How much of a deposit can a contractor ask for in California?

How much can a contractor legally ask for up front in California?

No more than $1,000 or 10 percent of the contract price, whichever is less.

That is the whole rule, and it is written into Business and Professions Code section 7159.5(a)(3). The contract amount includes profit, labor, and materials, but not finance charges.

Run the numbers and it gets clearer:

• $3,000 job. 10 percent is $300. The cap is $300.
• $10,000 job. 10 percent is $1,000. The cap is $1,000.
• $25,000 job. 10 percent is $2,500, but the flat $1,000 is less. The cap is $1,000.
• $80,000 job. 10 percent is $8,000. The cap is still $1,000.

The bigger the job, the more it is the flat thousand that controls. On almost any real remodel, the legal maximum down payment is $1,000.

Why does "whichever is less" confuse everyone?

Because people read it backwards.

They hear it as ten percent, with a thousand dollars as a floor. It is the opposite. It is whichever number is smaller.

Keep that straight and a "standard 50 percent deposit" line falls apart in about four seconds.

Can a contractor take more than the work is worth?

No, and this is the part almost nobody knows.

Section 7159.5(a)(5) says that apart from the down payment, a contractor "shall neither request nor accept payment that exceeds the value of the work performed or material delivered."

Read that again. In California it is not just unwise to let payments run ahead of the work. It is against the law. That protection also covers money coming from a lender or a financing company on your behalf.

So if you are four weeks in, the framing is not done, and they want the money for a finished kitchen, that is not a scheduling disagreement. The statute is on your side.

What about expensive special-order materials?

There is a narrow, real exception, and your contractor almost certainly does not qualify for it.

Here is the honest version. A contractor who furnishes a Blanket Performance and Payment Bond, an approved bond equivalent, or a joint control approved by the registrar is allowed to accept payment before completion. To even apply for that bond they have to have been licensed and active in California for at least two years.

That is a real mechanism and it exists for real reasons. It is also rare. If someone tells you they need half down for cabinets, ask them directly whether they carry a blanket performance and payment bond or an approved joint control. If they do, they will know exactly what you mean and can show you. If they do not, the cap applies and the answer is no.

What a contractor can always do is set up progress payments tied to real milestones, including a payment when the special materials actually land on your job. Section 7159.5(a)(4) requires that schedule to spell out, in dollars and cents, exactly what work or materials each payment covers. Payments track delivery. The down payment still stays under the cap.

Is a big deposit demand a red flag?

Usually, yes.

When someone needs a large chunk of your money before they have done anything, that often means cash flow trouble, and sometimes worse.

A solid pro runs their business on a payment schedule, not on your deposit. A demand for half down, or for cash up front, is a reason to slow down, check the license, and call references before you pay a dime.

How do I pay so I keep my leverage?

Pay the legal down payment, then pay for work only after you can see it.

Hold the final payment until the punch list is done and any required permit and inspection are signed off.

Your leverage is the money you have not paid yet. Never let the payments get ahead of the job. That one habit prevents most of the half-finished-job nightmares I get asked about.

What do I say if they ask for 50 percent down?

Tell them the cap is $1,000 or 10 percent, whichever is less, and ask for a payment schedule tied to real milestones.

Say this, and say it early, before anybody is annoyed:

I want to work with you, so let's get the payment schedule right. California caps the down payment at $1,000 or 10 percent, whichever is less, and after that payments have to track work that is actually done. Can you send me a revised schedule with the milestones spelled out?

A professional will not blink. They deal with this rule on every job and it is not news to them. Someone who argues, gets offended, or tells you "that is not how it works around here" has just told you something useful for free.

What happens if a contractor breaks this rule?

It is a misdemeanor, not a technicality.

A violation of the written-contract, down-payment, or overpayment rules in section 7159.5 is cause for discipline against the license, and you can report it to the Contractors State License Board.

You do not have to be the expert in the room. The rules already favor the homeowner here. You just have to know them before you sign.

This is general information, not legal advice. Confirm the current rules and your specific situation with the CSLB or a licensed professional before you act. Verified against California Business and Professions Code section 7159.5 as of July 15, 2026.