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How much deposit can a contractor ask for in California?
For home improvement contracts in California, a contractor may not collect a down payment larger than $1,000 or 10 percent of the contract price, whichever is less, under Business and Professions Code section 7159. After that, payments must track work actually completed or materials actually delivered to the site. A contractor asking for 30 or 50 percent up front on a residential remodel is asking for something the law does not allow.
| Maximum down payment | $1,000 or 10 percent of the price, whichever is less |
|---|---|
| Law | Business and Professions Code § 7159 |
| Progress payments | Only for work completed or materials delivered |
| Applies to | Residential home improvement contracts |
The rule
California limits the down payment on a home improvement contract to the lesser of $1,000 or 10 percent of the total price. On a $60,000 bathroom the maximum deposit is $1,000; on an $8,000 job it is $800. The contract must also show a schedule of progress payments, and each payment must be for work performed or materials delivered, not for work still to come. A narrow exception exists for contractors who have filed a blanket performance and payment bond with the CSLB, which is rare.
Why the rule exists
It protects homeowners from paying for work that never starts. A contractor who needs a large deposit to buy your materials is financing the business with your money. Legitimate contractors carry accounts with suppliers and bill as the work progresses.
What a lawful payment schedule looks like
A small deposit at signing, then payments at defined milestones: demolition complete, rough plumbing and electrical inspected, drywall complete, cabinets installed, final inspection passed. The final payment should be due after the punch list is complete. Custom-ordered materials such as cabinets or windows can be billed when they are delivered to the site, not when they are ordered. Oria Builders (CSLB #1029255) writes every residential contract to this standard, and you can confirm any contractor's license and bond status on the CSLB website.
Related Questions
Does the deposit limit apply to commercial projects?
No. The $1,000 or 10 percent rule is specific to home improvement contracts with homeowners. Commercial contracts negotiate their own terms.
Can a contractor charge me for materials before they arrive?
Not under the home improvement rules. Materials can be billed once they are delivered to the site, which is why cabinet and window payments usually fall at delivery.
What if a contractor insists on a larger deposit?
Decline and report persistent demands to the CSLB. Asking for more than the legal down payment is a violation that can be disciplined.
Sources
- California Business and Professions Code § 7159 (home improvement contracts)
- Contractors State License Board (CSLB)
Answered by Gilad Segev — Founder & Licensed General Contractor, Oria Builders (CSLB #1029255). Last updated October 2, 2026.