By LE Construction · Published October 6, 2026
California’s Business and Professions Code sets specific rules for home improvement contracts. They exist because remodeling disputes usually start with money: too much paid too early, changes made without agreement, or work that does not match what was promised. Here is what the law requires and how it protects you.
This is a general explanation, not legal advice. For questions about a specific contract, talk to an attorney or the Contractors State License Board.
The down payment cap
The down payment on a home improvement contract cannot exceed $1,000 or 10% of the contract price, whichever is less. On a $50,000 remodel, that is $1,000, not $5,000. The rule keeps homeowners from paying large sums before work begins.
Progress payments follow the work
After the down payment, California law says payments should not exceed the value of the work performed and materials delivered. A good contract ties payments to clear milestones: demolition complete, rough-in inspected, drywall complete, and so on. You should never be far ahead of the job.
What the contract should include
A written home improvement contract over $500 should spell out:
- The contractor’s name, address and license number.
- A description of the work and materials, specific enough to compare with what is built.
- The contract price and the payment schedule.
- Start and completion dates or a schedule.
- The required notices, including the three-day right to cancel when it applies, and information about mechanics liens.
Change orders
Remodels change. A hidden condition turns up, or you decide on a different tile. The right way to handle it is a written change order that describes the change, its price and its effect on the schedule, signed before the work is done. Verbal agreements in the middle of a project are where many disputes begin.
At LE Construction, we keep change orders rare by pricing conditions we can see into the original estimate. When something hidden appears, we stop, show you, and give you the price in writing before going further.
The three-day right to cancel
If you sign a home improvement contract somewhere other than the contractor’s place of business, you generally have three business days to cancel it in writing. The contract should include a notice explaining how.
Mechanics liens
Subcontractors and suppliers who are not paid can, under California law, record a lien against your property, even if you paid your contractor. Paying in line with completed work and asking for lien releases as payments are made reduces that risk.
How to use these rules
- Compare bids that describe the same scope in writing.
- Refuse large up-front payments.
- Tie payments to inspected milestones.
- Put every change in writing.
See how we run a project for how our contracts and payments work, and how to check a contractor’s license before you sign.
Frequently asked questions
What is the maximum down payment a California contractor can ask for?
For a home improvement contract, the down payment cannot exceed $1,000 or 10% of the contract price, whichever is less. A contractor asking for more up front is not following the law, and that is a reason to be cautious.
Can a contractor ask to be paid ahead of the work?
After the down payment, California law says progress payments should not exceed the value of work performed and materials delivered. A payment schedule tied to stages of completed work keeps you on the right side of that rule.
Does a change order have to be in writing?
California home improvement contracts are expected to handle changes in writing, describing the change and its effect on the price and schedule. Agreeing to changes verbally is a common source of disputes. Get every change written and signed before the work is done.
When do I have three days to cancel a contract?
When a home improvement contract is not negotiated at the contractor's place of business, for example at your kitchen table, you generally have three business days to cancel in writing. The contract should include a notice explaining how.