The deposit cap and progress payments: $1,000 or 10%, never ahead of the work
In one paragraph
On a home improvement contract the down payment may not exceed $1,000 or 10% of the price, whichever is less, and no other payment may run ahead of the work performed or materials delivered. That second rule is the one most electrical contractors break without knowing it: a 'materials deposit' for a panel that has not been delivered, or a 50% draw on a job that is 30% done, is a citation. The fix is a schedule of progress payments written from the job's real phases, and the discipline to invoice behind the work, never in front of it.
The rule
If a down payment is charged it may not exceed $1,000 or 10 percent of the contract amount, whichever is less (B&P 7159.5(a)(3)). Except for that down payment, the contractor may neither request nor accept payment that exceeds the value of the work performed or material delivered, and the prohibition extends to advance payment from any lender (7159.5(a)(5)). Payments before completion require a schedule of progress payments in dollars and cents referencing the work and materials each one covers (7159.5(a)(4)). Each violation is cause for discipline (7159.5(a)).
Why it matters
The deposit cap is the rule CSLB cites most often against residential contractors, because it is easy to prove: the contract says one number, the receipt says another. A contractor who takes a $3,000 'materials deposit' on a $9,000 job has violated two paragraphs of 7159.5 before buying the first breaker, and the customer's complaint writes itself.