# Limited Deposits



## TNTRenovate (Aug 19, 2010)

This subject came up on one of the contractor Facebook groups I belong to.

If contractors can only collect 10% up to $1000 for a deposit, how do the big box stores handle that? For instance, If I had a client purchase cabinets from me, according to that law, I could only collect $1000. But if they walked into Home Depot and ordered cabinets, they would pay in full. How does that work?

Also, do the home owners pay the big box for the installation all up front?


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## griz (Nov 26, 2009)

California law.

Dont know how big box gets around it.


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## 91782 (Sep 6, 2012)

TNTSERVICES said:


> This subject came up on one of the contractor Facebook groups I belong to.
> 
> If contractors can only collect 10% up to $1000 for a deposit, how do the big box stores handle that? For instance, If I had a client purchase cabinets from me, according to that law, I could only collect $1000. But if they walked into Home Depot and ordered cabinets, they would pay in full. How does that work?
> 
> Also, do the home owners pay the big box for the installation all up front?


Interesting.

I've used HD only sparingly. they installed carpet in a rental condo. We paid for it all at once, up front. Was there two invoices?

I think it was just one invoice.


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## NJ Contractor (Nov 12, 2016)

I am not aware of any such law in NJ and often require a 30% deposit.


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## Jaws (Dec 20, 2010)

Wtf? So a 750k+ custom home my deposit is 1k???


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## rrk (Apr 22, 2012)

Big box stores everything is paid in full before order gets sent in, same with special orders at lumberyard. I think the way they get around it is classifying it as a item sale not a labor sale.

More than likely though they just say "sue us we have more lawyers than you do" although that did not work with the wood size identification with Lowes


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## Jaws (Dec 20, 2010)

Big boxes here provide "labor" too

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## KAP (Feb 19, 2011)

I think there is a difference between contracting and retail...


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## TNTRenovate (Aug 19, 2010)

KAP said:


> I think there is a difference between contracting and retail...


They contract the installer to install the cabinets. They are acting GC. I don't see how it could be different in that respect. Maybe it's because of their size?


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## Windycity (Oct 3, 2015)

Probably because you are purchasing a product (cabinets) through a retailer as opposed to hiring a contractor. 

Im assuming the law is written that way since so many scumbags try to get half down then cash the check and "go out of business" screwing the customers. 


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## Framer53 (Feb 23, 2008)

If I remember correctly in California, the box stores have to post a large cash bond that allows them to collect it all in advance.


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## Jaws (Dec 20, 2010)

Well id probably tell California to kiss both sides of my ass....id be getting another check right after that grand. 

So if Rob is doing a custom kitchen and subs cabinets to Leo he has to front that 50% upfront??

Side note: this must be a remodel rule? One of the builders in the hba from Cali said he was not aware of it for new construction


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## TNTRenovate (Aug 19, 2010)

Jaws said:


> Well id probably tell California to kiss both sides of my ass....id be getting another check right after that grand.
> 
> So if Rob is doing a custom kitchen and subs cabinets to Leo he has to front that 50% upfront??
> 
> Side note: this must be a remodel rule? One of the builders in the hba from Cali said he was not aware of it for new construction


It's for home improvement and repairs.


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## Jaws (Dec 20, 2010)

KAP said:


> I think there is a difference between contracting and retail...


How.? Whether they buy cabinets from home depot and they order them to be made or they buy from a business who makes them? Install aside


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## Jaws (Dec 20, 2010)

TNTSERVICES said:


> It's for home improvement and repairs.


So what is a home improvement? A 60k deck or kitchen count? If so there is away to get paid upfront I'm sure

Someone somewhere figured a way around this. If there is a law there are lawyers who can use it to your advantage. Lol

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## rrk (Apr 22, 2012)

Jaws said:


> Big boxes here provide "labor" too
> 
> Sent from my SM-N920V using Tapatalk


I know but they can list the labor as $0 or $1 and list the rest as a item sale.


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## Jaws (Dec 20, 2010)

rrk said:


> I know but they can list the labor as $0 or $1 and list the rest as a item sale.


So they lie lol 

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## KAP (Feb 19, 2011)

Jaws said:


> How.? Whether they buy cabinets from home depot and they order them to be made or they buy from a business who makes them? Install aside


It's California, but I'm pretty sure the retail difference is there is a SKU involved (they can't keep everything in stock)... can a custom cabinet maker have a SKU? I guess, don't know of any, as that seem at odds with actual custom. Semi-custom, maybe, as it can be an up-charge from the original base SKU... 

