California caps the deposit on a home improvement contract at one thousand dollars or ten percent of the contract amount, whichever of the two is less. On a sixty thousand dollar remodel the lawful deposit is a thousand dollars, not six thousand. A contractor asking for a third of the job up front is breaking the licensing law before a single tool comes out of the van, which tells you something before work has even started.
Business and Professions Code § 7159.5(a)(3) states that if a downpayment will be charged, the downpayment shall not exceed one thousand dollars or ten percent of the contract amount, whichever amount is less. There is no sliding scale and no exception for materials the contractor says must be ordered early. The larger the job, the further the real deposit sits from what people expect to pay.
That cap does the most useful work of any California contracting rule, because an oversized deposit is the earliest visible sign of a job that will go wrong. A contractor who is comfortable ignoring the deposit limit is telling you how they treat the rest of the licensing law.
The section sits alongside § 7159, which sets out what a California home improvement contract must contain, and the Contractors State License Board licensing scheme that runs the classifications — C-36 for plumbing, C-20 for heating and air conditioning, and so on. A license is issued in specific classifications, and a contractor working outside their classification is working outside their license.
Payments after the deposit should track completed work. California does not fix a schedule for you, so the schedule you negotiate is the protection you get.
Three checks cover most of the risk, and all three happen before money changes hands. The deposit cap is the first, because it filters out a category of contractor entirely.
This page is general information, not legal advice. The California sections cited above rest on published code reproductions rather than the Legislative Counsel’s official text, and they are amended from time to time, so verify current requirements with the Contractors State License Board before relying on them.
Business and Professions Code Section 7159.5(a)(3) provides that if a downpayment will be charged, it shall not exceed one thousand dollars or ten percent of the contract amount, whichever amount is less. On any contract over ten thousand dollars that means one thousand dollars. There is no exception for special-order materials.
Treat it as a reason to walk. The deposit cap is part of California's contractors licensing law, and a contractor willing to ignore it at the outset is signalling how the rest of the job will be run. You can also report it to the Contractors State License Board.
Look the number up directly on the Contractors State License Board register rather than accepting a number printed on a vehicle or a business card. Check that the license is active and that its classification matches your work, since California licenses by classification, C-36 for plumbing and C-20 for heating and air conditioning among others.
California does not prescribe a schedule, so this is negotiated. Tie each payment to work that is complete and, where relevant, inspected, rather than to calendar dates, and hold a meaningful final payment until the punch list is closed and permits are signed off.