How Electrum Home positions itself legally, why the model is defensible, and the language discipline required across product, marketing, and policy. Not legal advice. This documents the operating model that counsel has reviewed (EV charger product) and the open questions for the broader platform.
1 · Summary in one paragraph
Electrum Home is a fixed-price marketplace platform for residential home services. We publish market-based prices for standardized projects. Verified, licensed, insured contractors opt in to accept jobs at those prices. The home improvement contract is between the homeowner and the accepting contractor — Electrum is not a party to that contract and does not perform the work. Electrum provides software, pricing data, dispatch, payment processing (via Stripe Connect), and dispute resolution as a platform service. Payment is collected only after work is complete (sidestepping deposit caps). Our compensation is a platform fee paid by the contractor, embedded in the project price.
2 · What we are (and what we're not)
✅ What Electrum Home IS
• A SaaS / marketplace platform connecting homeowners with licensed, insured residential contractors
• A pricing data publisher — we compute and publish market-based prices for standardized home services using transparent inputs (regional labor rates, manufacturer MSRP, permit fee schedules, scope of work)
• A payment platform — funds move through Stripe Connect (a licensed money transmitter); we never hold customer funds in a bank account we control
• A scope & price governance layer — changes to either must route back through the platform for review and customer approval
• A dispute facilitator for scope and payment disagreements between homeowner and contractor
❌ What Electrum Home is NOT
• Not a contractor. We do not perform construction work, do not contract with homeowners for the work itself, and do not hold a contractor's license. The licensed contractor is the principal in the home improvement contract.
• Not the homeowner's agent. We do not represent the homeowner in negotiations and owe no fiduciary duty. "Buyer's agent" framing is prohibited.
• Not an escrow agent. We do not hold funds in trust on behalf of third parties. Funds flow through a licensed payment processor (Stripe Connect).
• Not a salesperson. We do not consult, recommend specific products, or negotiate on a contractor's behalf. The pricing engine produces a number; the customer accepts or doesn't.
• Not a call center / concierge. Day-to-day homeowner ↔ contractor communication (scheduling, day-of logistics) is direct between the two parties.
3 · Contract architecture
Every project involves two distinct contracts. This separation is the structural foundation of the legal model.
Contract A
Homeowner ↔ Contractor
The home improvement contract
• Construction work, scope, warranty
• Executed via platform but the contract is between these two parties
• Contractor is licensed in the relevant trade and state
• Satisfies state contracting law because the contractor IS the licensed principal
Contract B
Homeowner ↔ Electrum
The platform terms of service
• Pricing data, dispatch, payment processing
• Dispute resolution for scope & payment disagreements
• Explicit disclaimer: Electrum is not a party to the construction contract
• Electrum is not the customer's agent and owes no fiduciary duty
⚠️ Discipline required
The two contracts must reference each other but not collapse into each other. Anywhere our TOS, marketing, or product UI says "we are doing X for you" about the construction work itself, we've weakened the structure. The contractor does the work. We do the platform.
4 · Payments & the 10% rule
How money actually flows
Customer pays Electrum → Stripe Connect routes funds → Electrum platform account holds the funds in Stripe (not in an Electrum bank account) → on project completion, Stripe transfers funds to the contractor's connected account, less the platform fee.
Stripe is a licensed money transmitter in all 50 states. By using Stripe Connect's native transfer mechanism rather than manually wiring contractors, the money-transmitter licensing burden stays with Stripe.
Why this is not escrow
Legal "escrow" requires a neutral third-party fiduciary holding funds pursuant to a written escrow agreement. Our model is different: funds flow through a licensed payment processor as part of a commercial transaction between platform participants. Customer's card may be authorized at booking, but actual payment is captured only after project completion— and the funds at no point sit in an account Electrum controls outside of Stripe's infrastructure.
The California 10% deposit rule
California Business & Professions Code §7159 limits a contractor from collecting more than 10% of the contract price (or $1,000, whichever is less) as a down payment before work begins. Our model sidesteps this because the customer makes no payment to the contractor prior to completion. A card may be on file (for authorization), but funds are not captured or transferred until the work is done.
⚠️ Operational discipline
This sidestep only works if it's real. If product or finance ever flips the flow to charge at booking, the 10% rule defense collapses immediately in California — and in any other state with similar deposit limits. Charge on completion. Authorize at booking if needed, but capture only after.
5 · Pricing engine & its legal role
Unlike a pure SaaS where the contractor sets their own price, Electrum's pricing engine publishes a price computed from market data. This is the most legally distinctive feature of the platform — and the source of the largest open compliance question.
How we frame it
Electrum publishes market-based reference prices for standardized residential home services, computed from:
• Regional labor rates (updated quarterly from licensed contractor data)
• Manufacturer MSRP and distributor equipment pricing
• County-level permit fee schedules
• Project-specific scope inputs from the homeowner (home age, configuration, access, equipment tier)
This is functionally analogous to Kelley Blue Book for cars — published reference pricing based on transparent methodology, not a quote produced by a salesperson. Contractors opt in to accept work at the published price. They can decline. They are not Electrum employees, and Electrum does not direct their work.
