SB 517 California: What Pacific Beach Home Improvement Contractors Must Know About Subcontractor Disclosure Requirements (Effective January 2026)

Senate Bill 517 is California legislation that amends the state's home improvement contract requirements to mandate greater transparency about subcontractor use. The law was signed into law as Chapter 585, Statutes of 2025, and became effective on January 1, 2026.

According to the official bill text published by the California Legislature, SB 517 requires home improvement contracts to contain a disclosure regarding whether or not a subcontractor will be used on the project. When a subcontractor will perform more than 50% of the total estimated project cost, the contract must include that subcontractor's name and contact information.

The law took effect 23 days ago, meaning all home improvement contracts entered into on or after January 1, 2026 must comply with these new disclosure requirements. Contracts signed before this date are not subject to SB 517's provisions, but contractors should update their standard contract templates immediately to ensure all new agreements meet the statutory requirements.

SB 517 applies to all licensed contractors who enter into home improvement contracts in California, as defined under Business and Professions Code Section 7159. This includes general contractors, specialty contractors, and any person subject to licensing under the Contractors State License Board (CSLB).

For contractors working in Pacific Beach, La Jolla, Mission Beach, Bird Rock, and communities near Tourmaline Surfing Park, this means virtually all residential remodeling projects fall under SB 517's scope. Whether you're a general contractor coordinating a whole-house renovation or a specialty contractor subcontracting portions of your licensed work to other trades, you must disclose subcontractor information when required.

The law specifically states that prime or direct contractors remain responsible for completion of the project in accordance with the home improvement contract, plans, and specifications. However, this responsibility does not preclude administrative discipline against subcontractors or home improvement salespeople for violations. Both prime contractors and subcontractors must maintain compliance with California's contractor licensing laws.

When a subcontractor will perform more than 50% of the total estimated project cost, California contractors must disclose four key pieces of information: the subcontractor's name, license number, classification, and contact information. This requirement appears in the amended Business and Professions Code Section 7159 provisions.

According to legal analysis from Hanson Bridgett LLP, contractors must provide this subcontractor information upon the homeowner's request. The disclosure must be included in the written home improvement contract, which is required for all projects exceeding $500 in California.

For Pacific Beach contractors, this typically applies when you hire specialized subcontractors for major components of a remodel. For example, if you're managing a $50,000 kitchen renovation and subcontract the electrical work ($15,000), plumbing ($12,000), and HVAC installation ($8,000) to licensed specialists, the combined subcontractor work totals $35,000 or 70% of the project cost. In this scenario, you must disclose the name, license number, classification, and contact information for each of these three subcontractors in your contract with the homeowner.

The 50% threshold is calculated based on the total estimated project cost stated in the home improvement contract. To determine whether disclosure is required, contractors should calculate the percentage of work that will be performed by subcontractors compared to the total contract price.

Here's a practical example for a typical Pacific Beach home remodel: If your home improvement contract states a total cost of $80,000, and you plan to subcontract work totaling $45,000 to electrical, plumbing, and framing specialists, the subcontracted work represents 56.25% of the total project cost ($45,000 / $80,000 = 0.5625). Since this exceeds 50%, you must disclose the subcontractor information in your contract.

The calculation should include all subcontracted labor and materials provided by subcontractors, but excludes work you perform directly with your own employees and materials you purchase directly. For contractors in La Jolla and Mission Beach who coordinate complex coastal property renovations requiring multiple specialized trades, it's advisable to calculate this percentage during the bidding phase to ensure your contract templates include proper disclosures from the outset.

According to the Contractors State License Board, contractors should document these calculations in their project files to demonstrate compliance if questioned during an audit or complaint investigation.

Failure to comply with SB 517's disclosure requirements can result in administrative discipline by the Contractors State License Board. Under Business and Professions Code Section 7159, failure by a licensee, their agent, salesperson, or any person subject to licensing to provide required information, notices, and disclosures in the contract is cause for discipline.

Potential penalties include license suspension, license revocation, civil penalties, and monetary fines. According to construction law resources, contractors who violate home improvement contract requirements may also face civil liability in contract disputes, as non-compliant contracts may be deemed unenforceable.

Beyond formal disciplinary actions, non-compliance creates significant business risks for Pacific Beach contractors. Homeowners who discover their contractor failed to disclose major subcontractor involvement may file complaints with the CSLB, leave negative reviews, or pursue legal action claiming fraud or misrepresentation. In San Diego's tight-knit coastal communities, reputation damage from compliance failures can significantly impact a contractor's ability to secure future projects.

The safest approach is proactive compliance: update your contract templates now, train your estimating and sales staff on the disclosure requirements, and make subcontractor transparency a selling point that demonstrates your commitment to ethical business practices and California law.

SB 517 provides Pacific Beach homeowners with critical transparency about who will actually perform work on their property. Many homeowners hire a general contractor believing that contractor's team will complete the work, only to discover later that most tasks were subcontracted to unfamiliar companies. This disclosure requirement eliminates that surprise and allows homeowners to research the subcontractors before signing a contract.

The law also helps protect homeowners from mechanics lien issues. When subcontractors aren't paid by the general contractor, they have the right to file mechanics liens against the homeowner's property, even if the homeowner paid the general contractor in full. By knowing the subcontractors' identities and contact information from the outset, homeowners can verify that subcontractors have been paid before releasing final payments to the general contractor.

For homeowners in La Jolla and Mission Beach investing in significant home renovations, ADU construction, or coastal property improvements, SB 517's disclosure requirements provide an additional layer of consumer protection in an industry where communication gaps between contractors and clients frequently lead to disputes and dissatisfaction.

To comply with SB 517, Pacific Beach contractors should immediately update their home improvement contract templates to include two key provisions. First, add a disclosure statement indicating whether subcontractors will be used on the project. This can be as simple as a checkbox or statement that reads: "Subcontractor Use: [ ] Yes [ ] No - Subcontractors will / will not be used to perform work under this home improvement contract."

Second, if subcontractors will perform more than 50% of the total estimated project cost, include a separate section listing each subcontractor's name, contractor license number, classification, and contact information (phone number and business address). For example: "Major Subcontractors (performing >50% of total project cost): 1) ABC Electrical Services, License #12345, Classification C-10 Electrical, (858) 555-1234, 1234 Garnet Ave, Pacific Beach, CA 92109."

According to the CSLB's home improvement contract guidance, contracts should also retain all other required elements under Business and Professions Code Section 7159, including the mechanics lien warning, three-day right to cancel notice, payment terms that limit down payments to $1,000 or 10% (whichever is less), and dispute resolution provisions. Contractors should consult with a California construction attorney to ensure their updated contracts fully comply with SB 517 and all other home improvement contract requirements.

Many Pacific Beach contractors are positioning this disclosure requirement as a transparency benefit when presenting contracts to clients, using language such as: "California law now requires us to provide detailed information about any subcontractors who will work on your project. We believe this transparency benefits you by ensuring you know exactly who will be on your property and can verify that all parties are properly licensed and insured."