How much deposit can a basement finishing contractor ask for in California?

California law caps basement finishing deposits at 10% or $1,000 (whichever is LESS) of the contract. On a typical $56,420 basement finishing, the maximum legal deposit is $1,000. The statute is CA Business & Professions Code §7159.5(a)(3). Any contractor demanding more is in violation of state law — refuse and report to the state contractor licensing board.

Industry standard for basement finishing: 10%. Long job (8–16 weeks). Industry standard: 10% deposit + progress draws — basement projects are the most common venue for contractor abandonment. Most legitimate California contractors will follow this norm regardless of whether the state has a statutory cap.

Yes — anything above 10% is illegal in California under CA Business & Professions Code §7159.5(a)(3). File a complaint with the state contractor licensing board, share the written request, and consider it a permanent red flag against that contractor. Reputable contractors know the law.

Best practice in California: 2% deposit at contract signing → milestone-based progress payments tied to inspectable phases (rough-in, mid-build, substantial completion) → 5–10% retention held until punchlist + final inspection sign-off. Never pay materials in full upfront; if your contractor goes under, the materials supplier owns those goods, not you. Pay via check or credit card — never wire transfer to a personal account.