Session 8: Protecting Your Family — Avoiding Legal Pitfalls
Descriptions
A successful rebuild starts with strong legal foundations, especially when navigating contractor relationships.
You’ll hear directly from experts about key consumer protection requirements.
They will explain how to safeguard your project from common legal and financial missteps, covering critical topics such as contractor licensing, consumer protection laws, project financing options, subcontractor payments, and mechanics liens.
You’ll leave knowing how to protect your investment, your rights, and your peace of mind from start to finish.
Speakers:
Dave Fogt, Contractor State License Board (CSLB)
Steph Carroll, Public Council
Session Highlights & Timestamps
1. Dave Fogt, CSLB (Contractor and Payment Protection)
The CSLB focuses on protecting the public, noting that disaster areas often attract unscrupulous contractors who cause significant financial harm.
[00:00 - 01:03] Avoiding Scams/Frontloading: Do not make a decision too quickly. Guard against contractors who heavily "frontload" the contract (e.g., requesting a second payment of 50-70% of the contract price before work is complete).
[01:01 - 01:55] Checking References: Ask prior customer references if the job was completed timely, if payments were based on completed portions of work, and if the contractor was responsive to concerns.
[02:24 - 03:36] Felony Warning: Contracting without a license in a declared disaster area is a felony. Also, verify that the person executing the contract is legally affiliated with the license.
[05:23 - 06:18] License Disclosure (Critical): Always check the CSLB website. Disclosure of a "probable violation" is added to license records for contractors suspected of taking large amounts of money and not performing work diligently.
[05:50 - 06:51] Payment Restrictions (Home Improvement Contract): Since rebuilds in a declared disaster are considered "home improvement," the contractor is restricted: The deposit cannot exceed $1,000. Progress payments must strictly reference work completed (e.g., pay for the foundation only after the foundation is in).
[06:46 - 07:37] Protecting Payments: If a contractor insists on taking money up front, they must provide a payment and performance bond or use a bank fund control/escrow account to assure completion.
[10:15 - 11:10] Mechanics' Liens: Subcontractors and material suppliers can file a 20-day preliminary lien notice. If you receive one, withhold payment to your prime contractor until they provide written verification that the subcontractor/supplier has been paid.
[12:34 - 13:38] Right to Cancel: You have 7 days (extended from 3 days in a disaster area) to cancel the contract. You must do this in writing (email or hard copy).
2. Steph Carroll, Public Council (Financing and Edison Pitfalls)
Public Council provides legal advocacy, focusing on consumer rights and economic justice, particularly concerning financing fraud.
[20:28 - 21:36] Solicitation & Free Programs: Be highly skeptical of anyone soliciting you directly. Independently research any representations about "free" or "reduced price" government programs, tax credits, or initial payment coverage.
[23:26 - 24:44] The Absolute Red Flag: Never touch a mobile phone or iPad presented by a contractor or salesperson to sign documents, check eligibility, or get an estimate. Always insist on a printed, hard copy of the contract.
[25:16 - 26:27] Pressure and Contracts: Never rush to sign. Insist on a written copy of the contract immediately, and be wary if the contract is only in English but negotiations were in another language (e.g., Spanish).
[28:43 - 30:00] Electronic Signatures: Avoid electronically signing (DocuSign) complex contracts, as they prompt you to sign rapidly, skipping critical text. Ensure you read and understand the entire document first.
[31:42 - 32:53] PACE Financing: Be extremely cautious of PACE (Property Assessed Clean Energy) loans, which are repaid through property taxes. Misrepresentations on these loans have led to people's property taxes spiking up to 11 times the original amount.
[35:32 - 36:41] Escalation Clauses: Look out for escalation clauses that can suddenly spike monthly loan payments (e.g., pay $300 for six months, then payments jump to $700 if certain conditions are not met).
3. Edison Settlement Considerations (Legal and Financial)
[38:40 - 39:48] Attorney Liens: If you have already signed with an attorney (class action or individual), they likely have a lien on the cause of action. This means they may be entitled to a proportion (e.g., 25%) of any settlement money, including the Edison offer. Contact your attorney in writing.
[39:48 - 41:01] Income and Tax: Settlement amounts awarded may be treated as taxable income (unlike personal injury settlements, which often are not). Check with a tax preparer regarding your individual situation and any potential benefits impacts.
[42:20 - 42:50] Medicare/Medi-Cal Liens: Accepting an offer may release Edison from responsibility for medical liens. If you received injury care paid for by Medicare/Medi-Cal, they may have a lien on your recovery amount.
[42:50 - 44:09] Minors Compromise: If you are claiming for children under 18, the settlement must go through a court process called the minors compromise (Probate Code) to be endorsed by a judge.
[43:34 - 44:53] Bankruptcy: Be aware that utility companies in similar situations have filed for bankruptcy. If this happens, a bankruptcy trustee can potentially look back at payments and attempt to claw them back to be redistributed.
