California's contractor deposit law and how to set a safe payment schedule

Quick answer

On a home improvement contract, the down payment can't exceed 10% of the contract price or $1,000, whichever is less. On any contract over $10,000, that means $1,000 is the most a contractor can ask up front.

Who to call: Coachella Valley Remodeling connects you with our licensed partner contractor, who visits and gives you a written price. Free to you. Get a free quote or call (760) 766-2218.

Updated November 6, 2026 · Typical published ranges, not a quote.

Of all the complaints we read about kitchen, cabinet and countertop jobs, the largest losses came from one pattern: a big payment up front, then a contractor who stalled, closed or walked off. One homeowner paid 50% on signing, and demolition didn't start for 274 days. Another paid about $70,000 before the room sat empty for four months behind a locked showroom. A third paid 75% and then found the island cut four inches too narrow.

California already has a rule that would have capped each of those deposits at $1,000. Most homeowners have never heard of it.

The rule in one sentence

On a home improvement contract, the down payment can't be more than 10% of the contract price or $1,000, whichever is less, and after that the contractor can't request or accept more than the value of the work done.

That comes from Business and Professions Code section 7159.5. The law also requires every home improvement contract to print the rule in bold capital letters: the down payment may not exceed $1,000 or 10 percent of the contract price, whichever is less. If your contract doesn't say that, it's missing a required notice.

For almost any remodel, then, the answer is $1,000. Not 30%, not 50%, and not “the cabinets in full before we order.”

What else the law says about payments

Section 7159.5 and the contract rules in section 7159 go further than the deposit:

• Payments can't run ahead of the work. Apart from the down payment, the contractor “shall neither request nor accept payment that exceeds the value of the work performed.”
• The schedule has to be in dollars and cents. If payments are due before completion, the contract must list each one as an amount, tied to specific work, services or materials.
• The contract must say it in bold. It must include the statement, in at least 12-point bold type, that it's against the law for a contractor to collect payment for work not yet completed or materials not yet delivered.
• Finance charges are separate. The contract price covers labor, materials and profit, and any finance charge has to be listed separately.
• It's a crime, not just a breach. Violations are a misdemeanor, with a fine of $100 to $5,000, up to a year in county jail, or both.

The one exception: a bonded contractor

A contractor who furnishes a performance and payment bond, a lien and completion bond, or a bond equivalent that meets the statute is exempt from the deposit limit and the payment-schedule rules. That's a real bond for your project, issued by a surety. It's different from the $25,000 license bond every contractor carries.

If a contractor says they're exempt, ask to see the bond, check the surety's name and the bond number, and call the surety to confirm it covers your job. “We're bonded” on a truck door is not the same thing.

Why big deposits go wrong

The complaints we read point to the same causes again and again:

• Your money pays for someone else's job. An undercapitalized contractor uses today's deposit to finish last month's project. When the new jobs dry up, the last customers in line lose.
• “Paid in full to order” removes your leverage. Some retail and big-box programs collect the whole price before ordering cabinets. When the order is wrong or late, you have nothing left to hold back.
• Financing can do the same thing. In several complaints, a lender released most or all of a loan to the company at signing, well before the work was done. Ask when the lender pays the contractor, and in what stages.
• It's often paired with pressure. Same-day discounts and “the price goes up tomorrow” offers usually come with a large payment on the spot.

What a fair payment schedule looks like

There's no single legal template, but a schedule that follows the law ties each payment to a stage you can see. For a $60,000 kitchen remodel, it might look something like this. The stages and amounts are an illustration, not a quote.

A few things to notice:

• Every payment follows the work, never leads it.
• Delivered materials can be paid for when they arrive at your home and you've seen them. Materials that are merely “ordered” haven't been delivered.
• The final payment is big enough to matter. If it's only a few hundred dollars, there's little reason for anyone to come back for the punch list.
• Each payment is a fixed dollar figure, as the law requires, not “40% at midpoint.”

Lien releases: the other half of paying safely

Paying your contractor on time doesn't guarantee your contractor pays the cabinet supplier, the stone fabricator or the plumber. California lets unpaid subcontractors and suppliers record a mechanics lien on your home, even if you've paid in full. The contract has to warn you about this.

The protection is simple:

1. Watch for preliminary notices. Subcontractors and suppliers generally send one within 20 days of starting work or delivering materials. Keep them; they tell you who has lien rights.
2. With each progress payment, ask for a conditional lien release from your contractor and from each sub or supplier who sent a notice. California has four statutory release forms, and non-statutory waivers aren't valid.
3. For larger payments, consider a joint check made out to the contractor and the supplier together.
4. With the final payment, collect the final releases.

What to say when someone asks for more

You don't need to argue law with a contractor. Something like this works:

“California caps the down payment at 10% or $1,000, whichever is less, and I'd like progress payments tied to completed stages. Can you send a schedule that works that way?”

