Tools · Contractor deposit rules

Contractor deposit rules in California

California 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.

Rules verified against the statute and Contractors State License Board (CSLB) 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.

The rules, cited

Down payment cap

On a home improvement contract the down payment may not exceed $1,000 or 10 percent of the contract price, whichever is less, and the contract must state that cap in bold type. A contractor carrying a performance and payment bond approved by the registrar is exempt from the cap. Later progress payments may not exceed the value of the work performed and materials delivered.

Business and Professions Code section 7159 (California) (opens in new tab) · CSLB: progress payment restrictions bulletin (opens in new tab)

  • Progress payments may never exceed the value of work done and materials delivered, whatever the schedule says.
  • The licensing threshold counts the whole project: splitting a job into under-$1,000 pieces to avoid it is prohibited.

Check them before you sign

Check a California contractor license (CSLB) (opens in new tab) is the official, free search run by Contractors State License Board (CSLB). Then see the public evidence we hold: check the business by name, or browse contractors with public evidence.

Common questions

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

On a home improvement contract the down payment may not exceed $1,000 or 10 percent of the contract price, whichever is less, and the contract must state that cap in bold type. A contractor carrying a performance and payment bond approved by the registrar is exempt from the cap. Later progress payments may not exceed the value of the work performed and materials delivered. The cap binds on the final signed contract price.

When does a contractor need a license in California?

A CSLB license is required for any project worth more than $1,000 in combined labor and materials. The threshold rose from $500 on 1 January 2025, and the exemption below it disappears if the work needs a building permit or the unlicensed person employs workers.

What protects me if the work goes wrong in California?

California has no state recovery fund. The protections are the contractor's mandatory $25,000 license bond (raised in 2023), CSLB complaint and arbitration routes, and small claims court. All of them work better against a licensed contractor, which is one more reason the license check comes first.

How do I check a contractor's license in California?

Use the free official search: Check a California contractor license (CSLB). It is run by Contractors State License Board (CSLB) and takes minutes. Checking before you sign costs nothing.

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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