💰 Common Contractor Overcharge Violations
California strictly regulates how contractors can bill homeowners. If your contractor violated these rules, I can help you recover your money through a demand letter, CSLB complaint, and bond claim.
💵 Excessive Down Payment
Charging more than $1,000 or 10% of the contract price (whichever is less) violates B&P 7159.5
📄 Unauthorized Change Orders
Charging for extra work without a written, signed change order before work begins
📈 Scope Creep
Claiming work was "extra" when it was included in the original contract, or gradually expanding scope without authorization
📦 Material Cost Inflation
Marking up materials beyond agreed terms, charging for materials not delivered, or double-billing
💳 Front-Loaded Payments
Demanding payments that exceed the value of work actually completed at each phase
📋 No Itemized Accounting
Refusing to provide detailed breakdowns of labor, materials, and charges when requested
Your Right to Itemized Accounting
When a contractor charges you for materials or time-and-materials work, you have the right to demand an itemized breakdown. This should include:
- Labor hours: Dates worked, hours per day, hourly rate, worker names
- Material costs: Receipts or invoices showing actual costs paid by contractor
- Markup disclosure: The percentage markup on materials (if any)
- Subcontractor costs: Breakdown of any subcontractor charges
- Change order documentation: Written authorizations for any scope changes
🔒 The Down Payment Rule (B&P 7159.5)
The contractor cannot demand or receive more than:
- $1,000 - OR -
- 10% of the contract price
- Whichever is LESS
Example: On a $50,000 job, the max down payment is $1,000 (not 10% which would be $5,000). On an $8,000 job, the max is $800 (10%).
Understanding Scope Creep
Scope creep is one of the most common ways contractors overcharge. Watch for these warning signs:
- "That's not included": Contractor claims standard work is extra after starting
- Vague original contract: Contract language is ambiguous about what's covered
- Verbal "agreements": Contractor claims you approved extras without written change orders
- Hidden conditions: Contractor "discovers" issues that allegedly weren't visible
- Progress billing surprises: Each payment demand exceeds work actually completed
🚨 Fraudulent Overcharging = 3x Damages
Under B&P Code 7160, if a contractor "willfully or deliberately" overcharges, you can recover treble damages (three times your actual damages) plus attorney's fees. This applies when the contractor:
- Knows the charges are excessive
- Intentionally misrepresents the scope or cost
- Uses deceptive billing practices
- Bills for work not performed or materials not delivered
⚖ California Home Improvement Contract Law
California's Home Improvement Contract Law (B&P 7159-7168) provides extensive protections against contractor billing abuse. These laws apply to all home improvement contracts over $500.
B&P 7159 - Home Improvement Contract Requirements
Home improvement contracts must be in writing and include: the contractor's license number, total contract price, description of work to be performed, approximate start and completion dates, and the down payment amount. Failure to include required terms can void the contract's enforceability.
B&P 7159(d) - Change Order Requirements
"Any alteration or deviation from the original contract... shall be set forth in a written change order or supplemental agreement... signed by both parties before work begins." The change order must describe the work and state the cost. Verbal change orders are not enforceable.
B&P 7159.5 - Down Payment Limits
"A contractor shall not demand or receive a down payment exceeding one thousand dollars ($1,000) or 10 percent of the contract price, whichever is less..." Collecting more than this amount is a violation that entitles you to a refund of the excess.
B&P 7160 - Treble Damages for Fraud
"Any person who is induced to contract for a work of improvement... in reliance on false or fraudulent representations or false statements knowingly made, may sue and recover from such contractor... treble the amount of damages..." This powerful remedy allows 3x recovery when fraud is proven.
B&P 7163 - Progress Payment Rules
Contractors cannot demand payments that exceed the value of work completed. Progress payments must correspond to work actually performed. "Front-loading" - taking more money than earned - violates this rule.
