What Deposit Can a Contractor Take?
Many homeowners have a question about how much of a deposit they should pay a contractor. It is important to know that California law says that IT IS ILLEGAL for a construction contractor to take more than a 10% deposit, or $1,000, whichever is less. The Contractors State License Board says that many homeowner complaints come from individuals who were unaware of this law. It should be a HUGE red flag if a contractor asks for more than this legal limit.
Some “Chuck and a Truck” workers (unlicensed and uninsured fake-contractors) will ask for more than the 10% and say it is to cover materials. Don’t go along with that. Any real contractor with a good track record will have credit terms with their suppliers.
When you do hire a contractor, make sure to see their license and insurance. Make sure you get a contract that lays out all the terms of the job. Don’t ever pay in cash and make sure your payments are timed to progress of the work.
When you hire an Approved Home Pro here in San Diego County that you will find with us, you can be sure that they are licensed, insured and come highly recommended.
There is a small exception in the law for a very small number of contractors who purchase blanket performance bonds that will protect the consumer. There are only about two dozen contractors in the state with those bonds however.