How Much Can a Contractor Ask for Upfront in California?

If you're planning a home renovation or construction project in California, one of the first questions you may ask is:

"How much can a contractor ask for upfront in California?"

This is a smart — and important — question. California has strict laws in place to protect homeowners from fraud and financial risk. Whether you're a contractor or a customer, understanding these rules is essential before signing a contract.

California Law: Upfront Payment Limits for Contractors

Under California Business and Professions Code §7159, the law is very clear:

✅ A contractor may not ask for more than 10% of the total contract price or $1,000 — whichever is less — as a down payment.

This law applies to home improvement projects and is enforced by the California Contractors State License Board (CSLB).

Example Scenarios

So even on a $50,000 remodel, a contractor cannot legally require more than $1,000 upfront.

What If a Contractor Asks for More?

If a contractor demands more than the legal limit upfront, it may be a red flag. Here's what you should do:

• ✅ Politely remind them of California’s legal limits
• ✅ Check their license on the CSLB website
• ✅ Report violations to the CSLB if they persist
• ✅ Never pay in cash without a signed contract and receipt

Exceptions to the Rule

There are very limited exceptions, but most licensed contractors know and follow the rule.

However, a contract may include progress payments based on completed work stages (e.g., framing, drywall, inspection). These must be clearly defined in the contract and cannot be front-loaded.

What Should a Legitimate Contract Include?

A valid home improvement contract in California should have:

• Contractor’s license number
• Project scope and materials
• Start and completion dates
• Payment schedule
• Notice of right to cancel
• Down payment amount (must follow legal limits)

Why This Law Exists

Unfortunately, California has seen numerous contractor scams in the past. To protect homeowners from:

• Unlicensed contractors
• Abandonment after payment
• Poor or incomplete work

…the state enforces strict rules on upfront payments.

For Contractors: Stay Compliant, Stay Trusted

If you're a licensed contractor in California, following this rule not only keeps you compliant but builds trust with clients. Consider these tips:

• Use clear, milestone-based payment schedules
• Document all transactions
• Educate clients on the law (they’ll appreciate it)
• Use software like TaskTag to store contracts, photos, and permits in one place

Summary

So, how much can a contractor ask for upfront in California?

No more than 10% of the total project cost or $1,000 — whichever is less.

This rule protects both homeowners and honest contractors. Whether you’re hiring or getting hired, always follow California law and use written contracts for every project.