Amendment to Business and Professions Code Section 7026.1 / Construction Contracts/Consultants

The amendment to B&P Code Section 7026.1 that went into effect January 1, 2013 could significantly impact boards of directors and association managers.  The amendment states that any home improvement contract that costs more than $500 in labor and material requires the work to be performed by a licensed contractor.  The amendment defines a construction “consultant” as a person who provides a bid, or who arranges for and sets up work schedules and maintains oversight of a construction project.

 It is important to keep in mind that home improvement contracts include contracts for work on one unit in a homeowners association.  For example, if there is a water leak that damages one unit in the association and the association enters into a contract to repair the unit, the amendment could come into play. If the cost to repair the water damaged unit is $500 or more in labor and materials, then the work must be performed by a licensed contractor under the new amendment.

 Managers have asked whether providing bids for home improvement contracts is considered acting as a “consultant”.  The answer is a resounding “no” because the manager is simply providing the contractor’s bid to the board for review. The manager is not preparing the bid and is therefore not in violation of the amendment. Indeed, the author of the amendment explicitly stated that there was no intention that managers be considered consultants for this purpose.

Jamie Schwartz

Address: 8220 University Ave #100, La Mesa, CA 91942

Phone Number:  +1 619-589-8800