Choose an ADU builder whose California license actually covers building a new home (in practice a Class B General Building contractor, or a C-47 only when the ADU is a manufactured home) and who will put four things in writing before you sign. Those four are: who is responsible for the plans and engineering, that the permit will be pulled in the contractor’s own name, exactly which site work and utility connections the price includes, and a schedule with approximate start and completion dates. Walk away from any of these: a down payment above $1,000 or 10 percent of the contract price (whichever is less), a request that you pull the permit yourself as an owner-builder, or an “all-inclusive” price with the sewer, trenching and electrical service marked “by others”. Below are the twelve red flags we would look for if we were hiring an ADU builder ourselves, how to check each one in a few minutes, and the questions that tell a builder apart from a salesperson.
We are Green Design and Build, a licensed residential general contractor based in Van Nuys (CSLB #1110975). We build site-built ADUs (garage conversions, attached units and detached backyard homes) across Los Angeles, Orange, Ventura and the western edges of Riverside and San Bernardino counties. That makes us one of the builders you might be comparing, so every rule below links to the statute, the state license board or the city’s own records, and you can check it without taking our word for it. This is general information, not legal advice. For a contract dispute, talk to a California construction attorney.
Why hiring an ADU builder is different from hiring a remodeler
A kitchen remodel happens inside walls that passed inspection decades ago. An ADU is a new, independent home on your lot. Whether it is a garage converted into an ADU or a new unit built from the ground up, it needs its own drawings, structural design, energy-compliance documents and plan check. It also needs connections to sewer, water and electrical service that may run the length of your yard. State law gives the city 60 days to approve or deny a complete ADU application when there is already a home on the lot (Gov. Code §66317). The clock starts only once the application is complete, and getting it complete is the builder’s job.
The general vetting steps (references, insurance certificates, checking the business entity) are covered in our guide to hiring a general contractor without getting scammed. This page covers what is specific to ADUs. If you are still deciding what to build, read what an ADU is and what California allows first.
The 12 ADU contractor red flags at a glance
| # | Red flag | Why it matters on an ADU | How to check |
|---|---|---|---|
| 1 | License class doesn’t cover a new home | A B-2 or specialty license can’t legally run a new ADU build | CSLB license lookup, “Classifications” line |
| 2 | The seller isn’t the contractor | Unregistered sales staff, or a contract name that doesn’t match the license | CSLB lookup for the salesperson’s HIS registration |
| 3 | “All-inclusive” price excludes site work | Sewer, trenching and electrical service are often the largest unknowns | Read the exclusions for “by owner” and “by others” |
| 4 | Nobody owns plans and engineering | Plan-check corrections stall the permit | Ask who answers corrections, in writing |
| 5 | You’re asked to pull an owner-builder permit | You may become the employer and carry the liability | Contract should name the contractor as permit holder |
| 6 | Oversized deposit, or payments ahead of the work | State law caps the deposit and ties payments to work done | Compare the payment schedule to B&P §7159 and §7159.5 |
| 7 | No written schedule | An ADU has five or six distinct phases | Approximate start and completion dates in the contract |
| 8 | Workers’ comp “exempt” but a crew shows up | The exemption means the contractor says it has no employees | CSLB license record, workers’ comp section |
| 9 | Won’t name the subcontractors | Unpaid subs and suppliers can lien your property | Ask for the subcontractor list with license numbers |
| 10 | Vague or low allowances | They come back later as change orders | Dollar amount and scope for every allowance |
| 11 | Prefab dealer with no builder for the site | The factory price rarely covers foundation and utilities | Ask who holds the license for the site work |
| 12 | Pressure tactics and permit promises | No one controls plan check | Take the contract home and read it |
The 12 red flags, explained
1. The license class doesn’t cover building a new home
California sorts contractors into classifications, and two of them get confused constantly on ADUs. A Class B General Building contractor works on structures “built, being built, or to be built” to shelter people, using at least two unrelated trades (B&P §7057). The Contractors State License Board’s own ADU fact sheet says B contractors can build or install ADUs.
The B-2 Residential Remodeling classification, created in 2021, is narrower. It covers improvements to an existing residential wood-frame structure, and the statute bars a B-2 from contracting for structural changes to load-bearing portions: footings, foundations, load-bearing walls and roof structures (B&P §7057.5). A new detached ADU is not an existing structure, and a garage conversion that adds footings, reframes bearing walls or alters roof framing is outside B-2 work.
Specialty licenses such as C-10 electrical or C-36 plumbing let a contractor do that trade, not run a whole ADU. The one other license that fits is C-47 General Manufactured Housing, which CSLB says can install an ADU that is a manufactured home built off site. The handyman exemption doesn’t help either: it covers only jobs under $1,000 in total that need no building permit, and splitting a bigger job into small contracts doesn’t qualify (B&P §7048). Look the license up on CSLB’s Check a License page. Our guide to verifying a contractor’s license in California walks through the rest of the record.
