New California Contractor Law Changes for 2026: What OC Homeowners Should Know

Three new California laws took effect on January 1, 2026, and all three change what has to be in a home improvement contract or how the hiring process is supposed to work. None of them require you to do anything differently as a homeowner. But they change what a licensed contractor is now required to give you, and knowing that gives you leverage before you sign anything. Here's what actually changed.

You Can Now Cancel a Contract by Email (AB 1327)

California has long given homeowners a three-business-day right to cancel most home improvement contracts, no questions asked. What changed under AB 1327 is how you're allowed to exercise that right. Cancellation used to require a mailed notice. As of this year, you can cancel by email instead, and your contractor is required to list an email address and phone number in the contract specifically for that purpose.

The law also requires the contractor to email you a copy of the signed contract within 24 hours of signing. If a contractor hands you a paper copy and nothing else shows up in your inbox, that's worth a follow-up question, not because it changes your rights, but because it tells you whether they're keeping up with current requirements.

Contractors Must Disclose Their Subcontractors If You Ask (SB 517)

SB 517 gives homeowners the right to ask for, and receive, the name, license number, trade classification, and contact information for any subcontractor working on their project. This has always been a smart question to ask (we cover it in How to Read a Contractor Bid), but now it's a disclosure a contractor is required to provide, not just a courtesy.

Once you have a sub's name and license number, you can verify it yourself in about thirty seconds at cslb.ca.gov. Knowing exactly who is doing the electrical or plumbing work in your home, and confirming they're actually licensed for it, is one of the simplest ways to catch a problem before it becomes your problem.

The Retention Cap That Mostly Doesn't Apply to You (SB 61)

SB 61 caps retention, the percentage of a payment an owner can hold back until a project is fully complete, at 5% on most private construction contracts. It gets talked about a lot in construction industry coverage, so it's worth knowing what it actually covers: the cap does not apply to a typical single-family home that isn't part of a mixed-use project and is four stories or fewer. In plain terms, most standard kitchen, bathroom, addition, and whole-home remodels in Orange County fall outside this one. It mainly matters for larger multi-unit or mixed-use projects. If your remodel includes a sizable ADU or multi-structure scope, it's a fair question to raise with your contractor, but for a typical single-family remodel, this law probably doesn't change your contract.

What to Check in Your Contract Before You Sign

None of these changes require a new approach to hiring, just a few specific things worth confirming as of 2026:

• An email address and phone number for cancellation: should be printed directly on the contract, not just verbally mentioned.
• A confirmed email of your signed contract within 24 hours: keep it, it's your proof of the agreed scope and price.
• Subcontractor names and license numbers: ask for them up front, especially for electrical, plumbing, or structural work.
• The contractor's own license verified at cslb.ca.gov: this hasn't changed, but it's still the single most important five minutes you'll spend.
• Retention terms, if your project is large or mixed-use: ask directly whether SB 61's cap applies to your scope.

This Doesn't Replace Local Permitting Rules

These are statewide contract-law changes, not building code or permit changes, and they don't override anything your city requires. Permit rules, HOA approval steps, and inspection timelines still vary by jurisdiction. If you're early in planning a project, our guides to building permits in Orange County and permits and contracts for OC homeowners cover what to confirm with your specific city before you get too far into design. When in doubt on anything code or permit related, your city's building department has the final word, not a blog post, including this one.