Why this matters legally
ℹ️ Risk surface
By setting the price, Electrum is closer to a principal than a pure facilitator. Three structural defenses preserve the marketplace-platform classification:
Pricing methodology is rule-based and defensible. The engine produces a number from documented inputs. There is no human discretion at the point of quote.
Contractor optionality is real. Contractors actively accept individual jobs. They can decline. They can leave the platform. Decline rates and contractor mobility are tracked as evidence.
The work contract is contractor-to-homeowner. Electrum is not a party to the construction agreement.
If any of these three break down, the classification weakens. Specifically: if Electrum's pricing engine were a black box with internal price-setting discretion, or if contractors were force-routed to jobs they couldn't decline, the structural defense against being reclassified as a general contractor becomes much harder.
6 · Language discipline
Words create legal exposure. The marketing, product UI, and TOS must use consistent, defensible language. Drift from these terms re-opens questions counsel has already closed.
Approved term
Means
Platform / marketplace
Software that connects homeowners with licensed contractors
Pricing engine
The rule-based system that publishes market-based reference prices
Verified / approved pro
Licensed and insured contractor in the network
Accept / assign
Contractor opts in to a job at the published price
Scope and payment governance
Electrum's role in mediating changes and disputes
Platform fee
Electrum's compensation, paid by the contractor
Payment processed by Stripe
How funds flow — never "held by Electrum"
7 · Delta from the approved EV charger model
The EV charger product previously received compliance approval in California. The Electrum Home model is structurally similar but legally more aggressive in one specific way: pricing authority.
Approved (EV chargers)
• Installer sets the price. Electrum displays it.
• Pure SaaS — software for the contractor
• Customer pays after completion (10% rule cleared)
• Contractor is unambiguously the principal in pricing
Open (Electrum Home)
• Electrum publishes the price. Contractor accepts.
• Marketplace + pricing engine
• Customer pays after completion (same)
• Contractor accepts a published price (new)
⚠️ Re-review required before CA launch
The prior approval does not automatically extend to the new model. We must re-engage the same CA counsel with this specific delta: (a) does pricing-engine-as-publisher hold up under CSLB scrutiny? (b) does it trigger home improvement broker licensing in CA (or NY, NJ, MD)? (c) does the 10% rule treatment still apply when the price is set by us, accepted by the contractor, then paid by the customer post-completion?
8 · Open questions for counsel
The following items need explicit confirmation from our payments/contractor-licensing attorney before CA launch and before scaling to other states:
1 · Pricing authority. Does publishing a market-based price and finding a contractor to accept it trigger home-improvement broker, salesperson, or general-contractor licensing in CA? In MD, NY, NJ?
2 · 10% rule resilience. Confirm the post-completion payment structure still defeats Bus. & Prof. Code §7159 when Electrum (not the contractor) sets the price.
3 · Stripe Connect MTL shield. Confirm our specific Stripe Connect integration (destination charges / transfer model) is what counsel reviewed and that the MTL obligation rests with Stripe, not Electrum.
4 · State-by-state expansion map. Which states require home improvement salesperson / broker registration even for marketplace platforms? Prioritize the next 5 states by population and rank by registration burden.
5 · TOS structure. Confirm the two-contract architecture (homeowner↔contractor + homeowner↔Electrum) is reflected in our current TOS and contractor agreement, with proper cross-references and disclaimers.
6 · Dispute resolution role. Confirm Electrum's scope/payment dispute mediation does not constitute the unauthorized practice of arbitration or claims handling.
7 · Warranty handling. Confirm we can market the optional "Electrum Home Protection Plan" without triggering insurance regulation. (Likely requires a licensed administrator partner.)
9 · Do say / Don't say
❌ Phrases to never use in public copy
• "Escrow" / "held in trust" / "trust account"
• "Buying agent" / "your agent" / "representing you"
• "One team to call" / "one point of contact: us" (for general communication)
• "We handle everything" / "you come to us, we handle the rest"
• "We hire the contractor for you" / "we employ the pros"
• "We set the price" (use "we publish a market-based price" instead)
• "Electrum guarantees the work" (the workmanship warranty is the contractor's)
✅ Phrases that are accurate and defensible
• "Electrum publishes market-based prices for standardized projects"
• "Verified, licensed, insured contractors accept jobs at those prices"
• "Your contract for the work is with the contractor; Electrum is the platform"
• "Payment is processed by Stripe and released to your pro on completion"
• "Any scope or price change comes back through the platform"
• "Your pro's workmanship warranty covers the work"
• "Electrum steps in for scope or payment disputes"
• "The platform is the protection layer"
Status
Draft v1 · Documents operating model. EV charger product previously approved by CA counsel. Broader Electrum Home model requires re-review before CA launch.
Disclaimer
This document is internal positioning guidance, not legal advice. Final compliance language and structural commitments must be reviewed and approved by qualified counsel before public-facing publication or state-specific launch.