Kitchen deposits, progress payments, and the one exception

What they can ask for, when they can ask for it, and the case that changes the rule.

The money rules are short. A contractor may take a deposit, and after that they may only be paid for work they have actually done. Here is exactly how far each of those goes, and the one situation where the deposit rule does not apply at all.

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$1,000
The deposit ceiling
One thousand dollars or ten percent of the contract price, whichever is the smaller number. That is the cap, and it holds unless one exception applies.
$0
Paid ahead of the work, past the deposit
After the deposit, a payment may not run past the value of the work already done or the materials already delivered on site.
1
The exception nobody prints
A contractor carrying an approved bond or joint control is released from the cap and may lawfully take money ahead of the work.

The deposit cap, and the exact words for it

The deposit is the only money a contractor may hold before there is work to show for it, and the law puts a hard ceiling on it. One thousand dollars, or ten percent of the contract price, whichever is less. On a fifteen thousand dollar kitchen the ten percent figure is fifteen hundred, so the thousand dollar ceiling is the one that binds. On a six thousand dollar job the ten percent figure is six hundred, and that becomes the limit instead.

That cap is not buried in fine print. The statute makes the contractor print it in at least 12 point boldface, in these words.

THE DOWNPAYMENT MAY NOT EXCEED $1,000 OR 10 PERCENT OF THE CONTRACT PRICE, WHICHEVER IS LESS.
Source Business and Professions Code 7159.5

Try it with your own price

Pick the written price on your contract. The ruler works out the most a contractor may ask for before any work starts, using the two limits above, so you do not have to do the arithmetic.

The written contract price is$2,500$5,000$10,000$25,000$60,000

$250The most a deposit may be on a $2,500 contract. Ten percent of $2,500 is $250, under one thousand dollars, so the smaller figure is the limit. This is the rule in the deposit cap.

$500The most a deposit may be on a $5,000 contract. Ten percent of $5,000 is $500, under one thousand dollars, so the smaller figure is the limit. This is the rule in the deposit cap.

$1,000The most a deposit may be on a $10,000 contract. Ten percent of $10,000 is exactly one thousand dollars, so both limits meet at the same figure. This is the rule in the deposit cap.

$1,000The most a deposit may be on a $25,000 contract. Ten percent of $25,000 is $2,500, over one thousand dollars, so the thousand dollar ceiling is the limit. This is the rule in the deposit cap.

$1,000The most a deposit may be on a $60,000 contract. Ten percent of $60,000 is $6,000, over one thousand dollars, so the thousand dollar ceiling is the limit. This is the rule in the deposit cap.

A contractor may ask for more only if they carry an approved bond or joint control, under the bond exception. This is the law in plain words, not legal advice.

Not sure what your paper says? Call (661) 593-5907, text or send a message, and we will introduce you to a licensed contractor who puts it in writing.

The one exception, and why it is not a trick

Here is the part that catches people out, in both directions. A contractor who furnishes an approved performance and payment bond, a bond equivalent, or a joint control approved by the registrar is released from the deposit cap and from the rule about payment following the work. They may lawfully ask for more than a thousand up front, and they may take money ahead of the job.

So a request for a large deposit is not automatically a warning sign, and a promise that "the law caps it at a thousand" is not automatically true. Both depend on one fact about the contractor. The move is to ask it plainly.

A performance and payment bond: A third party guarantees the job gets finished and the subcontractors and suppliers get paid. It shifts the risk off you, which is why the law lets a bonded contractor take payment differently.
An approved joint control: A neutral third party holds the funds and releases them against the work as it is done. Your money is controlled by someone with no stake in the job, so again the cap is lifted.
The question to ask: Are you taking more than the standard deposit, and if so, which of these do you carry. A straight answer names the bond or the joint control. A vague one is the answer.

After the deposit, money follows the work

Once the deposit is set, every later payment is a progress payment, and the rule on those is simple. A contractor may not request or accept a payment that is larger than the work performed or the material delivered up to that point. Paying ahead of the work is exactly what the law is written to stop, because money paid ahead is money you cannot get back if the job stalls.

A good schedule of progress payments states each payment in dollars and cents and ties it to a specific piece of work, so that each release is something you can stand in the kitchen and see. A payment tied to a calendar date rather than to finished work is the line to question before you sign. The contract has to carry that schedule under its own heading.

Lien releases are a lever you already hold

There is a protection that is easy to miss because nobody points it out. After you make any payment, if you ask for it, the contractor has to obtain and hand you a full and unconditional lien release covering the portion of the work you just paid for. Until those releases arrive, you are entitled to withhold every further payment.

That matters because of how liens work. An unpaid subcontractor or material supplier can record a lien against your home even after you have paid the contractor in full. The lien release is the paper that closes that door, one payment at a time. Ask for it every time you pay, and hold the next check until it is in your hand.

So, before you write the first check

Three questions cover almost all of it. Is the deposit within the thousand dollar or ten percent ceiling, and if not, do they carry the bond or joint control that lifts it. Does each later payment name the work it pays for. And will they hand you a lien release for each portion as you pay. If you have signed, remember the money is not final for a few days yet, because you may still have a right to cancel. When you want a contractor who puts all of this in writing, we can match your Canyon Country kitchen with one.

Source Business and Professions Code 7159 / Business and Professions Code 7159.5

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