Contractor deposit limits by state

California’s $1,000 rule is well known. It is not national.

Ask how much deposit a contractor can take and you will hear three answers: 10 percent, one-third, and “50 percent is a red flag but legal.” All three can be true of the same kitchen. It depends on the state the kitchen is in.

The statute says it plainly. California Business and Professions Code §7159.5(a)(3), retrieved September 5, 2026 from the Legislature’s code site, reads: “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.”

The Contractors State License Board restates the rule in Industry Bulletin 22-14 (November 22, 2022) and in its April 2026 licensee newsletter. It applies the rule to home improvement, residential solar, accessory dwelling units and rebuilding in declared disaster areas.

Breaking paragraph (1), (3) or (5) of subdivision (a) is a misdemeanor: a fine of $100 to $5,000, up to a year in county jail, or both. In a declared disaster the court must impose the maximum fine.

Here is how strict that is. Ten percent of a $40,000 kitchen is $4,000. California takes the lesser of $4,000 and $1,000, so the cap is $1,000.

A contractor who asks for “the standard 10 percent” on that job in Los Angeles is asking for four times the legal limit. The same ask in Dallas is a negotiation, not a crime.

Our store shows the split. Its 4,820 California CSLB records, measured September 5, 2026, sit under that rule. Its 955 Texas records sit under no statewide deposit ceiling, and they are city registrations, not a state license. That is why we will not publish a national “typical deposit.”

Worked example: $8,000 down on a $40,000 kitchen

The worked example is our calculation from each statute, not a quote. Hold one job constant: a $40,000 kitchen in an existing, owner-occupied house, with no pool, no declared disaster, no cost-plus contract and no performance bond. Then ask whether $8,000 at signing is lawful. That is 20 percent of the price.

California: unlawful. Ten percent of $40,000 is $4,000, the statute takes the lesser of that and $1,000, so the limit is $1,000. $8,000 is eight times it.

CSLB Bulletin 22-14 gives the same example: on any project of $10,000 or more, the most allowed is $1,000. Later payments can only follow work done or materials delivered.

Nevada: unlawful on an owner-occupied, completed single-family home, by the same math, unless the contractor has filed the $100,000 consumer-protection bond NRS 624.970 allows. The Board’s September 19, 2025, consumer alert restates the limit and warns that large upfront materials payments by Zelle fit a scam pattern.

Ohio: unlawful where Chapter 4722 applies, and a $40,000 contract is over the $25,000 line. Ten percent is $4,000, so $8,000 is double the cap. The exceptions: $8,000 is no more than 75 percent of a listed non-returnable special-order item, the contract is cost-plus, or the money is a construction-loan draw.

A $20,000 bath in the same Ohio house falls under the $25,000 line, so the 10% cap would not apply to it.

Maryland: lawful. One-third of $40,000 is $13,333.33, and $8,000 is under it. No money may change hands before the written contract is signed (Bus. Reg. §8-617(a)).

Pennsylvania: lawful on a HICPA contract over $5,000. One-third is $13,333.33. Add $6,000 of custom cabinets that meet the statute’s special-order definition and the cap becomes $13,333.33 + $6,000 = $19,333.33, as long as the cabinets are listed separately in the contract (73 P.S. §517.7(a)(9) and §517.9(10)).

Massachusetts: lawful on the same one-third math. The cap is the greater of one-third or the actual cost of special-order items that must be ordered in advance. Unlike Maryland, Massachusetts also bars demanding final payment before the work is completed to both parties’ satisfaction.

Maine: lawful, with two catches. A written contract is required above $3,000, and the one-third limit can be waived in writing once the contractor has explained the right. The Maine Attorney General states that condition on its home-construction page; the exemption is 10 M.R.S. §1489.

No statewide percentage ceiling: Texas, Florida, Arizona (ordinary remodel), Illinois, Washington, Utah, North Carolina, New York, New Jersey, Connecticut, Wisconsin and Hawaii. There, $8,000 down is not by itself a statutory violation. It can still be a poor deal, evidence in a later fraud case, or a breach of an escrow or construction-account duty.

Largest lawful first payment on a $40,000 kitchen in the seven states with a verified cap.

Our calculation from the statutes in the cap table, retrieved September 5, 2026, assuming no performance bond, cost-plus contract, special-order add-on or storm-repair rule.

The no-cap states are left off: plotting them at $40,000 would suggest a ceiling their statutes do not set.

Progress payments are where the rest of the money moves

A deposit cap, where one exists, governs the first check. The rest of a remodel is paid after that, and the statutes that regulate later payments do it by the value of work done, not by a second percentage.

California, BPC §7159.5(a)(5): apart from the down payment, the contractor may not request or accept more than the value of work performed or material delivered, including from a lender. The contract needs a dollars-and-cents schedule naming what each payment covers. CSLB’s 2022 bulletin puts the boldface warning in the contract itself.