My understanding is the 10% / $1000 has to do with the down payment... doesn't have anything to do with the progress payments or how many are involved... here's their rule...

http://www.cslb.ca.gov/Media_Room/Press_Releases/2012/August_15.aspx​
Nothing stopping you from getting the initial 10% / $1000 upfront, then progress payments (i.e. - design fees, materials, labor for fabrication, install, etc.)...

Although we do progress payments whether or not someone is just buying cabs or we're doing a remodel, if I lived in California, you work within the system and structure it to minimize your risk...


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## greg24k (May 19, 2007)

The same way your payment schedule should work. If I'm doing a kitchen remodeling lets say 20k total job I get downpayment 10% (2k) at signing a contract + 6k the cost of cabinetry. I get the second payment when cabinetry arrives 10k and I get the 3d payment of 2k which is the balance when the job is completed.


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## superseal (Feb 4, 2009)

Here's the law in PA...

(10) (i) Except as provided under subparagraph (ii), for a home improvement contract in
which the total price is more than $5,000, receive a deposit in excess of:
(A) one-third of the home improvement contract price; or
(B) one-third of the home improvement contract price plus the cost of
special order materials that will be ordered, as designated in the written contract.
(ii) The provisions of subparagraph (i) shall not apply to a home improvement
retailer, regardless of net worth, who does all of the following:
(A) Posts an irrevocable letter of credit payable to the bureau for the use
and benefit of every person protected by the provisions of this subparagraph in a
form approved by the bureau, in the amount of $100,000 per store location but
not to exceed $2,000,000 for a home improvement retailer that has multiple
stores.
(B) Ensures that its contractors are registered under this act and have
proof of liability insurance as defined in section 4(a)(1)(ix) 9
.
(iii) In the event of a dispute with a home improvement retailer or a contractor
authorized to do work on behalf of the home improvement retailer, an owner may file with the
bureau a complaint against the home improvement retailer and request a draw upon the home
improvement retailer's letter of credit. The following shall apply:
9 73 P.S. § 517.4.
Home Improvement Consumer
Protection Act Page 13 Amended 7.07.11 & 10.22.14

(A) Upon receipt of a complaint, the bureau shall notify the home
improvement retailer and investigate the complaint.
(B) Upon a determination by the bureau that the home improvement
retailer is in default of the contract, the bureau may, after providing notice to the
home improvement retailer, draw upon the irrevocable letter of credit to satisfy a
consumer's complaint as part of its mediation process or a civil action brought
under the act of December 17, 1968 (P.L.1224, No.387) 10, known as the Unfair
Trade Practices and Consumer Protection Law.
(C) A home improvement retailer with two draws on an irrevocable letter
of credit within a two-year period issued for the purposes of this subparagraph
shall be prohibited from posting an irrevocable letter of credit for purposes of this
subparagraph for a period of five years beginning from the date of the second
draw and shall be required to comply with subparagraph (i).
(11) While acting as a salesperson, fail to account for or remit to the contractor whom
the salesperson represents a payment received in connection with a home improvement.
(12) Subsequent to entering into an agreement for home improvement services or
materials, changes the name of the contractor's business, liability insurance information, the
contractor's business address or any other identifying information in a fraudulent or deceptive
manner likely to cause confusion or misunderstanding without advising the owner in writing
within ten days following any such change.


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## Leo G (May 12, 2005)

As with any contract.


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## cvtsf (Nov 5, 2016)

Californiadecks said:


> True but what you charge for such completed work is entirely up to the contract.
> 
> _________________


Not entirely, it has to be "reasonable". The amount needs to reflect the amount of work done plus materials and a "reasonable" amount for profit and mark-up. If it's too much then it's front loading the payments. 

The theory (as my attorney explained it), if you quit or cannot finish a job then the homeowner can have the work completed for close to the same amount. Which, when you think about it from a consumer protection standpoint makes sense.


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## Leo G (May 12, 2005)

I find it unfair. It give the HO complete control and the contractor all the risk.

It's the HOs project, not the contractors. Why is it the contractor must be the financier of the HOs project?


