How to Vet an ADU Builder in Sacramento (After What Happened Here)

ADU Builder editorial – Sacramento, CA

NBC Bay Area reported that the CSLB revoked the contractor license of a large Sacramento-area ADU company after it collapsed in the middle of projects and its founders filed for bankruptcy, leaving customers with lost deposits and unfinished builds. If you are about to put six figures into a backyard home, that report deserves your attention, and so does the part nobody leads with: California already put your protection in writing. Under Business and Professions Code §7159.5, the down payment on a home improvement contract may not exceed $1,000 or 10 percent of the contract price, whichever is less. On a $200,000 ADU, the legal maximum deposit is $1,000. Beyond that, a contractor may not collect payment that exceeds the value of the work actually performed or materials delivered. A builder who follows that rule never holds much of your money ahead of the work. That is the shield, and here is how to choose an ADU builder who uses it.

Concept rendering – illustrative, not a completed project.

What did NBC Bay Area actually report?

Two reports, and we will repeat only what each one says. We do not know the inside story of either company, and this page will not guess at it.

The first covers October 2024 through September 2025 and concerns Anchored Tiny Homes, as NBC Bay Area reported. According to that coverage, the CSLB revoked the company’s contractor license after it collapsed mid-projects and its founders filed for bankruptcy, and customers were left with lost deposits and unfinished builds.

The second is from January 2026. NBC Bay Area reported that Nonna Homes, another Sacramento-based ADU builder, had its license suspended after its contractor bond was cancelled.

That is everything we will say about either company, and nothing on this page claims anything beyond what those reports say. Read them yourself. Then look at the one thing a homeowner can actually control. You cannot control whether a builder stays in business. You can control how much of your money sits in their hands before the work is done.

How much deposit can an ADU builder legally ask for in California?

This is the heart of the page, so take it slowly.

California Business and Professions Code §7159.5 governs home improvement contracts. On those contracts, the down payment may not exceed $1,000 or 10 percent of the contract price, whichever is less.

Those last two words do the work. On a $200,000 ADU, 10 percent is $20,000, and $1,000 is the smaller number. The legal maximum deposit is $1,000. One thousand dollars.

Try it on realistic jobs. Our planning ranges for Sacramento are $250 to $400 per square foot for a detached ADU and $150 to $260 per square foot for a garage conversion. At those ranges, a 600 square foot detached unit lands between $150,000 and $240,000, and a 400 square foot conversion between $60,000 and $104,000. Ten percent of those totals runs from $6,000 to $24,000. The legal maximum down payment on every one of them is $1,000. These are planning ranges, not quotes, and your lot sets the real number (our ADU cost and financing guide shows what moves it).

The second half of the rule protects you after the deposit. Beyond the deposit, a contractor may not collect payment that exceeds the value of the work actually performed or the materials delivered. In plain terms: if you have paid more than what is built and delivered on your lot, you are ahead of what the statute allows a contractor to collect.

We are builders, not your attorney. Read the statute at the link above, and have your own lawyer look at any contract that seems unusual. If a builder tells you the rule does not apply to your job, ask in writing which exception they rely on, and call the CSLB before you sign.

Is a contractor bond enough to protect your deposit?

No. California contractor bonds are $25,000, and a single ADU contract can run six figures. One $25,000 bond cannot make a homeowner whole on a $200,000 build, and it cannot stretch across several homeowners at once. The bond is a floor under the license. The payment structure is your real protection, because the money you never handed over is the money you cannot lose.

The bond still has to be there. In the second report above, the license was suspended after the bond was cancelled, as NBC Bay Area reported. The bond listing appears on the CSLB license page. Check it before you sign, and check it again before each payment.

How do you vet an ADU builder in Sacramento?

Here is the checklist we would hand our own mother. Print it and bring it to every meeting. None of the eight steps asks you to trust anyone’s word.

• Look up the license on cslb.ca.gov. The check is free. Confirm the license is active, the name matches the business name printed on your contract, and the classification fits the work. Read the bond listing while you are there.
• Cap the deposit at $1,000. Any builder asking $10,000 to $50,000 “to get on the schedule” is asking you to break the law in their favor. Say no, and mean it.
• Pay on milestones, never on dates. Each payment is tied to completed work you can see on your lot, such as a poured foundation or framing that passed inspection. A calendar does not build anything.
• Get the scope in writing, and every change in writing. A written scope names what is included. A written change order states the price and the schedule effect before the work happens, and you sign it first. “We’ll sort it out later” is a price you have not seen yet.
• Ask for an insurance certificate naming you. It should come from the builder’s insurer and name you as the certificate holder, so you can confirm coverage is in force for your project.
• Collect lien releases with each payment. A signed release for the amount you just paid is your record that the money was accounted for. Ask about releases from subcontractors and suppliers as well.
• Get addresses of completed local projects. Addresses, not photos. Drive past them. Ask the builder to set up a call with the owner.
• Slow down if the pitch leans on speed. If you hear pressure or a “price that expires today,” take the paperwork home. A fair price is still fair next week.

A builder who is comfortable with all eight will not mind you asking. If a builder cannot pass number two, you do not need to look at the other seven.

What should a safe payment schedule look like?

Picture a staircase, not a cliff. At signing, a deposit of no more than $1,000. After that, each payment unlocks only when a defined piece of work is finished, and the amount does not exceed the value of that work. A foundation that passed inspection. A framed structure. Each step is something you can stand in front of and photograph.

Walk the lot before every payment and take dated photos. Set the invoice next to what you see. If the number on the invoice is ahead of the work on the ground, say so in writing before you pay it. Pay by check or bank transfer to the business named on the license, never in cash.

The city’s inspection sign-off is the closest thing to an independent witness you will get. A payment tied to a passed inspection is a payment tied to something that exists.

What does the law say versus what a red flag asks for?

Put the two side by side. The left column is the statute and the state’s own guidance. The right column is wording to listen for.

Each request in the right-hand column moves your money to the builder ahead of the work. That is the effect, whatever anyone intends by it.

What if a builder pushes speed or a price that expires today?

Slow down. ADU permit review is ministerial statewide, according to HCD, which means a rules-based check of your plans, not a contest for a slot. Our ADU permits and zoning guide walks through it. A deadline set by a seller is not a deadline set by the city.

Take the contract home and read it twice, once for the price and once for the payments. Ask a family member, or a friend who has built something, to read it as well.

What if you have already paid more than $1,000?

Do not panic, and do not stop the conversation. Ask the builder in writing for a breakdown of what your payments cover and what work is complete, and check the license record on the CSLB site. If the numbers do not line up, the CSLB accepts complaints, and a construction attorney can read your contract and tell you where you stand. This page cannot tell you what your particular contract allows.

How does ADU Builder handle this?

We follow §7159.5 to the letter, and we put the $1,000 deposit cap in writing in every contract. Our site visits are free and the estimate is written. The full list of what we commit to sits on our Safe Builder Standard page, so you can hold us to it. Because we work design-build, one team answers for both the design and the build.

Run this checklist on us, and on everyone else you talk to. Call (916) 432-0333, or request a free on-site estimate. Your protection is not a promise from a builder. It is a number written into state law: $1,000.

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