CSLB Complaint Leverage
The Contractors State License Board (CSLB) has significant power to discipline contractors who violate billing rules. When I send a demand letter, I explain that non-compliance will result in a CSLB complaint, which can lead to:
- License suspension or revocation: Contractor cannot legally work
- Civil penalties: Fines up to $15,000 per violation
- Bond claims: I help you file against the $25,000 contractor's bond
- Public record: Violations appear on the contractor's CSLB profile
- Criminal referral: For egregious violations, CSLB may refer to prosecutors
💡 Civil Code Protections
In addition to the B&P Code, California Civil Code provides remedies:
- Civil Code 1770: Consumer Legal Remedies Act - prohibits unfair business practices
- Civil Code 3300: Breach of contract damages
- Civil Code 3294: Punitive damages for fraud or malice
Statute of Limitations
📅 Written Contract
4 years from breach (CCP 337)
📅 Fraud
3 years from discovery (CCP 338(d))
📅 Bond Claim
2 years from violation (B&P 7071.6)
📅 CSLB Complaint
File promptly - no strict deadline but earlier is better
📊 Overcharge Recovery Calculator
Use this calculator to estimate what you may be able to recover from your contractor. I can review your specific situation for a more precise analysis.
Calculate Your Potential Recovery
💡 Down Payment Calculation Examples
- $8,000 contract: Max down = $800 (10% is less than $1,000)
- $15,000 contract: Max down = $1,000 (10% would be $1,500)
- $50,000 contract: Max down = $1,000 (10% would be $5,000)
- $100,000 contract: Max down = $1,000 (10% would be $10,000)
📝 Sample Demand Letter Language
I use these elements when drafting demand letters for contractor overcharging. For a complete letter customized to your situation, contact me for a consultation.
RE: DEMAND FOR REFUND OF OVERCHARGES - [PROJECT ADDRESS]
Contract Date: [DATE] | License #: [NUMBER]
Dear [CONTRACTOR NAME]:
I represent [CLIENT NAME] regarding your home improvement work at the above property. This letter constitutes a formal demand for refund of overcharges collected in violation of California Business and Professions Code Sections 7159-7164 and 7160.
Your contract specified a total price of $[CONTRACT PRICE]. Under California Business and Professions Code Section 7159.5, the maximum down payment you could lawfully collect was the lesser of $1,000 or 10% of the contract price.
Legal Maximum Down Payment: $[LEGAL MAX]
Down Payment You Collected: $[AMOUNT PAID]
Illegal Excess Collected: $[EXCESS]
This excess down payment must be immediately refunded.
Under California Business and Professions Code Section 7159(d), any alteration to the scope of work or contract price must be documented in a written change order signed by both parties BEFORE the extra work begins.
You have charged my client $[AMOUNT] for work you characterize as "extra" or outside the original scope. However, you failed to obtain a proper written change order as required by law. [Choose applicable:]
- No written change order was ever signed
- The "change order" was presented after work was already performed
- The work was actually included in the original contract scope
- The change order did not include the price before work began
These charges are not legally enforceable. Unauthorized charges: $[AMOUNT]
In addition to the refund demanded below, I require you to provide a complete itemized accounting of all charges within 10 days, including:
1. Detailed breakdown of all labor charges (dates, hours, workers, rates)
2. Copies of all material invoices and receipts showing your actual costs
3. Documentation of markup percentages applied to materials
4. Copies of all subcontractor invoices
5. Any other documentation supporting the amounts charged
Failure to provide this accounting will support my client's claims of fraudulent billing under B&P 7160, which entitles recovery of treble damages.
If you fail to pay the amounts demanded within fifteen (15) days, I will:
1. File a CSLB Complaint: I will file a formal complaint with the Contractors State License Board documenting your billing violations, which may result in license suspension or revocation;
2. File a Bond Claim: I will file a claim against your contractor's license bond (currently $25,000) for recovery of all documented overcharges;
3. Pursue Civil Litigation: I will file suit seeking actual damages plus treble damages under Business and Professions Code Section 7160 for willful overcharging, plus attorney's fees and costs of suit.
Under B&P 7160, if I prove your billing practices were willful or fraudulent, my client is entitled to recover three times the actual damages.
✅ Key Elements I Include in Every Demand
- Specific B&P Code citations for each violation
- Exact calculations of overcharged amounts
- Clear 15-day deadline with consequences
- CSLB complaint and bond claim warnings
- Reference to treble damages for fraud
- Request for itemized accounting
❓ Frequently Asked Questions
What is the maximum down payment a contractor can charge in California?
