CALIFORNIA · PAYMENT SCHEDULES
California contractor progress payment rules
How progress payments work in a California home improvement contract: tying each amount to completed work or delivered materials, and writing the schedule into the agreement.
Last reviewed: September 26, 2026
When the contract uses progress payments
Under §7159(d)(9), when payments other than the down payment are due before the project is complete, the contract includes a Schedule of Progress Payments. Each payment is stated in dollars and cents.
For the separate down-payment amount, see the California down-payment limit guide.
Each payment needs a real phase of work
Each line of the schedule should point to the amount and type of work or services, and the materials or equipment, for that phase. “Second payment” or “mid-project” tells the customer nothing; “cabinets delivered and installed” does.
Payment should track value delivered
As an ordinary rule under §7159.5(a)(5), apart from a down payment, a contractor may not request or accept payment that exceeds the value of work performed or material delivered. The restriction extends to advance payment, in whole or in part, from a lender or financier.
§7159.5(a)(8) provides an exception for a contractor who furnishes a registrar-approved performance and payment bond, lien and completion bond, bond equivalent, or joint control covering full performance and payment. Confirm that an exception applies before relying on it.
A simple structure
Illustrative only. On a real job, the phases and amounts come from the project itself and the rules that apply to it.
Lien releases and later payments
Under §7159.5(a)(6), after payment for a portion of the work and before any further payment, if requested, the contractor must obtain and furnish a full and unconditional release from potential lien claimant claims or mechanics lien claims for the paid portion. Further payments may be withheld until those releases are furnished.
Change orders can affect the payment schedule
Under §7159(d)(13), a written, signed change order addresses the change in scope, the cost added or subtracted, and the effect on progress payments. See the California home improvement contract requirements guide for the wider contract picture.
Timing is its own contract requirement. When a change shuffles the payment stages, check them against the schedule using the start and completion date guide
Payment-schedule checklist
- Contract price and down payment separated clearly
- Each progress payment in dollars and cents
- Each payment tied to work/services/materials/equipment
- Ordinary payment amount does not outrun value delivered
- Statutory exception confirmed before relying on it
- Change orders update price and payment effects
- Source and current-law review before sending the contract
How ContractBuilderAI fits
In ContractBuilderAI, the payment schedule is built in a structured step, with review checkpoints before the contract goes out. It organizes the schedule; it doesn't process payments.
Software can structure the schedule and flag workflow questions; it does not determine whether a payment is legally permitted in a specific transaction.
Primary sources
Building California contracts should not start from a blank page.
ContractBuilderAI is opening a California private beta on November 1, 2026 for licensed home improvement contractors.
Apply for the California beta →