Deposit limits — California Business & Professions Code §7159.5 caps contractor deposits at 10% of the contract price or $1,000, whichever is less. Any contractor asking for more is violating state law.
License status — Only contractors with Active CSLB licenses can legally perform work in California. Expired, Suspended, and Revoked licenses carry the same legal consequences as being unlicensed.
Written contract — For any project over $500, California law requires a written contract before work begins. The contract must include start and completion dates, total price, and payment schedule (B&P §7159).
Completion dates — The contract must state start and estimated completion dates. Missing dates make it impossible to enforce timeline obligations or file a valid complaint.
Right to cancel — Home solicitation contracts must include a 3-day right to cancel notice per Civil Code §1689.6. If your contractor contacted you first — door-to-door, at a home show, or anywhere other than their office — this notice is required.
Payment structure — Demanding full payment before completion is a major risk indicator. Milestone-based payments tied to completed work protect homeowners from abandonment.
Bond and workers’ comp — California requires contractors to carry a surety bond and workers’ compensation insurance (or valid exemption). If either lapses, the contractor is operating illegally and you could be liable for injuries on your property.
Classification — ADU projects typically require a B (General Building) license. Specialty-only licenses may not cover the full scope of an ADU build including structural, plumbing, and electrical coordination.
Complaint history — Open CSLB complaints indicate unresolved disputes. Multiple open complaints are a strong warning sign of a pattern.
A shady contractor doesn’t always look shady. They show up with a professional truck, a firm handshake, and a bid that undercuts everyone else. The problems start after you hand over the deposit.
The most common signs of a bad contractor in California follow a pattern: they ask for too much money upfront, they resist putting anything in writing, and their CSLB license is expired, suspended, or doesn’t exist. These aren’t personality flaws — they’re violations of California law.
The Red Flag Checker above tests your contractor against the specific statutes that licensed California contractors are required to follow. It checks whether their deposit request exceeds the legal cap under B&P §7159.5, whether they provided the written contract required by B&P §7159, and whether their CSLB license is Active with valid bond and workers’ compensation coverage.
If a contractor fails any of these checks, that’s not a yellow flag or a “maybe.” That’s a contractor operating outside California law — and you should not sign until every issue is resolved. Use the tool above to check yours now.
ADU construction in California typically costs $150,000 to $400,000. At that price point, a bad contractor doesn’t just waste your money — they can leave you with an unpermitted structure, a construction lien on your property, or an abandoned project mid-build. These are the signs of a bad contractor that every homeowner should check before signing. Every major ADU scam we’ve documented — Anchored Tiny Homes, Multitaskr, Next Generation Builders, Nonna ADU — started with at least one of these red flags.
The contractors who passed our 7-point verification standard clear every check on this tool. If your contractor doesn’t pass, that doesn’t automatically mean they’re a scammer — but it means you should ask questions before signing anything. Browse verified builders in your area to find contractors who pass all seven checks. See our full removed contractors list for builders who failed verification.
Frequently Asked Questions
The fastest way is to check their CSLB license number — if it’s expired, suspended, or doesn’t exist, stop immediately. Beyond that, watch for deposits exceeding California’s legal limit (10% or $1,000, whichever is less), no written contract, and pressure to pay in full before work starts. The Red Flag Checker above runs all of these checks automatically against California law.
The most critical red flags are an expired or suspended CSLB license, a deposit request exceeding California’s legal limit (10% or $1,000, whichever is less), no written contract, and lapsed workers’ compensation coverage. Any one of these should stop a homeowner from proceeding until resolved.
Under B&P §7159.5, the maximum deposit is 10% of the total contract price or $1,000, whichever is less. A contractor asking for 30%, 50%, or full payment upfront is violating California law.
No. An expired license carries the same legal consequences as having no license at all under B&P §7028. The contractor cannot file mechanics’ liens, cannot sue to collect payment, and homeowners lose access to the CSLB complaint process and bond protection.
California law (B&P §7159) requires: start and estimated completion dates, total contract price, deposit amount, scope of work, payment schedule, and contractor license number. For projects initiated through home solicitation, a 3-day right to cancel notice is also required.
Search the CSLB public database at cslb.ca.gov or use the VerifiedADU License Lookup tool. Note that not all complaints are publicly visible — the CSLB restricts certain disclosures under B&P §7124.6.
Stop all payments immediately. A suspended contractor cannot legally continue work. Check the CSLB record for the suspension reason. If the suspension is due to a bond or workers’ comp lapse, you may have limited time to file a bond claim. Contact the CSLB for guidance.
Find Contractors Who Pass Every Check
Every builder in the VerifiedADU directory clears all 7 checks on this tool — active license, clean complaints, bond, workers’ comp, and proof of ADU work. Browse verified builders in your city.
VerifiedADU is an independent verification directory. We are not a law firm, and this tool does not constitute legal advice. California contractor law is cited for reference only. For legal questions about your specific contract, consult an attorney. Contractor data is sourced from public CSLB records.