10 Red Flags When Hiring a Contractor in California (2026)

A licensed GC tells you exactly what to look for before you hand over a single dollar.

How Do I Know If a Contractor Is Legitimate Before I Sign Anything?

Go to cslb.ca.gov right now and look up their license number. Takes 30 seconds. If they cannot give you a license number before a site visit, they are not a licensed contractor.

As a licensed GC, I can tell you that the single most common mistake homeowners make is skipping this step. In California, every contractor performing work over $500 in labor and materials must hold a valid CSLB license. That is not a suggestion. That is the law.

Here is what the CSLB lookup tells you in one screen: license status (active or not), license classification (are they actually licensed for your type of work?), bond status, workers compensation status, and any disciplinary actions. A legitimate contractor has zero problems with you checking this. A bad one will make excuses.

According to CSLB complaint data, unlicensed contracting accounts for billions in consumer losses annually in California. The agency investigates thousands of complaints each year. Most of those homeowners thought they were hiring someone reputable.

In my experience building homes across Silicon Valley since 2017, the contractors who push back hardest on license verification are the ones with expired licenses, suspended bonds, or active complaints. That resistance is itself a red flag.

What Does It Mean If a Contractor Asks for More Than 10% Upfront?

It means they are either unfamiliar with California law, or they are counting on you being unfamiliar with it. Either way, stop.

California Business and Professions Code Section 7159 limits the initial deposit on home improvement contracts to 10% of the total contract price or $1,000 - whichever is less. On a $150,000 kitchen remodel, that means a maximum $1,000 deposit. Not $15,000. Not $30,000. $1,000.

As a contractor, I can tell you this rule exists because the most common contractor fraud pattern is simple: ask for a large deposit, do little or no work, disappear. The CSLB sees this pattern in hundreds of complaints every year.

Here is what legitimate payment should look like on a remodel: a small mobilization deposit (within the legal limit), followed by a draw schedule tied to completed milestones. Money flows as work is verified. Not before. If you want to understand how draw schedules protect you, read our breakdown at useopsite.com/blog/what-is-a-draw-schedule-construction.

If a contractor demands $10,000, $20,000, or 30% upfront before breaking ground, that is not a cash flow issue on their end. That is a red flag.

Why Is a Bid That Looks Too Good to Be True Always a Trap?

Get three bids minimum. Not two, not one. Three. And if the lowest bid comes in 20-30% below the other two, that is not a deal - that is a contractor who will hit you with change orders the moment demo starts.

Based on typical project data from Bay Area contractors, a standard kitchen remodel in the Bay Area runs $60,000 to $150,000 depending on scope and finishes. A whole-house remodel ranges from $200 to $500+ per square foot. If someone bids $40,000 for a scope that two other licensed GCs priced at $90,000, ask yourself: where is the $50,000 going?

The low-ball bid contractor has three options once you sign: (1) use cheaper materials than specified and hope you don't notice, (2) cut corners on labor and subcontractors, or (3) hit you with a change order for every single thing that was conveniently missing from the original scope. In my experience, they usually do all three.

Here is the comparison table I use when coaching homeowners on evaluating bids:

A detailed breakdown of how to read a contractor estimate line by line is covered in our guide at useopsite.com/blog/complete-guide-construction-business-operations.

What Happens If a Contractor Says You Don't Need a Permit?

Run. That is the short answer.

As a licensed GC, I can tell you that the "no permit needed" line is one of the most dangerous things a homeowner can hear - and one of the most common things bad contractors say. Here is why it matters: if work is done without the required permits and something goes wrong (structural failure, fire, flood), your homeowner's insurance can deny the claim. When you go to sell the house, unpermitted work either has to be disclosed or legalized. Legalizing it often costs more than doing it correctly the first time.

In California, permits are generally required for structural changes, electrical work, plumbing, HVAC, additions, ADUs, and any work that affects the building's systems. A contractor who skips permits is not saving you time. They are protecting themselves from inspection scrutiny - which tells you something about the quality of their work.

Here is something most homeowners don't know: you can verify whether a contractor is actually pulling permits at their job sites. Permit records are public. Opsite's Property Watch tool monitors building permits filed at any California address and alerts you to new activity. If you hire a contractor and no permit ever shows up, that is a problem you can catch early - not after the drywall is closed.

Based on 2026 construction cost data, fixing unpermitted work after the fact typically costs 40-80% more than doing it right the first time, because inspectors often require demolition to verify the work underneath.

What Communication Red Flags Should I Watch for Before I Even Sign?

If your contractor takes 48+ hours to return a text during the sales process, imagine how fast they'll respond when there's a plumbing leak at 4pm on a Friday.

From working with homeowners on projects ranging from $50K to $2M+, I have seen the same pattern over and over: the communication issues that blow up a project during construction were all visible before anyone signed anything. Homeowners just didn't treat them as signals.

