u/davidVerifiedADU

I keep seeing this come up, so let me lay out the actual rule, because half the confusion is people remembering it wrong.

1. The down payment cap is 1,000 or 10 percent of the contract, whichever is less. That whichever is less part is the whole ballgame. It is not 10 percent flat.

2. Run the math on a real ADU. Say the build is 200k. Ten percent would be 20k, but 1,000 is the smaller number, so 1,000 is the legal max. On basically any ADU the answer comes out to 1,000 flat, because 10 percent of a six figure job is always way more than a grand. The lesser number wins every time.

3. So when a contractor asks for 10 percent of a 200k job, that is 20k, and that is 19k over the legal limit. Not a gray area. That is California Business and Professions Code 7159.5.

4. The cap is only the down payment, meaning the money before any work starts. Once work begins, the builder can bill for completed and inspected milestones, and those payments can be large and totally legal. Nobody is saying a contractor only ever gets 1,000. They are saying no more than 1,000 before a single bit of work happens.

5. Basically Small money to start, then payments that track the actual work.

If a contractor wants to argue it, the code section is right there. 7159.5.

After tons of research, this is the best way to fight this situation. short version.

**1.	T**erminate in writing first. mail and email both. then save everything, contract, invoices, texts, photos, bank records. every step after this lives or dies on your paper trail.  
**2. F**ile a CSLB complaint, but know what it does. it goes after the license, it cannot make them pay you back. good for the record, useless for your wallet.  

3. claim their bond. every licensed contractor carries a 25k bond. you file straight with the surety company, not CSLB, not a court. deadlines are tight, usually 2 years from the violation or 1 year from when the job died.
4. small claims for anything up to 12,500, regular civil court above that. you dont need a lawyer for small claims.
5. if it smells like fraud, huge money upfront, or work that never even started, or its the same operator behind a bunch of abandoned jobs, report it to the state AG and your county DA. thats the criminal side.

that 25k bond is the same whether the company is one guy or has 400 victims. it gets split. folks who lost six figures get back pennies. recovery after the fact is almost always partial, which is the whole reason checking the license and the people behind the company before you pay matters so much.

hope this saves somebody the scramble i went through. Good luck !

Some know, but most have no idea!

California LAW says $1,000 or 10% of the contract total, whichever is less. That’s the max a contractor can legally ask for before any work starts.

Not $50,000 for appliances. Not $20,000 for materials. $1,000 or 10%.

The ones I see hurt the most by this are seniors. Fixed income, trusting, not always familiar with contractor law. They hear a big number and assume that’s just how it works. It is not how it works. They get easily pressed and taken advantage of all the time. (A few years ago, my mom called me swing by to go over her contract and … luckily I went by). That’s when I did a lot of digging and learned this is a very common thing.

Education and awareness, is how we protect one another … especially our elders.

(ADU) California's $25,000 contractor bond sounds like protection. It is not.

That $25,000 is not per homeowner. Not per project. It is the total amount SPLIT between every single person who files a claim against that contractor.

Anchored Tiny Homes. Over 450 victims. One $25,000 bond split between them comes out to about $55 each. People lost tens of thousands.

Multitaskr took $15 million from over 100 homeowners. Split evenly, that bond is about $250 a person. People lost six figures each.

Nonna ADU in Rancho Cordova. One family paid $83,706 over nine months. Zero work done. Same $25,000 pool.

And here is the part most people miss. California actually RAISED this bond to $25,000 in 2023. It was $15,000 before that. So this is the highest it has ever been, and it still does not come close. The average ADU runs well over $100,000, and these companies sign hundreds of contracts at once.

Bonded and insured is on every contractor website in California. Now you know what it actually means.

I've been tracking and documenting the worst ADU scams for a while now, and a lot of the bad ones are right here in our backyard.

TOP 4 so far, as i continue my investigations :

1. Anchored Tiny Homes. Sacramento based. Over 450 families. They took deposits, never finished the work, then filed bankruptcy. The bond paid out a few hundred bucks per person while people lost tens of thousands each.
2. Nonna ADU. Out of Rancho Cordova. License suspended, complaints piling up, families paid tens of thousands and got nothing back. (I almost went with these guys for my parents ADU build too. Glad I checked the license first.)
3. Multitaskr down in San Diego. Around 15 million dollars from over 100 homeowners. Some even had loans taken out in their name they never signed.
4. Dezign in LA. The state has a pending accusation against them for diverted funds. And one of the people behind it already opened a brand new company under a different name. (This case is actually ongoing and the craziest one still developing...)

Same story every time. The license gets pulled, the company disappears, and the people behind it just move on like nothing happened and our neighbors lose THOUSANDS! That 25k bond protection...is NOTHING! It's split between hundreds of victims. (I also wrote about the 25k bond pump fake)

I have all of it documented in much more detail on my site.

Best defense is to share what you find, spread awareness and look out for each other. Check the contractor before you pay a dollar. ADU's are great and beneficial but comes with corruption...tread carefully my friends.

The ADU Boom is great and all but great things usually come with great corruption.

This led me down a rabbit hole and I've been tracking and documenting the worst ADU contractor scam cases in California for a while now. Here are the BIG ones.

1. Anchored Tiny Homes. Over 450 families. Took deposits, never finished, then filed bankruptcy.
2. Multitaskr in San Diego. Around 15 million dollars from over 100 homeowners. Some even had loans taken out in their name they never signed.
3. Nonna in Sacramento. License suspended, complaints piling up, families paid tens of thousands and got nothing. (I almost went with these guys for my parents ADU build too)
4. Dezign in LA. The state has a pending accusation for diverted funds. And one of the people behind it already opened a brand new company under a different name.

Same story every time. The license gets pulled, the company disappears, and the people behind it just move on.

I have all of it documented in detail on my site. License records, complaints, bond payouts, numbers, and the names behind each one.

Best defense is to share what you find and look out for each other. Accessory Dwelling Units are great and beneficial, just tread carefully and safely.

(ADU) California's $25,000 contractor bond sounds like protection. It is not.

That $25,000 is not per homeowner. Not per project. It is the total amount SPLIT between every single person who files a claim against that contractor.

Anchored Tiny Homes. Over 450 victims. One $25,000 bond split between them comes out to about $55 each. People lost tens of thousands.

Multitaskr took $15 million from over 100 homeowners. Split evenly, that bond is about $250 a person. People lost six figures each.

Nonna ADU in Rancho Cordova. One family paid $83,706 over nine months. Zero work done. Same $25,000 pool.

And here is the part most people miss. California actually RAISED this bond to $25,000 in 2023. It was $15,000 before that. So this is the highest it has ever been, and it still does not come close. The average ADU runs well over $100,000, and these companies sign hundreds of contracts at once.

Bonded and insured is on every contractor website in California. Now you know what it actually means.

After Nonna Homes collapsed I spent months going through every ADU contractor fraud case I could find in California. Victims who lost $30k, $80k, $150k. Every single case had the same thing in common.

The contractor's license had either expired, been suspended, or was flagged before the homeowner ever signed a contract. Nobody checked. Not because they were careless — because most people don't know how or where to look.

CSLB is public record. Anyone can check a contractor license in 60 seconds at cslb.ca.gov. Bond status, workers comp, complaint history — all there. Most homeowners never look until after something goes wrong.

If you're hiring an ADU contractor in California check the license before you pay a single dollar. Not after the contract. Before the first meeting.