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

How the down payment cap works

The cap is in Business and Professions Code section 7159.5, and the required contract language prints it in bold type. It covers home improvement contracts, the repair and remodel work most homeowners hire for. Two examples:

• On a $25,000 kitchen remodel, 10 percent would be $2,500, so the cap is the smaller number: $1,000.
• On a $6,000 job, 10 percent is $600, which is less than $1,000, so the cap is $600.

What about payments after the deposit?

They follow the work. Apart from the down payment, the law says a contractor may not collect payment for work not yet completed or materials not yet delivered. Tie each payment to progress you can see, and hold the last one until the job is done: that money is your leverage to get problems fixed.

When is a written contract required?

When the job is over $500 in combined labor and materials, it needs a written contract, signed before work begins. Put later changes to the work in writing too. What the contract has to say, item by item, is in our guide to reading a contractor's quote.

When does a contractor need a license?

Since January 1, 2025, for any job where combined labor and materials come to $1,000 or more. Assembly Bill 2622 raised the old $500 threshold. Below $1,000, an unlicensed person can do the work only if all of these are true:

• The work needs no building permit of any kind.
• They hire no employees or helpers to do it.
• The job is not split into smaller pieces to stay under the limit.

An unlicensed person who advertises for work has to say they are not licensed.

The permit condition matters most. The Contractors State License Board says anyone who contracts for a job that requires a building permit must hold a valid license, whatever the price, so the small-job exemption never covers permitted work. Orange County cities each set their own permit rules; our Orange County permit guide shows how they differ. Check any license at cslb.ca.gov before you hire.

Do these rules apply in every Orange County city?

Yes. They are state law, so they apply the same way in every city and in the unincorporated areas. See our city pages for Santa Ana, Garden Grove, Fullerton, Costa Mesa, Dana Point, or all Orange County cities.

What are the red flags?

• Pressure to pay a large deposit above the legal cap, or most of the job before work starts.
• A push to pay in cash, which leaves you without a clear record.
• No written contract on a job over $500, or a rush to start before anything is signed.
• No license number, or reluctance to give one you can look up.

None of these proves bad intent on its own, but each is a reason to slow down. You are free to walk away and hire someone else.

Statutes checked September 2026. General information, not legal advice: confirm the current rules with the Contractors State License Board or an attorney.