Here are the communication red flags that matter:

• No written scope of work - only verbal promises
• Pressure to sign "today" because of a special price or limited availability
• Unable to name the specific subcontractors who will do the work
• No project manager or single point of contact identified
• Vague answers about timeline or "we'll figure it out as we go"
• Pushback on providing proof of GL insurance and workers compensation coverage
• References who cannot be called ("they moved away," "I don't have their number")

As a contractor, I can tell you: legitimate contractors welcome reference calls. They are proud of their work. If a contractor hedges on connecting you with past clients on comparable projects, that is not a scheduling issue - that is a warning sign.

Also call those references and ask one specific question: "Did the project come in on budget, and if not, by how much?" A 10-15% variance is normal on a remodel. A 40% variance means change orders were weaponized.

How Do I Do a Full Background Check on a Contractor Before Hiring in 2026?

Three data sources. Check all three. This takes about 10 minutes and can save you tens of thousands of dollars.

1. CSLB license lookup. Go to cslb.ca.gov. Verify the license is active, the bond is current, workers compensation is on file, and the classification matches your project type. A contractor licensed for B (General Building) can handle most remodels. A contractor licensed only for C-10 (Electrical) cannot legally be your general contractor on a kitchen remodel.

2. Permit history. Ask how many projects they have completed in the last three years that are similar to yours. Then ask to verify by looking up permit records. Based on typical project data from Bay Area contractors, an active GC doing residential remodels should be pulling 10 to 50+ permits per year. A contractor who claims to do 20 jobs a year but has 2 permit records in the system is cutting corners somewhere.

3. Court records and online presence. A Google search for "[contractor name] complaints" or "[license number] lawsuit" takes two minutes. Check the Better Business Bureau and Yelp, but weight them less than the permit record and CSLB data.

If you want this process automated, Opsite's Pro Report runs the full background check for you - CSLB live status, permit history pulled from Shovels.ai, inspection pass rates, court records, and aggregated reviews - and gives you a ranked recommendation on which contractor to hire. It is $49 and takes a few minutes. On a $100,000 remodel, that is the cheapest insurance you will buy.

If you're a contractor reading this and want to understand the tools homeowners are using to evaluate you, see what Opsite offers at useopsite.com/features.

Add a 15-20% contingency budget to every project. Not 10%. Every remodel hits something unexpected - rot behind a wall, outdated wiring, a permit revision. The contingency is not pessimism. It is math.

Frequently Asked Questions

What is the maximum deposit a contractor can legally ask for in California?

California law limits the initial deposit on home improvement contracts to 10% of the contract price or $1,000 - whichever is less. On a $200,000 remodel, that means a maximum $1,000 upfront deposit. Any contractor asking for more than this is either uninformed or hoping you are.

How do I check if a contractor is licensed in California?

Go to cslb.ca.gov and use the free license lookup tool. Enter the contractor's name or license number. You will see license status, expiration date, bond status, workers compensation coverage, license classifications, and any disciplinary actions. This takes about 30 seconds and should be the first thing you do.

What is a CSLB disciplinary action and how serious is it?

A disciplinary action means the CSLB formally investigated a complaint against the contractor and took action - this can range from a citation and fine to license suspension or revocation. Even a single disciplinary action is a significant red flag. Multiple actions mean you should not hire that contractor under any circumstances.

How low does a bid have to be before it's a red flag?

If the lowest bid is more than 20-25% below the median of three bids, treat it as a warning sign. That gap almost always gets closed through change orders during the project. Get three bids minimum so you have a real market comparison.

Can I verify that my contractor is actually pulling permits?

Yes. Permit records are public in California. You can search your local building department's permit database by address or contractor license number. If you want automatic monitoring, Opsite's Property Watch tool alerts you whenever a permit is filed at your property address so you can verify your contractor is doing things by the book.

What insurance does a contractor need to have in California?

Two things: general liability (GL) insurance and workers compensation coverage. GL covers property damage and injury to third parties. Workers comp covers the contractor's employees if they get hurt on your job. Without workers comp, you can be held liable if a worker is injured on your property. Ask for certificates of insurance naming you as additionally insured, and verify both are current.

What should I do if I already hired a contractor and something feels wrong?

Document everything in writing immediately. Send an email summarizing your concerns and asking for a response. Do not make additional payments until issues are resolved in writing. If the contractor is unresponsive or the situation escalates, you can file a complaint with the CSLB at cslb.ca.gov and consult with a construction attorney about your contract rights.

Is a verbal contract valid with a contractor in California?

Technically yes, but practically it is nearly impossible to enforce. California law requires home improvement contracts over $500 to be in writing. Without a written contract, you have no documented scope, price, timeline, or payment schedule. Never start work without a signed written agreement.