Nevada, NRS 624.970 and 624.875: the same structure. Each progress payment is a stated sum, and the contractor may not receive more than 100 percent of the value of work performed, excluding finance charges and the down payment. A payment-and-performance bond covering completion is the exception.

New York: the Attorney General’s fact sheet restates GBL Article 36-A. The schedule must bear a “reasonable relationship” to work done, materials bought or other project costs. That is a relationship test, not a cap.

So a New York contractor can take a large deposit, but must hold it in a New York bank until the schedule, substantial completion, or a customer breach (to cover reasonable costs) lets them draw on it.

Final payment rules: Massachusetts c.142A §2 bars demanding final payment before the work is completed to both parties’ satisfaction.

New Jersey bars asking you to sign a completion certificate or pay in full before the work matches the contract. Wisconsin ATCP 110.02 says the same.

Florida §489.126(3) bars an overpaid contractor from stopping work for any 90-day period.

In a no-cap state, the payment schedule is the protection you actually have. A Texas contract reading “50% at signing, 40% at rough-in, 10% at completion” is lawful as a deposit matter. It still pays 90 percent of the job before a final inspection.

The fix is to rewrite the schedule around permits and inspections: demolition, rough mechanical, insulation and drywall, trim, final. Hold back a retainage until the building department’s final.

Utah Code 13-8-5 caps retainage at 5% of each payment and of the total price. That limits what an owner may hold back, the opposite of a deposit cap, and it is the only Utah payment-timing number we found.

What happens if a contractor takes more than the law allows

An over-cap deposit can be a licensing violation, a misdemeanor, an unfair-trade-practice count, a contract you are not bound by, or evidence for small claims, depending on the state. It does not mean a board sends you a refund.

California. $8,000 down on a $40,000 kitchen is grounds for CSLB discipline, and breaking §7159.5(a)(3) is a misdemeanor. File a complaint with CSLB. That creates the public record and the license case. It is not a refund route.

Getting money back still takes a civil claim or small claims, and later, if the contractor is licensed and other conditions are met, a Recovery Account claim. We did not retrieve the current Recovery Account limits, so we do not quote them. In a declared disaster the criminal fine is the statutory maximum.

Nevada. The same $8,000 on an owner-occupied home breaks NRS 624.970 unless the $100,000 consumer-protection bond is on file. NSCB takes the complaint; its 2025 alert describes exactly this pattern of a large materials payment followed by silence. The Residential Recovery Fund is a separate path for licensed contractors.

Maryland, Pennsylvania, Massachusetts, Maine, Ohio. An over-cap deposit is a prohibited act in Pennsylvania, grounds for an MHIC penalty of up to $5,000 per violation in Maryland, a c.142A and c.93A issue in Massachusetts, a Chapter 219-A issue in Maine, and an unfair or deceptive act with a private right to sue in Ohio.

In those five states the attorney general or licensing program is where the public record starts, and small claims or a lawyer is how you collect. Pennsylvania’s AG pleaded “more than one-third” in a 2025 lawsuit.

New York. There is no cap to break. The violation would be failing to escrow or bond the money within five and ten business days, or drawing it early.

Fines run $250 to $2,500, the AG can seek restitution, and you can add $500 plus fees for fraudulent writings. Ask in writing for the bank and account number.

Florida. No cap to break. The violation is missing the 30-day permit or 90-day start deadline after a first payment above 10 percent, or taking more than the work is worth and then vanishing for 90 days.

Misapplying construction funds (§713.345) is a felony scaled to the amount, and a chapter 489 licensee convicted of it faces a mandatory one-year license suspension under §489.129(1)(r). The Homeowners’ Construction Recovery Fund pays after a judgment against a licensed contractor, with conditions.

Texas. No cap to break. The AG says not to pay in full, to tie partial payments to finished work, and, on homestead jobs over $5,000, to get written verification of the construction account.

An AG complaint is a public record, but the AG cannot represent you. A DTPA claim, with treble damages for knowing deception, needs a private lawyer.

TDLR is the right agency only if the person did electrical, air-conditioning or mold work. It is the wrong one for a general remodeler, because Texas does not license that job. See states without contractor licensing.

Our suggested order, not a legal rule: stop further payments. Check whether a cap, escrow duty or construction-account duty applies in your state.

File with the board or attorney general so there is a record. Then small claims or a lawyer, depending on the amount.

Recovery funds come last: they want a judgment, a licensed contractor and a wait.

Cities and counties can add their own rules

New York State has no percentage cap. New York City and Nassau, Suffolk, Westchester, Putnam and Rockland counties license home-improvement contractors locally.

The Attorney General’s fact sheet says so, then points to Article 36-A and Lien Law §71-a(4) for the statewide escrow rule underneath.

