The biggest ADU contractor red flags are no verifiable license, a down payment above the legal limit, no written contract, a bid far below the others, and pressure to sign fast. In California, the down payment on a home improvement contract can’t exceed 10% of the price or $1,000, whichever is less.
ADUs are six-figure projects, which attracts both good builders and bad ones. Here’s how to tell them apart.
1. Is the license real and current?
Every contractor needs an active California license, which you can verify free on the CSLB website. Watch for a borrowed license number, a lapsed license, or a license class that doesn’t cover the work. This two-minute check is the most valuable step on this page.
2. Are they asking for a big deposit?
For home improvement contracts, California caps the down payment at 10% of the contract price or $1,000, whichever is less. After that, payments should match work completed. A request for 30% to 50% up front “for materials” is a serious warning sign.
3. Is there a real written contract?
A real ADU contract lists the scope, materials, price, payment schedule, start and finish dates, change-order process, warranty, and license number. A one-page estimate with a total and a signature line isn’t enough.
4. Is the bid far below everyone else’s?
If three bids land near $220,000 and a fourth comes in at $140,000, the low bid is probably missing scope or planning to make it up in change orders. Ask every bidder to list exclusions so you’re comparing the same work.
5. Are they pressuring you to sign today?
“This price expires today” and “I need a deposit now to hold your spot” are tactics that keep you from checking references and getting other bids. A good contractor expects you to take time.
6. Do they have ADU experience?
A great kitchen remodeler isn’t automatically a good ADU builder. ADUs involve zoning, setbacks, utility capacity, Title 24 energy rules, and fire requirements. Ask how many ADUs they’ve finished in the last two years. A vague answer is an answer.
7. Will they give you references?
An established ADU builder has past clients. Expect photos of finished ADUs and two or three clients willing to take a call.
8. Are they asking you to pull the permit?
Some operators ask the homeowner to pull the permit as an “owner-builder.” That can shift legal responsibility for the project, including worker injuries and code compliance, onto you. A licensed contractor should pull permits under their own license.
9. Can you verify where they’ve been?
A P.O. box, a brand-new website, no local project addresses, and frequent business name changes all deserve a closer look.
What should you do if you already hired a bad contractor?
- Document everything: photos, emails, texts, and payment records.
- Pause further payments while you sort out the dispute.
- File a complaint with the CSLB. It’s free.
- For abandoned work or deposits above the legal limit, talk to a construction attorney.
What’s the 10-minute background check?
- Look up the license on the CSLB website: active status, the right class, and any disciplinary actions.
- Search the business name with “complaint,” “lawsuit,” and “review.”
- Ask for a certificate of insurance and read it.
- Call two references and ask if they’d hire the contractor again.
- Confirm the contract lists the license number and a milestone payment schedule.
Want a contractor to start your search with?
Call (661) 486-8393. If no one answers, leave a voicemail with your name, phone number, address, and the type of ADU you want. You can also use the contact form. We’ll pass your details to a local ADU contractor, who will follow up with you directly. Run the same checks on them. There’s no obligation to hire.
ADU contractor red flag FAQs
How much can a California contractor ask for as a down payment?
For a home improvement contract, no more than 10% of the contract price or $1,000, whichever is less.
Is it a red flag if a contractor wants me to be the owner-builder?
Yes, if they’re doing the work. As an owner-builder you may take on responsibility for permits, inspections, and workers on the job.
Where do I report a bad contractor in California?
File a complaint with the Contractors State License Board (CSLB). It handles complaints against licensed contractors and unlicensed activity.
Are very low bids always bad?
Not always, but a bid far below the others usually leaves out work. Ask the contractor to explain the gap in writing.