California caps the down payment at $1,000. A contractor asking for half is asking for something else.

A homeowner agrees to a $40,000 kitchen. The contractor says he needs $20,000 to order materials. It sounds like ordinary commercial sense — cabinets are expensive, suppliers want paying, and the homeowner does not want to look difficult before the job has even started.

California answered this question already, and the answer is not a guideline. For an ordinary home improvement contract the down payment may not exceed $1,000 or 10 per cent of the contract price, whichever is less.

On a $40,000 contract, 10 per cent is $4,000. The lesser of the two figures is $1,000. That is the ceiling. A request for $20,000 before work begins is not a negotiating position and not a tough opening offer; on an ordinary home improvement contract it is a request the Contractors State License Board says the contractor may not make. One narrow exception exists and is set out below — but it is a bond on file with the Board, not an argument made at the kitchen table.

The arithmetic that trips everyone up

The rule is stated as a pair, and the operative word is lesser. It is not “ten per cent, with a floor of a thousand dollars”. On any contract above $10,000 the ten-per-cent figure is the larger number, so the cap collapses to a flat $1,000 and stays there no matter how big the job gets.

The cap is stated excluding finance charges, and the Board requires the contract itself to carry the sentence in at least 12-point boldface: the down payment may not exceed $1,000 or 10 percent of the contract price, whichever is less. If that line is missing from a contract in front of you, that is itself information about who wrote it.

“We need it to order your cabinets” is not an exception

This is the most common way the cap is talked around, and the Board addresses it in one sentence: there are no exceptions for special-order materials.

The rule is not indifferent to the contractor’s cash-flow problem. It resolves it in the homeowner’s favour deliberately, because the alternative — a homeowner’s money sitting far ahead of any work — is the exact position from which a residential construction dispute becomes unrecoverable.

There is one narrow statutory exception, and it is not a conversational one. A contractor who has furnished a blanket performance and payment bond, or an equivalent approved by the registrar, is outside the cap, because the bond does the protective work the cap otherwise does. Few residential remodellers carry one. If a contractor claims it, the response is not to accept the claim but to ask for the bond and verify it with the Board directly — the same way you would verify the licence.

After the down payment, one principle governs every cheque

The cap only controls the first payment. What governs the rest is simpler and matters more over the life of a project: a progress payment may not exceed the value of the work actually performed or the materials actually delivered.

A homeowner who has paid 70 per cent on a job that is visibly 20 per cent complete has not just overpaid. They have handed over the only leverage they had, and the practical remedy from that position is a civil one.

The Board also closes the obvious route around the restriction: the down payment and progress payment limits extend to advance payment, in whole or in part, from a lender or financier for the performance or sale of home improvement goods or services. Financing the job does not lift the cap. And because the definition of home improvement reaches residential solar installations and accessory dwelling units, a solar contract is subject to the same limits as a kitchen.

What the written contract has to contain

California requires a written home improvement contract, and the Board sets out what belongs in it. Reading the list is the cheapest hour of a renovation:

• the contractor’s contact information and licence number, and a statement that they are licensed by the Board;
• a detailed scope of work and a description of the materials to be used;
• the total price, and how and when payments are made, with the down payment stated under its own “Down Payment” heading and any schedule under “Schedule of Progress Payments”;
• who obtains the building permits and pays the fees — ordinarily the contractor;
• warranties on labour and materials, saying what is covered and for how long;
• a notice that unpaid subcontractors or suppliers may place a lien on the home;
• whether the contractor carries commercial general liability and workers’ compensation coverage;
• the notice of the homeowner’s three-business-day right to cancel, in at least 12-point boldface, with the detachable cancellation form.

Anything promised in conversation and absent from this document is not part of the job. “We’ll paint the garage too” is a future argument unless it is written down with a price beside it.

A change order is a contract, not a conversation

Projects change. A wall opens and reveals damage. A fixture is discontinued. The homeowner picks different tile. None of that is a failure; all of it is normal construction.

What turns a normal change into a dispute is the phrase we’ll sort the price out at the end. A change should be documented and signed before the changed work proceeds, and it should answer three questions: what changed, what it costs, and whether the completion date moves. A change order that answers two of the three has left the third to be argued about later.

Three bids, one scope

The Board recommends obtaining at least three written bids and comparing them against the same plans and the same scope. That second half is where the value is. Three numbers priced against three different mental pictures of the job are not comparable, and the cheapest of them is usually cheapest because it left something out.

Verify the licence yourself rather than accepting a screenshot: the Board publishes a live licence lookup showing status, classification, bond and workers’ compensation information. A licence number printed on a business card establishes that someone printed a business card.

Five checks before signing, one before every payment

Before signing: verify the licence on the Board’s lookup; confirm the written scope; confirm the total price; confirm the down payment against the cap; confirm permits, warranties and the completion date.

Then, before every single payment thereafter, ask one question and answer it out loud: what completed work or delivered material supports this payment?

That one habit prevents most of the disputes that reach the Board. It is not adversarial, and a competent contractor will have the answer ready — because a payment schedule tied to completed phases is what the law asked them to write in the first place.

How to verify this yourself

• The Contractors State License Board’s home improvement contract page carries the cap, the “whichever is less” construction and the absence of a special-order-materials exception.
• The Board’s industry bulletin on progress payment restrictions sets out the required contract headings and the 12-point boldface language, and cites Business and Professions Code sections 7159 and 7159.5.
• The Board’s home page states that the restrictions extend to advance payment from a lender or financier, and that solar and accessory dwelling unit work is covered.
• cslb.ca.gov hosts the licence lookup and the complaint route. Verify the licence there, not from a document the contractor gave you.

Contract requirements are amended from time to time, and a threshold quoted in an older guide is not necessarily the one in force. Where a figure here differs from what the Board publishes today, the Board is right.

Also on this desk

• The second property tax bill — completed construction is a supplemental event, so a renovation can produce one.
• Reading a California property tax bill.
• Before you pay — the verification habit, applied to fraud rather than contracts.