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ADU payment schedule: deposit and progress payments

By the HyreADU research desk. Last checked .

The short answer

An ADU payment schedule should start with a small down payment and tie every later payment to finished, inspected work.

In California, the down payment on a home improvement contract may not exceed $1,000 or 10 percent of the price, whichever is less, and a contractor may not take payment ahead of the work done or materials delivered (Bus. & Prof. Code § 7159.5).

A structure to ask for

  1. Down payment within the legal cap.
  2. Foundation poured and inspected.
  3. Framing complete and inspected.
  4. Rough plumbing, electrical and mechanical inspected.
  5. Insulation and drywall complete.
  6. Finishes and fixtures installed.
  7. Final inspection passed and permit closed.

The percentage at each stage is for you and the builder to agree. California requires each progress payment to be stated in dollars and cents and tied to the work it covers (§ 7159).

Protect each payment

  • Pay only after the stage is finished and, where there is one, inspected.
  • Ask for conditional lien releases from the builder and major suppliers with each payment. In California, preliminary notices tell you who may claim a lien (Civ. Code § 8200).
  • Keep the final payment until the final inspection is signed.
  • Pay by traceable means, not cash.

Prefab and factory deposits

Factory-built units often involve a separate purchase agreement with the manufacturer. Ask which contract the down payment cap applies to, and how factory payments are protected. See prefab vs stick-built.

What to do next: read the questions to ask an ADU builder, check what decides ADU cost, then tell us about your project. Matching is not live yet, so we reply with information, not a quote.

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Questions

What is the maximum deposit for an ADU in California?

$1,000 or 10 percent of the contract price, whichever is less, under Bus. & Prof. Code § 7159.5.

Should I pay for materials up front?

California bars payment ahead of work done or materials delivered.

What is a lien release?

A document in which a contractor or supplier gives up lien rights for amounts paid.

How much should I hold back at the end?

Agree it in the contract; tie it to the final inspection.

Sources

HyreADU is a publisher. It does not design, permit or build ADUs, has no partner builders, and gives no legal, tax or engineering advice. Rules vary by state and city; California rules are labeled as such.