An initiative designed to add significant regulatory obligations to the home improvement and solar financing industries is progressing through the California legislature. Senate Bill 784 (SB 784) passed the California Senate last month and the California Assembly is quickly moving a slightly amended version of the bill through committees in July. If enacted, SB 784 would take effect on January 1, 2026.
The bill primarily targets “home improvement loans,” defined as consumer loans disbursed to contractors for home improvements, excluding certain types of financing like Property Assessed Clean Energy (PACE) and specific mortgage loans. It also applies to retail installment contracts and other non-financed home improvement contracts.
Key Provisions of SB 784
- Lender Requirement to Obtain HIC and Confirmation Call: SB 784 introduces new requirements for lenders offering home improvement loans and on the loan itself. If enacted, SB 784 would require lenders to undertake specific actions before a consumer can execute a loan contract. This includes obtaining the home improvement contract for the improvement being financed by the loan, completing a telephone or video call to receive the consumer’s oral confirmation of key loan terms and ensuring that the consumer understands both the home improvement contract and loan agreement.
- Dealer Fee Disclosure: Under the bill, lenders would be required to provide oral and written disclosures about dealer fees prior to consumer execution of a loan agreement to finance home improvements. The written disclosure language is set forth in the bill with specific formatting requirements and would require the borrower’s signature acknowledging receipt of the disclosure.
- Repayment Obligations and Completion: As to a non-solar home improvement, an amended version of SB 784 moving through the Assembly would prohibit a consumer’s repayment obligation from beginning before the lender has: (1) confirmed that all home improvements have been given final permitting approval and has received confirmation from the consumer that the improvements are operational; or (2) the lender has completed a reasonable investigation determining that all home improvements are operational. With respect to solar energy systems, repayment obligations would not begin under the bill until the lender confirms the utility supplying electricity to the property has been connected and granted permission to operate the solar energy system.
- Extended Cancellation Periods: The bill extends the existing cancellation periods for home solicitation contracts. Under current California law, consumers generally have a three-day period to cancel such contracts, with a five-day period for senior citizens. SB 784 extends these cancellation periods to five and seven days. This extension provides consumers with additional time to reconsider their contractual commitments.
Troutman Pepper Locke will continue to monitor the progression of SB 784 and provide updates.