A legitimate contractor will adjust. Plenty of good contractors work this way every day, and our partner contractor agrees to it in writing. If the answer is “everyone takes 50%” or “then we can't order your cabinets,” that's your signal to keep looking. It's on our list of red flags from homeowner complaints for good reason.

If you've already paid too much

It happens, often before anyone mentions the law. Here's how to limit the damage:

• Stop paying ahead. Make no further payment until the completed work is worth more than what you've paid.
• Put it in writing. Send a short email or letter asking for a schedule that complies with section 7159.5 and a start date.
• Document everything. The contract, receipts, cancelled checks front and back, texts and photos of the job.
• Check the license at cslb.ca.gov for bond details and complaints.
• If work stops, follow the steps in our guide to what to do if a contractor abandons your job, including a CSLB complaint.

Small jobs and handyman work

The home improvement contract rules apply once a contract passes $500. For small repairs, the simplest protection is to pay on completion, after you've checked the work. Be wary of paying a handyman in cash or to a personal account before any work starts. In the handyman complaints we read, 16% involved paying up front and never seeing the worker again.

Remember that in California, any job of $1,000 or more in labor and materials, or any job that needs a permit, needs a licensed contractor.

How we handle payments

We connect you with a licensed contractor, free, and we never hold your money. Our partner contractor agrees in writing to ask for no more than the legal down payment, to tie payments to completed work, and to hold the final payment until you've walked the job. Before you sign, we look over the payment schedule with you and point out anything that runs ahead of the work.

1. Licensed, bonded and insured, checked by us

   Before any introduction we look up our partner contractor's license at cslb.ca.gov: active, the right classification for your job, bond current, workers' comp on file or a valid exemption, plus a certificate of liability insurance. We check again before every new introduction.

2. Your information goes only to our partner contractor, with your OK

   One licensed local partner contractor, named before it contacts you, and only if you approve. Never a call center or a list, and "stop" means stop.

3. A small deposit, then pay as work gets done

   California caps the down payment at 10% of the price or $1,000, whichever is less, and payments can't run ahead of the work. Our partner agreement requires it too: no pay-in-full, no cash-only.

4. A written, itemized scope

   Our partner agreement requires every task, the materials by name, what's excluded, who pulls permits, allowances for anything not chosen yet, and start and finish dates, before money changes hands.

5. No surprise charges

   Every change is written, priced and signed by you before the work happens. Our partner agreement says the contractor won't charge for a change you didn't sign.

6. Measure, draw, approve, then cut

   Cabinet layouts and countertop templates, seams and cutouts approved by you before anything is ordered or cut.

7. Show up, or call ahead

   Our partner agreement requires appointments confirmed the day before, 24 hours' notice of changes and calls returned within one business day. We track no-shows.

8. One local person who answers, plus photo updates

   A named contact at the contractor and one at our office. Owners who are away get photos at the end of every work day.

9. Your home protected and left clean

   Our partner agreement requires floor and counter protection, dust control, stone cut outside or with dust extraction, debris hauled away, broom-clean every day.

10. Walkthrough first, written warranty after

    Final payment only after a walkthrough and a finished punch list, and our partner agreement requires at least a one-year written workmanship warranty. If there's a dispute, we step in to mediate.

Common questions

What is the maximum deposit a contractor can charge in California?

On a home improvement contract, the down payment can't exceed 10% of the contract price or $1,000, whichever is less. On any contract over $10,000, that means $1,000 is the most a contractor can ask up front.

Can a contractor ask for money to buy materials before starting?

Not beyond the down payment. After the down payment, a contractor can't request or accept payment that exceeds the value of the work performed. A payment can be scheduled for when materials are delivered to your home, which is different from paying before they're ordered.

Are there any exceptions to the deposit limit?

Yes. A contractor who furnishes a qualifying performance and payment bond, a lien and completion bond, or a bond equivalent is exempt from the down-payment and payment-schedule limits. Ask to see the bond, and check it with the surety. Swimming pool contracts have their own rules.

Is it illegal for a contractor to take a bigger deposit?

Taking more than the legal down payment, or payments beyond the work performed, is a misdemeanor under Business and Professions Code 7159.5, punishable by a fine of $100 to $5,000, up to a year in county jail, or both. It's also grounds for CSLB discipline.

What if I already paid more than the limit?

Don't pay more until the work catches up with what you've paid. Keep every receipt and message, ask in writing for a schedule that matches the law, and if the contractor stalls, file a complaint with the CSLB. Our guide to abandoned jobs covers the next steps.

Do the same rules apply to a handyman?

The home improvement contract rules apply to contracts over $500. For small jobs, the safest approach is simply to pay when the work is done and you've checked it.

Last reviewed November 6, 2026. Prices and rules change; confirm details with your contractor and your city or county building department.