What is the maximum deposit for a construction contract?

Asked over 4 years ago - Fresno, CA

Residential or commercial construction contract what is the maximum deposit allowed by law?

Attorney answers (3)

  1. David William Ginn

    Contributor Level 13


    Lawyer agrees

    Answered . Neither of the prior responses are entirely correct. The maximum deposit of $1,000 or 10 percent of the contract amount applies only to Home Improvement Contracts. See Business and Professions Code section 7159.5. A Home Improvement Contract is generally one associated with remodeling or repair, but this is not always the case. Contracts for the installation of new Swimming pools, for example, are considered Home Improvement Contracts. The definition of Home Improvement and Home Improvement Contract are at Business and Professions Code section 7151 and 7151.2.

  2. Pamela Koslyn

    Contributor Level 20

    Answered . A contractor's down payment can't be more than 10% of the contract price or $1,000, whichever is less. Please see the CSLB site linked below.

    Disclaimer: Please note that this answer does not constitute legal advice, and should not be relied on, since each state has different laws, each situation is fact specific, and it is impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue. This answer does not create an attorney-client relationship.

  3. Joseph Clark Melino

    Contributor Level 14

    Answered . There is no dollar limit when dealing with commercial property. The prior response only deals with residential. In a commercial project. The amount to be pre-paid on a commercial construction contract usually deals with the cost of obtaining necessary [and scarce] materials and the cost of mobilizing for the project and is set at whatever the parties to the contract negotiate.

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