My contractor wants cash only. Is that a red flag?
Short answer: cash itself is not illegal, and plenty of small, honest jobs get paid in cash. The warning sign is cash only with no written contract, or a demand for the full amount up front. That combination strips away your record, your recourse, and your leverage all at once, no matter what state you are in. Slow down before any money moves.
What cash only can be hiding
When someone will only take cash and will not put the job on paper, ask why. It can mean no license, no insurance, and no intention of leaving a trail. Cash with no invoice means there is nothing to prove what you paid, what you were promised, or that the job ever happened. If the work goes bad, you have no receipt to stand on.
Get the job in writing, wherever you live
The fix is the same everywhere: put the scope, the price, and the timeline on paper before work starts, no matter how the final bill gets paid. A written contract is what protects you, and most states require one for any real home improvement job. A pro who refuses to write anything down is telling you something.
Paying up front is the bigger problem
A little cash to hold a date or grab materials can be fine. Handing over most or all of the money before the work starts is the real danger anywhere. Your leverage is the money you have not paid yet, so never let the payment get ahead of the work. Some states also cap how much a contractor can take up front, so a big down payment demand is worth checking against your state's rules.
In California
For any home improvement job over $500, California law requires a written contract, so "cash, no paperwork" does not meet the rule for most real projects. California also caps the down payment at $1,000 or 10 percent of the job, whichever is less. So a cash-only, half-down demand is not just a red flag here, it is more than the law allows.
How to pay and keep your protection
Put the job in writing first. Pay a small down payment, then progress payments as real milestones are hit, and hold the final payment until the work is done and any required inspection is signed off. If you do pay some in cash, get a signed receipt every single time. Paper is what protects you when memory and goodwill run out.
Trust the feeling, then check the paper
If the cash-only push feels off, it usually is. Do not stop at the feeling. Ask for the written contract, the license number, and proof of insurance, then confirm they are real before you pay a dime. An honest pro will not flinch at any of it.
This is general information, not legal advice. Confirm the current rules and your specific situation with your state's licensing board or a professional before you act.
Common questions
Is it illegal for a contractor to ask for cash only?
Cash payment by itself is not illegal. The risk is cash only with no written contract, which removes your record and recourse. Many states, California included, require a written contract for larger home improvement jobs, so "cash, no paperwork" often breaks the rule.
Should I pay a contractor in full before the work is done?
No, anywhere. Your leverage is the money you have not paid yet. Pay a small down payment, then progress payments tied to milestones, and hold the final payment until the job is finished and inspected.
How do I protect myself if I pay a contractor in cash?
Get the job in writing first, keep the down payment small, and get a signed receipt for every cash payment. Verify the license and insurance before any money changes hands.