Hello.
How do you guys go by this "wiered" law?
It is illegal to charge more then 10% of the total contract?
How is that exactly work?
Someone can explain me why is this law exist?
Let say I will be doing the job for $10000.
I buy floating floor, underlayment, trims, baseboards and so on that with tax comes to $7000.
I can charge only $1000?
Thanks Rafal

The answer is quite simple. Here is what the law says in CA. As a contractor, you may not ask (charge) more than 10% OR $1,000.00, whichever is LESS, upon SIGNING of a contract. Once you deliver materials, you may collect more money to cover the cost of those materials. This is why having an acct. with reputable distributors is an absolute necessity because one can float the material charges until the job is paid for. Or charge them to a VISA. So, using you hypothetical $10,000.00 job. You can collect $1,000.00 when the customer signs a contract with you. You have not provided anything yet except maybe an estimate. Now you purchase the materials that cost you $7,000.00. So you charge that with 30 days to pay without interest. When you deliver the materials to the customer's property, you can collect a "progress payment" as you are providing something tangible; in this case, flooring. So say you mark up the materials 10%, so you can charge an additional $7,700.00 upon delivery of all the flooring materials to the job. Now you have been paid $8,700.00 on a $10,000.00 job you haven't even installed yet. But you need to pay off the $7,000.00 material bill first. That's where contractors get into trouble. Pay your charges first, then yourself.

How about the job where I don't supply the material.
I take 10% upon the signig of the contract, let's a week before the start.
The first day of my work I can take as much as I want?
Say %60?
Thanks

No. The idea is that a contractor cannot collect fees or payments for work he has not yet performed. Let's say you are going to do an install, sand and finish. You could get 10% of your contract amount upon the signing of the contract. Now if you are not supplying the flooring material, your next "draw" or payment, if you prefer, would not be till you completed the installation phase of the job. You can/may collect a progress payment ( any amount you agree upon but reason would say 50% of the balance of the contract, or 45% of the total contract amount. You already got 10% on signing) after completing a certain phase of the job, such as the installation of the flooring. Then, you now need to sand and finish the floor. So when the job is 100% completed, you may now collect your remaining 45%.