.
CSLB provides a specific:
Contractor Notification of Home Improvement Salesperson Employment
The notification must be completed before the registered HIS begins working for that contractor.
This means the current process is:
The salesperson obtains and maintains their individual HIS registration.
The contractor confirms the HIS registration is current.
The contractor notifies CSLB before employing that HIS.
The HIS may then perform qualifying home improvement sales activities for that contractor.
You can review the CSLB Home Improvement Salesperson requirements for current information.
The contractor must also notify CSLB when the registered HIS is no longer employed by the company.
Current CSLB rules require the contractor to report the cessation of employment within 90 days.
So solar contractors need to manage both:
HIS employment notifications
HIS employment cessation notifications
Don’t rely on the salesperson to handle these contractor notifications.
Before work begins, the contractor must provide the buyer with a copy of the home improvement contract signed and dated by both parties.
This is important not only for documentation but also because delivery of the contract is tied to the homeowner’s cancellation rights.
Keep a complete copy in your company records as well.
California home improvement contracts generally include a cancellation period.
Many qualifying home improvement contracts provide the homeowner with a three-business-day right to cancel, subject to statutory exceptions.
For qualifying contracts, homeowners who are 65 years of age or older generally receive a five-business-day cancellation period.
This five-day rule has applied to qualifying home improvement contracts entered into since January 1, 2021.
Solar contractors should make sure their contract documents and cancellation notices reflect the correct cancellation period for the customer and transaction.
A home improvement contract must also include information about the project timeline.
The contract should state:
An approximate date when work will begin
An approximate date when work will be completed
Avoid leaving project timing vague.
If the schedule changes, communicate the change clearly and document contract changes appropriately when required.
If the scope, price, materials, equipment, or other contract terms change after the agreement is signed, use a written change order when required.
The change order should clearly identify:
The change in work
Added or removed materials
Changes in price
Changes in project timing when applicable
The customer and contractor should sign the change order before the changed work is performed.
Solar contractors should be especially careful to avoid:
Taking a down payment above $1,000 or 10%, whichever is less
Collecting progress payments ahead of completed work
Charging for materials that have not been delivered
Using an outdated solar disclosure document
Allowing an unregistered HIS to solicit or negotiate qualifying contracts
Failing to notify CSLB before employing a registered HIS
Failing to notify CSLB when HIS employment ends
Using the wrong homeowner cancellation period
Leaving project start or completion dates out of the contract
Failing to document changes to the scope or price
Solar contracts receive significant regulatory attention, so seemingly small administrative mistakes can become serious CSLB compliance problems.
For a standard California home improvement contract, the maximum down payment is:
$1,000 or 10% of the contract price, whichever is less.
Progress payments generally cannot exceed the value of work already completed or materials already delivered.
The contract should contain a detailed progress-payment schedule tied to specific phases of the project.
No.
HIS registration is now stand-alone.
A registered Home Improvement Salesperson can represent multiple contractors, but each contractor must notify CSLB before employing that HIS.
The licensed contractor does.
The contractor must submit the required employment notification before the registered HIS begins working for the company.
The contractor must notify CSLB of the cessation of the HIS’s employment within the required period, currently 90 days.
Yes, where the statutory cancellation right applies.
Qualifying homeowners age 65 or older generally receive five business days to cancel the home improvement contract.
Yes.
Residential solar contractors must comply with California’s solar disclosure requirements and use the current required disclosure document.
California residential solar installations are home improvement projects, which means solar contractors need to pay close attention to California’s contract rules.
The most important requirements to remember are:
Down payment: $1,000 or 10%, whichever is less
Progress payments generally cannot exceed completed work or delivered materials
Use the current Solar Energy System Disclosure Document
HIS registration is stand-alone
The contractor must notify CSLB before employing a registered HIS
Contractors must also report when HIS employment ends
Homeowners age 65+ generally receive a five-business-day cancellation period where applicable
Include project start and estimated completion dates
Document contract changes properly
For current requirements, always check the Contractors State License Board before updating your residential solar contract forms.
If you’re preparing for the California solar contractor exam, explore our C-46 Solar Contractor License Exam Preparation resources.
