Consumer Alert: Don’t Pay Too Much Money Upfront on Home Improvement Projects

Editor's note: this consumer alert was provided by the Contractors State License Board (CSLB). Visit the CSLB website at https://www.cslb.ca.gov to sign up to receive additional consumer alerts.

Contractors Cannot Request Payment for Work Not Completed or Materials Not Delivered.

Except for a limited down payment, it is against the law for a contractor to collect payment for work not yet completed, or for materials not yet delivered.

This applies to home improvement projects. It covers just about any work at a residence, including construction of an accessory dwelling unit (ADU).

Down Payment Before Work is Started

If there is a down payment, it cannot exceed $1,000 or 10 percent of the contract price.

Tip: Do not pay more than $1,000 down on any contract price.
If the price is less than $10,000, do not pay more than 10 percent of that price as a down payment.

Progress Payments

Sometimes the contractor asks for one total payment upon completion. Other times, the contractor may request one or more progress payments before the work is completed.

Tip: Be careful about payments for "plans" or "permits" before the work starts. Ask the contractor for an accounting of the cost of the plans or contact the engineer or architect who drafted them to confirm the cost and that they were paid. Call or go to the building department's website to confirm permit costs.

If you are asked to make payment(s) before the project is completed, the payments must be listed in dollars and cents and specifically reference the amount of work or services performed and materials and equipment supplied.

Tip: The work, service, material, or equipment described in the progress payment schedule must be performed or supplied before the contractor can collect your progress payment.

If you are not provided with a payment schedule or believe the contractor requested or accepted payment that exceeds the value of the work performed or material delivered, file a complaint with CSLB.

Learn more and/or file a complaint on CSLB's website:

• File a Complaint
• Terms of Agreement: A Consumer Guide to Home Improvement Contracts
• Unhappy With Your Contractor On Your Home Improvement Project? Read this!

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