California deposit limits: what your contractor can legally ask for
California law (B&P Code 7159.5) limits deposits to $1,000 or 10% of the contract, whichever is less. Any contractor asking for more is breaking the law.
How much deposit can a contractor legally ask for in California?
Under California Business & Professions Code Section 7159.5, a contractor cannot request a down payment or deposit that exceeds $1,000 or 10% of the contract price, whichever is less. For example: on a $50,000 kitchen remodel, the maximum legal deposit is $1,000 (not $5,000, which would be 10%). On a $8,000 painting job, the maximum is $800 (10% is less than $1,000). This law exists to protect homeowners. If a contractor asks for more, they are violating CSLB regulations, and you can file a complaint.
What should I do if my contractor asks for 50% upfront?
This is a violation of California law and a major red flag. Politely but firmly tell them: 'California law limits deposits to $1,000 or 10% of the contract, whichever is less. I'd like to structure payments around project milestones instead.' If they insist on a large upfront payment, do not hire them. A legitimate contractor knows the law and will work within it. You can report contractors who demand illegal deposits to the CSLB at (800) 321-CSLB.
Is it normal to pay before work starts?
A small deposit at contract signing is normal - but it must be within the legal limit ($1,000 or 10%, whichever is less). This deposit secures your spot on their schedule and may cover initial material ordering. After that, all payments should be tied to completed milestones: demo complete, rough inspection passed, cabinets installed, substantial completion, and final walkthrough. Never pay for work that hasn't been done yet. The golden rule: the total payments you've made should never exceed the value of work completed on your property.
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Never pay ahead of work completed. Tie payments to milestones: deposit, demo complete, rough inspection, substantial completion, final walkthrough.
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