Tools · Contractor deposit rules

Before you pay a contractor: what your state's law allows

The down payment a contractor can ask for is capped by law in some states and wide open in others, and the license rules differ just as much. Check what applies at your job value, with every rule cited to the statute and your state board, verified on 2026-07-17.

What applies at your job value

Pick your state and a rough job value. The requirements that apply at that value appear below, with the official source behind each one. Your final signed contract price decides, not the estimate.

Choose a state and a value to see the requirements that apply at that size of job.

CaliforniaCalifornia has the strictest down-payment cap in the country: $1,000 or 10 percent of the contract price, whichever is less. A license is required above $1,000 of work (the threshold doubled in January 2025), and progress payments may never run ahead of the work.NevadaNevada caps the down payment on owner-occupied home work at $1,000 or 10 percent, whichever is less, unless the contractor has filed a $100,000 consumer-protection bond. A widely shared 2026 consumer guide states this rule backwards.MarylandMaryland caps the deposit at one third of the contract price, bans taking any money before the contract is signed, licenses all home improvement work with no dollar threshold, and stands behind licensed contractors with a Guaranty Fund of up to $30,000 per claim.

If your state is not listed

Most states set no down-payment cap at all. That is not a norm to lean on: where no cap exists, the written contract, the payment schedule you negotiate, and the license or registration check are what protect you. Some states protect the money a different way: New York requires pre-completion payments to sit in an escrow account (or the contractor posts a bond), and Florida ties any payment over 10 percent to hard permit and start deadlines. And in some states there is no state license to check at all: Texas has none for general contractors, and Illinois and most of New York license locally. There, check the trade licenses (electrical, plumbing), the local registration, insurance, and the written contract instead.

Whatever the state, check the license first

Then see the public evidence we hold: check a business by name or browse the registers we track.

Common questions

How much deposit can a contractor ask for?

It depends on your state and, sometimes, the contractor's bonding. California caps the down payment at $1,000 or 10 percent of the contract price, whichever is less. Nevada matches that cap unless the contractor has filed a $100,000 consumer-protection bond. Maryland caps the deposit at one third and bans any payment before the contract is signed. Most other states set no cap; there, the written contract and payment schedule you negotiate are the protection.

Is a 50 percent deposit normal?

In California, Nevada (without the bond) and Maryland, a 50 percent ask is above the legal cap. In most other states it is legal but far above the norm for standard work; large upfront shares are usually justified only by genuine special-order materials. Whatever the state, tie payments to completed work in the written contract before anything changes hands.

When does a contractor need a license?

Each state decides. California requires a CSLB license above $1,000 of work (the threshold doubled in January 2025). Nevada licenses essentially all construction work. Maryland licenses home improvement work at any value. Texas has no state license for general contractors at all, and Illinois and most of New York license locally, so there the checks that matter are trade licenses, local registration, insurance and the written contract.

What if the contractor takes the money and disappears?

Some states stand behind licensed contractors with a fund: Nevada's Residential Recovery Fund pays up to $40,000 per claim and Maryland's Guaranty Fund up to $30,000. California relies on the contractor's $25,000 license bond and CSLB processes instead. Every one of these works only against licensed contractors, which is why the license check comes before any payment.

This is guidance from the public rules, not legal advice. The thresholds bind on your final signed contract price, not an estimate, and state law changes. Check the board's current page before you sign or pay anything.

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