▼Under California B&P Code 7159.5, contractors cannot demand or receive a down payment exceeding $1,000 OR 10% of the contract price, whichever is less. For example, on a $50,000 job, the maximum is $1,000 (not $5,000 which would be 10%). On an $8,000 job, the maximum is $800 (10%). Any amount collected above this limit is a violation that entitles you to a refund.
Can I refuse to pay for unauthorized change orders?
▼Yes. Under B&P Code 7159(d), change orders must be in writing, signed by both parties, and include the cost BEFORE the work begins. If the contractor didn't follow this process, the extra charges are not legally enforceable. You can refuse to pay and demand a refund if you already paid. The contractor's verbal claim that you "agreed" to extra work is not sufficient.
What is scope creep and how do I fight it?
▼Scope creep occurs when a contractor claims standard work was "extra" after the project starts, or gradually expands the project without proper authorization. Fight it by: (1) reviewing your original contract carefully to see what was included, (2) demanding written documentation for any claimed "extras," (3) refusing to pay without a signed change order, and (4) getting estimates from other contractors to prove the work was standard.
Can I demand an itemized breakdown of charges?
▼Yes. You have the right to demand an itemized accounting of all charges, including labor hours (with dates and rates), material costs (with receipts), markup percentages, and subcontractor invoices. If the contractor cannot provide documentation supporting their charges, those charges may not be enforceable. Failure to provide documentation also supports fraud claims.
What are treble damages and when do they apply?
▼Treble damages means you can recover three times your actual damages. Under B&P Code 7160, this applies when the contractor "willfully or deliberately" defrauded you - such as knowingly lying about costs, billing for work not performed, charging for materials not delivered, or intentionally misrepresenting the scope. You must prove the contractor knew their billing was false.
How do I file a CSLB complaint for overcharging?
▼Visit cslb.ca.gov or call (800) 321-CSLB (2752). You can file online or request a paper form. Include copies of your contract, all payment records, change orders (or documentation that none exist), and a detailed explanation of the overcharges. CSLB can investigate, attempt mediation, and take disciplinary action including license suspension or revocation.
What is a contractor's license bond and how do I claim against it?
▼Every licensed California contractor must maintain a $25,000 license bond. This bond protects consumers from contractor violations. To file a claim: (1) Get the bond company name from CSLB's license lookup, (2) Send a written claim to the surety company with documentation, (3) The surety will investigate and may pay valid claims. This is separate from any lawsuit and can be done simultaneously.
🚀 Get Legal Help
Sergei Tokmakov, Esq.
I personally draft demand letters and handle contractor overcharge claims for California homeowners. My practice focuses on construction disputes, CSLB complaints, and bond claims. I understand the B&P Code requirements and know how to leverage them to recover your money.
My Approach to Overcharge Claims
- Analyze your contract: I review the contract language to identify what was included vs. "extras"
- Calculate violations: Down payment violations, unauthorized change orders, overpayments
- Draft demand letter: Professional letter citing specific B&P Code violations and consequences
- CSLB complaint: If needed, I prepare and file a formal CSLB complaint
- Bond claim: I help file claims against the contractor's $25,000 license bond
- Litigation support: If the contractor doesn't pay, I can assist with court filing
Pricing
Demand Letter
Flat fee for demand letter preparation and delivery
Hourly Rate
For CSLB complaints, bond claims, and litigation support
Schedule a Consultation
I offer a 30-minute consultation to review your contractor overcharge situation and explain your options.
Recovery Options Summary
📝 Demand Letter
Formal demand citing B&P 7159-7164 violations. Many contractors settle to avoid CSLB complaints and bond claims.
📦 CSLB Complaint
File complaint with Contractors State License Board. Can result in license suspension, fines, and mediation.
💰 Bond Claim
Claim against contractor's $25,000 license bond. Separate from lawsuit - can pursue simultaneously.
⚖ Court Action
Small claims (up to $12,500) or civil court. Treble damages available for fraud under B&P 7160.
⚠ When to Contact Me
Consider getting legal help if:
- Overcharges exceed $5,000
- Contractor refuses to provide itemized accounting
- You believe the billing was fraudulent (treble damages may apply)
- Contractor is threatening a mechanic's lien
- You need help with CSLB complaint or bond claim
Contact Information
- Email: owner@terms.law
- Schedule: calendly.com/sergei-tokmakov