Home improvement loans: right to cancel contracts.

Senator Durazo's home improvement loan legislation expands consumer protections by extending contract cancellation periods and establishing new requirements for lenders. The bill extends the standard cancellation window from three to five business days, while senior citizens receive seven days to cancel home improvement contracts. These changes take effect January 1, 2026.

The legislation creates comprehensive regulations for home improvement loans, prohibiting lenders from initiating repayment or reporting to credit agencies until improvements receive final permit approval and consumers confirm the work is complete. For solar energy systems, repayment cannot begin until utility connection and permission to operate are secured. Lenders must conduct recorded oral confirmations with consumers to verify understanding of key loan terms, accommodating language preferences and providing interpreters when needed.

The bill mandates that lenders maintain detailed documentation for five years and promptly fulfill consumer requests for loan information without charging fees. Lenders cannot provide payments or incentives to third parties that exceed actual improvement costs. Consumers retain the right to assert claims against lenders that would be available against contractors or salespeople in home solicitation disputes.

For emergency repairs requiring immediate protection of persons or property, consumers may waive their cancellation rights by providing a signed statement describing the urgent situation. The legislation requires regulatory oversight through the Business and Professions Code while specifying that implementation costs should be absorbed within existing frameworks.