New Construction Laws for 2026 in California
California is at it again, enacting a multitude of new laws taking affect in 2026 that impact hashtag#construction and contractors. Here are two that directly impact most commercial construction:
>>SB 61 establishes a mandatory 5 percent cap on retention for most private construction contracts entered into on or after Jan. 1, 2026. The cap applies to both progress payments and total retention and must flow down through all subcontracting tiers. The retention limit cannot be waived by contract and includes an attorneys’ fee provision for enforcement.
>>SB 440, the Private Works Change Order Fair Payment Act, creates standardized procedures and timelines for resolving claims and change-order disputes on large private projects. The law emphasizes timely notice and documentation.
And here are a couple specifically for the home improvement contractors:
>>SB 517 requires disclosure of subcontractor use in home improvement contracts. If a subcontractor performs more than 50% of the estimated project cost, the contractor must disclose identifying information.
>>AB 1327 modernizes home improvement contract cancellation rules by allowing homeowners to cancel within three days via email and requiring contractors to provide an email address and phone number for cancellation assistance.
The state also switches over to using the 2025 California Building Standards Code (Title 24) which is the latest edition, and locks that in until at least 2031 due to a legislative freeze on any new building codes. California is always one of the states that is a challenge to keep up with. If you know of any more new laws, add them to the comments.
New California Construction Laws Take Effect in 2026: CEQA, Housing and Contracts