The short answer
It depends on where you live. The FTC says, "Don't pay the full amount for the project up front. Some states actually limit the amount of money a contractor can ask for as a down payment." California is one state's example: its law says the down payment "shall not exceed one thousand dollars ($1,000) or 10 percent of the contract amount, whichever amount is less."
What the FTC says about paying up front
The FTC's guidance starts with the full price of the job:
"Don't pay the full amount for the project up front. Some states actually limit the amount of money a contractor can ask for as a down payment." (FTC)
The key word is some. There's no single national number in the FTC's guidance. Whether a limit applies to you depends on your state, so the next step is checking the rule where you live.
California law (one state's example)
Here's what one state's limit looks like in the statute's own words.
California law (one state's example), Bus. & Prof. Code §7159.5: "If a downpayment will be charged, the downpayment shall not exceed one thousand dollars ($1,000) or 10 percent of the contract amount, whichever amount is less."
This limit is for home improvement contracts. Other contract types can have different rules; check the statute or the CSLB.
This is one state's rule, and yours may be different. It's here to show what a state limit can look like, not as the rule everywhere.
California: special-order materials don't change the down payment
If a deposit request is tied to materials that have to be ordered ahead, California's Contractors State License Board (CSLB) addresses it on its contract page, in its section on the down payment:
"There are no exceptions for special-order materials." (CSLB, California)
California: after the down payment, payments follow the work
The CSLB also explains how payments work once the job is underway:
"There must be a detailed, written payment schedule in the contract. The payments to the contractor cannot exceed the value of the work performed" (CSLB, California; the down payment is the exception)
So under California law (one state's example), as the CSLB explains it, the contract must include a detailed, written payment schedule, and payments to the contractor cannot exceed the value of the work performed. The down payment is the exception.
Not in California? Check your state
California's law is one state's example. For everywhere else, the FTC points you to a local source:
"Contact your state or local consumer agency to find out the law in your area." (FTC)
The FTC also has advice for the end of the job:
"…never make the final payment until the work is done and you're satisfied with it." (FTC)
Quick checklist before you hand over a deposit
| Step | Details |
|---|---|
| Is the ask for the full amount up front? | The FTC says don't pay the full amount for the project up front. |
| Does your state limit down payments? | Some states do (FTC). Contact your state or local consumer agency to find out the law in your area. |
| In California: | check the down payment against §7159.5 (one state's example), and remember the CSLB says "There are no exceptions for special-order materials." |
| In California: | look for a detailed, written payment schedule in the contract (CSLB). |
| At the end: | never make the final payment until the work is done and you're satisfied with it (FTC). |
Limitations
This page quotes the FTC and one state's law, California's, as an example. It doesn't state the rule in any other state. To find out the law in your area, the FTC says to contact your state or local consumer agency.
General info, not legal advice. Talk to a licensed attorney in your state.
Related guides
- How to compare plumbing repair estimates without missing scope
- How to compare roof replacement estimates line by line
- How to compare pest control quotes and treatment plans
Frequently asked questions
Is there a limit on how much a contractor can ask for as a down payment?
In some states, yes. The FTC says, "Some states actually limit the amount of money a contractor can ask for as a down payment." To find out the law in your area, the FTC says to contact your state or local consumer agency.
What is the down payment limit in California?
California law (one state's example), Bus. & Prof. Code §7159.5: "If a downpayment will be charged, the downpayment shall not exceed one thousand dollars ($1,000) or 10 percent of the contract amount, whichever amount is less."
Can a California contractor ask for more because of special-order materials?
California's contractor board (CSLB) says, on the down payment: "There are no exceptions for special-order materials."
When should I make the final payment?
The FTC says to "never make the final payment until the work is done and you're satisfied with it."
Sources and further reading
All quotes above are from these pages.
Put the guide to work
This page is run by QuoteOtter.