how is the percentage charge for starting a contract

1 week ago

I wanted to know how is the percentage charge for starting a contract job? is it 10% by law? MY contractor asked me pay $20,000 for starting a contract total amount $74,300. That is 26.5%. Is it right?

Senior Legal Associate Levelset

Whether there’s a cap on what kind of downpayment can be charged will generally depend on the project type. By and large, California doesn’t actually limit what kind of downpayment a contractor can charge for their services. However, for California Home Improvement Contracts, down payments are limited to the lesser of (1) $1,000; and (2) 10% of the contract price.

So, for a home improvement contract, a contractor asking for a down payment exceeding $1,000 should be a red flag – and it might be a good indicator that the contractor’s licensing info should be double checked. But, for non-home improvement contracts, down payments are generally negotiable – and they may fall anywhere between 10-30% of the contract price, depending on the job at hand.

When considering whether a down payment is fair, though,it’s likely a good idea to try and suss out what the downpayment will cover. If there are high mobilization and permitting costs on the job – a higher downpayment might make sense. But, where there’s little startup cost, or where a contractor can’t explain what the downpayment will go towards, there might be more cause for caution. And, as always – it’s best to get the construction contract, including the terms of the downpayment, in writing.

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