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## Calidecks (Nov 19, 2011)

cvtsf said:


> Not entirely, it has to be "reasonable". The amount needs to reflect the amount of work done plus materials and a "reasonable" amount for profit and mark-up. If it's too much then it's front loading the payments.
> 
> The theory (as my attorney explained it), if you quit or cannot finish a job then the homeowner can have the work completed for close to the same amount. Which, when you think about it from a consumer protection standpoint makes sense.


Nope, I can charge what I want without meeting any reasonable condition set by the state. You will need to show me the link and /or what "reasonable" is, set by a statute. Otherwise it's isn't a law. 

_________________


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## Calidecks (Nov 19, 2011)

Here's from the board. If they agree to your price regardless of what someone else can do it for, and they sign a contract reflecting their agreement they are on the hook. Period. 



> Consumers also should be aware that their contractor cannot “front load” the contract by asking for project funds in advance. That means a person should never pay for work before it is completed, or for materials before they are delivered to the property. Make sure the written contract contains a progress payment schedule that outlines project phases, with all costs and estimated completion dates.


You need to get a new lawyer. 

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## Calidecks (Nov 19, 2011)

Here's the whole reading from CSLB.



> SACRAMENTO*—The*Contractors State License Board*(CSLB) is alerting California consumers who are considering hiring a*painter,*landscaper*– or any other type of construction contractor – that it is illegal to ask for or accept a down payment of more than 10 percent of the total home improvement contract price or $1,000, whichever is less.
> 
> Many consumer victims who file complaints with CSLB tell investigators they were unaware that there is a legal limit for down payments. Many unlicensed operators also are not familiar with this aspect of California contracting law, which should serve as a red flag for homeowners. If someone asks for a large amount of money up front, the person might not have a license or the necessary project skills. Many times, unlicensed operators take a homeowner’s down payment and never start the project.
> 
> ...




_________________


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## Calidecks (Nov 19, 2011)

Leo G said:


> I find it unfair. It give the HO complete control and the contractor all the risk.
> 
> It's the HOs project, not the contractors. Why is it the contractor must be the financier of the HOs project?


 That's not exactly true either. When I go to my supply house, I open an account in the properties name. Therefore all supplies are subject to liens. 

The first thing I do is go into credit and give them the job address and HO name. They look it up to see if they match. I always pay before 20 days to prevent my customers from being prelimed. Now if I have doubts about the customer or they are making me a little nervous, I'll let then get prelimed. That has happened once in 15 years. I've always been payed without incident. 

_________________


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## Calidecks (Nov 19, 2011)

Notice it doesn't say frontloading the job. It clearly says you can't frontload the contract. So what it's saying is you must abide by the agreement terms (progress payment schedule) of the contract. 

_________________


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## Calidecks (Nov 19, 2011)

My California licensing law books.









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## Leo G (May 12, 2005)

Californiadecks said:


> That's not exactly true either. When I go to my supply house, I open an account in the properties name. Therefore all supplies are subject to liens.
> 
> The first thing I do is go into credit and give them the job address and HO name. They look it up to see if they match. I always pay before 20 days to prevent my customers from being prelimed. Now if I have doubts about the customer or they are making me a little nervous, I'll let then get prelimed. That has happened once in 15 years. I've always been payed without incident.


If they don't move or finance something a lien is worthless.


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## Calidecks (Nov 19, 2011)

Leo G said:


> If they don't move or finance something a lien is worthless.


It says in our lien laws they can be forced to sell. 

_________________


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## Leo G (May 12, 2005)

Good luck with that.


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## TNTRenovate (Aug 19, 2010)

cvtsf said:


> Not entirely, it has to be "reasonable". The amount needs to reflect the amount of work done plus materials and a "reasonable" amount for profit and mark-up. If it's too much then it's front loading the payments.
> 
> The theory (as my attorney explained it), if you quit or cannot finish a job then the homeowner can have the work completed for close to the same amount. Which, when you think about it from a consumer protection standpoint makes sense.


I will rebut with one thing...

Here's your sign!

We don't need the gov't mandating protection. It's pretty easy, a fool and their money are soon parted. If you agree to front load and pay a contractor for work before it's started then you are agreeing to take that risk.

I have only had one client in 9 years wince at "front loading". So I didn't require it. She was serious, signed the contract and I collected my 50% on the day we started. We had a pleasant experience with the project and it came out pretty darn nice (if I don't say so myself).


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