A Brooklyn kitchen and an upstate kitchen share the escrow duty but not the licensing office.

Texas has no state general-contractor license and no state deposit cap. San Antonio and El Paso still register contractors before issuing permits, with insurance minimums set by each city. Those registrations (955 in our store, all from those two cities) do not add a deposit ceiling that we found.

A Houston kitchen and a San Antonio kitchen face different permit rules and the same deposit law, which is none. What protects you there is the written contract, the construction account on homestead work over $5,000, the DTPA, and not paying in full.

A “no cap” row is where the local question starts, not where it ends. We did not retrieve any city deposit ordinance for this study and will not invent one. Ask the building department that will issue your permit, in writing, before the first payment.

Which rules the contractors in our seven-state store work under

The HyreRemodel contractor store, measured September 5, 2026, holds 23,756 companies and 22,183 license records across seven states, and anything drawn from it is titled to those states. Deposit limits come from statutes, not from our records; the store only shows which rule each group of records falls under.

California (4,820 CSLB records) and Nevada (3,494 NSCB records) fall under the $1,000-or-10% cap. Arizona (4,932 ROC records) has no general remodel cap, only the pool and storm rules. Florida (7,130 DBPR / CILB records) has no cap but the 10% start-work clock.

Texas (955 city records) has no cap and no state general-contractor license. Utah (703 DOPL records) has only the 5% retainage limit. North Carolina (149 NCLBGC records) has no cap, and a remodel under $40,000 does not need that license at all.

A small North Carolina count fits a high licensing threshold. It says nothing about whether North Carolina contractors take deposits. We will not compute a “typical deposit” from license records: they show who is licensed, and the statute shows what they may take.

License records in the HyreRemodel store by issuing authority, measured September 5, 2026, labeled with the deposit rule we verified. The bars show our research coverage, not market size and not a typical deposit.

Disciplinary records are filled in only for Utah in this snapshot. An empty discipline field elsewhere means we have not retrieved it, not that the record is clean, and it says nothing about deposits.

The states we have not verified

Round-ups add up to thirty more states to a “no cap” list: Alaska, Alabama, Arkansas, Colorado, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Mexico, North Dakota, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Vermont, Virginia, West Virginia and Wyoming.

Some move Tennessee, South Dakota or Rhode Island into a one-third column instead. The round-ups disagree with each other, and we did not retrieve a primary source that places any of those states in either table.

What we tried: Alaska’s contractor statutes (AS 08.18) on the licensing and bonding side, which did not state a deposit ceiling in the pages we opened. Oregon’s ORS 701, Virginia’s Board for Contractors consumer pages and Michigan’s residential-builders statute were not retrieved.

Tennessee and South Dakota appear as one-third states in some secondary tables; we will not copy that without the statute. Hawaii’s §444-25 (Payment for goods and services) was blocked to our retrieval, so we recorded only §444-25.5, a disclosure and written-contract section.

Nineteen verified rows and a named gap are more useful than fifty rows where the last thirty were copied from each other. We add states as each one is retrieved and dated. Until then, unverified does not mean uncapped.

How we built the tables

The question: which states set a numerical ceiling on a contractor’s first payment for residential remodeling or home improvement? For each, we recorded the ceiling, the rule on later payments and the penalty. For states with no ceiling, we recorded the substitute (escrow, construction account, start-work clock, written-contract statute, recovery fund).

For each state we found the statute that would cap a home-improvement deposit if any did. We retrieved it from the legislature’s official site, or from the board or attorney general restating it, and recorded the text with the date.

A state counts as capped only where that text sets a dollar figure, a percentage or both. It counts as no-cap only where we retrieved the relevant statute, or the regulator’s page on payment rules, and found no ceiling. We do not infer a cap from a blog, or its absence from a failed search.

The worked examples hold one job constant ($40,000 kitchen, $8,000 deposit, no pool, no disaster, no cost-plus, no performance bond) and apply each rule. They are our calculations from the statutes, not measured job costs or quotes.

Every requirement falls into one of three categories: verified present, verified absent, or not verified. An unchecked cell never shows as “no.” Arizona’s pool and storm caps are recorded as exceptions, and Connecticut’s and New Jersey’s one-third figures as agency advice, because the statutes we retrieved do not contain them.

Store counts come from the HyreRemodel contractor store, measured September 5, 2026 from files on disk. Texas records are stored against city authorities and labeled that way. Discipline fields are filled in only for Utah. Store counts are never used to compute a typical deposit.

Nothing here comes from a contractor-directory round-up. Those tables disagreed on New Jersey, Connecticut, New York, Arizona, Florida, Texas, Ohio’s threshold, Pennsylvania’s $1,000-or-$5,000 trigger, and whether Nevada’s cap survives a $100,000 bond. That disagreement is why we leave a gap rather than fill it.