How Much Deposit Can an LA Contractor Legally Ask For?
California law caps the down payment on a home improvement contract at 10 percent of the contract price or $1,000 - whichever is less. Because virtually every remodel contract runs past $10,000-$20,000, the legal ceiling on nearly any Los Angeles job is that $1,000 figure - not a percentage of the total. A contractor asking for 20, 30 or 50 percent up front is asking for something the law does not allow.
What the law actually says
The Contractors State License Board states it plainly: "The down payment cannot be more than $1,000 or 10 percent of the contract price, whichever is less, for a home improvement job or swimming pool, excluding finance charges. There are no exceptions for special-order materials."
That last sentence matters, because special-order materials are the most common reason given for a larger deposit. Custom cabinetry, imported stone and a long-lead appliance package are all real costs a builder carries early. None of them changes the cap.
Source: CSLB, Learn About Home Improvement Contracts.
The one exception, and why it will almost certainly not apply to you
There is a single narrow exception. A contractor who carries a blanket performance and payment bond on file with CSLB may ask for the full contract amount up front and is not required to set a payment schedule at all.
CSLB describes this arrangement as rare - roughly two dozen approved companies statewide. If a contractor tells you the cap does not apply to them, that is a claim you can check before you write anything, and it is worth checking.
Source: CSLB, Contracts and Binding Agreements.
What the payments should look like after the deposit
Past the down payment, money should follow completed work rather than run ahead of it. A schedule of progress payments tied to identifiable milestones - rough-in signed off, drywall closed, cabinetry set - keeps the two roughly in step.
The direction of the risk is what matters. If you are always slightly behind the work, a walk-off costs you the inconvenience of finding somebody else. If you are always slightly ahead of it, a walk-off costs you money you will probably never see again.
Why a builder might ask anyway
It is not always bad faith. A small firm genuinely does carry material and labour before the first payment lands, and cash flow is the reason most small builders fail. Understanding that is fair.
Agreeing to it is not. The cap exists because homeowners who paid large deposits to builders who then disappeared are the single largest category of complaint in this industry. A builder who cannot start a job without a large deposit is telling you something useful about their finances.
What to do if you are asked for more
Say no, and say it in writing. You are not being difficult; you are declining to waive a consumer protection written specifically for this situation.
Then check the licence. A licence number, its status, its classifications and its bond are all public and take about a minute to look up - we set out how in how to verify an LA contractor licence. If the answer to a lawful request is pressure, that is your answer.
Frequently asked follow-ups
Is the deposit cap 10 percent or $1,000? +
It is whichever of the two is LESS. On a contract of $10,000-$20,000 or more, 10 percent is the larger number, so the $1,000 figure is the binding one. The percentage only governs on contracts under about $10,000.
Does the cap apply to custom cabinetry or special-order materials? +
Yes. CSLB states there are no exceptions for special-order materials. A builder may reasonably ask for a payment when those materials are ordered or delivered, as a progress payment against work - but not as a larger down payment before the job starts.
Does the cap apply to an ADU or a new-build? +
The cap is written for home improvement contracts, which is what a remodel is. Contract types and thresholds vary, so if you are unsure which category your project falls into, ask the contractor to point to the specific contract form they are using and check it against the CSLB guidance before signing anything.
What if I already paid a large deposit? +
You are not without options. The licence, the bond and the complaint process all still exist, and CSLB is the body that handles this. Raise it in writing with the contractor first, keep every receipt and message, and if the work does not progress, take it to CSLB rather than waiting and hoping.
Is a small deposit a sign the builder is weak? +
No - it is a sign the builder is complying with the law. A firm that can fund the opening of a job without a large payment from you is demonstrating exactly the financial stability you want on a project that will run for months.
Want the same answer applied to your specific project? Onn personally reviews every inquiry.
Written by Onn Cohen-Meguri, founder and designer at Design Onn Point. Onn has spent 20+ years designing and building in Los Angeles. CSLB #1133368.
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