2. The person selling you the ADU isn’t the contractor
Many ADU companies send a sales consultant first. That is normal, but California makes it a misdemeanor to sell home improvement contracts without a current Home Improvement Salesperson (HIS) registration (B&P §7153), and a registered salesperson sells on behalf of a licensed contractor. Confirm two things. First, the salesperson’s registration (the same CSLB lookup searches HIS registrations). Second, that the business name on the contract matches the license record exactly. A marketing brand or a different LLC on the contract is a problem you would otherwise discover only when you need the license board’s help.
3. The “all-inclusive” price leaves out the site work
The most common way an ADU price looks low is by leaving the yard out of it. Read the exclusions and look for “by owner”, “by others”, “not included” or “TBD” next to any of these:
- The sewer connection and any work on the lateral
- Trenching for water, gas and electrical lines
- Electrical service or panel upgrades
- Utility company charges and city fees
- Grading, retaining work on a slope, and demolition of an existing garage or slab
- Debris hauling and final cleanup
Every item on that list has to happen before the unit can pass final inspection. CSLB’s ADU guidance specifically tells homeowners to confirm who handles the underground utilities. A builder who hasn’t looked at your sewer cleanout, electrical panel and access path can’t price them, which is why a credible ADU bid follows a site visit. Our explainer on why ADU quotes vary so much between contractors shows how these items move the number, and our guide to what an ADU costs to build shows the budgeting ranges we publish.
4. Nobody owns the plans and the engineering
Some builders price construction only and tell you to “bring your plans.” That can work, but ask who answers the plan-check corrections, who coordinates the structural engineer and the Title 24 energy documents, and who pays when the drawings and the field conditions don’t match. If the answer is “you”, you are the project’s manager. Be equally careful about paying a large sum for “plans and permits” before anything is built: CSLB advises homeowners to be cautious about paying for plans or permits up front and to confirm those costs with the designer or engineer and with the building department. Pre-approved designs can shorten the drawing stage on some lots (see ADU standard plans in Los Angeles), but someone still has to fit them to your site and carry them through plan check.
5. They ask you to pull the permit as an owner-builder
If a builder suggests putting the permit in your name “to save time”, stop. On an owner-builder permit, the LADBS notice to property owners warns that if you hire anyone other than licensed contractors on work worth $500 or more, you may be treated as an employer, responsible for payroll tax withholding, workers’ compensation and unemployment contributions. It also warns that you can be held liable for injuries to unlicensed workers, and that your homeowner’s insurance may not cover them. A licensed ADU contractor pulls the permit under its own license, and you can confirm it on the LADBS Permit & Inspection Report search once it is issued. Our guide to ADU permits in Los Angeles covers the permit path itself, and if a unit was already built without one, see legalizing an unpermitted ADU.
6. The deposit is bigger than the law allows, or payments run ahead of the work
A California home improvement contract must state in bold type that the down payment may not exceed $1,000 or 10 percent of the contract price, whichever is less (B&P §7159). CSLB has said explicitly that the rule covers construction of an ADU. After the deposit, a contractor may not request or accept payment that exceeds the value of the work performed or material delivered (B&P §7159.5).
On an ADU, that rules out “a third when the permit is issued” or “half when framing starts”. Each payment should follow a stage you can see, ideally one the city inspector has signed off. Our guide to contractor payment schedules in California lays out a compliant schedule and the lien releases to collect with each payment.
7. There’s no written schedule
“We’ll start as soon as permits are in” is not a schedule. The same statute requires a home improvement contract to give an approximate start date, a statement of what counts as substantial commencement of work, and an approximate completion date (B&P §7159). For an ADU, also ask for the phases: design, engineering, plan check, utility coordination, construction and final inspection. A builder who can’t break the timeline down hasn’t planned the job. Our guide to how long an ADU takes to build shows what each phase realistically involves in Los Angeles.
8. The workers’ comp record says “exempt” but a crew shows up
Every active California license must have either a workers’ compensation certificate or an exemption on file, and the exemption is the contractor certifying that it has no employees. Some classifications (concrete, HVAC, asbestos abatement, roofing and tree service) can’t use the exemption at all. An ADU takes weeks of crew labor, so if the record shows an exemption, ask exactly who will be on your site and check each subcontractor’s own license and coverage. The record also shows the contractor’s bond, which is $25,000 by law (B&P §7071.6). That is a small fraction of what an ADU costs, so it is no substitute for choosing well.
9. They won’t tell you who the subcontractors are
An ADU involves more licensed trades than almost any residential job: concrete, framing, roofing, electrical, plumbing, mechanical, drywall and exterior finishes. California requires a home improvement contract to say whether subcontractors will be used. If they will, the contract must acknowledge that the contractor has to provide a list of them on request, with names, contact information, license numbers and classifications (B&P §7159). Ask for it.
This matters because a subcontractor or supplier who isn’t paid can record a mechanics lien on your property, even if you paid the general contractor in full. Those parties generally must serve a preliminary notice within 20 days of first furnishing work to keep their full lien rights (Civil Code §8204). Keep every preliminary notice you receive, and collect a lien release from each of them as you pay.
10. Allowances are vague or unrealistically low
An allowance is a placeholder budget for something not yet chosen, such as cabinets, tile, plumbing fixtures, appliances or flooring. Low allowances make a bid look cheaper and then come back as change orders once you start choosing finishes. For every allowance, ask for the dollar amount, whether it covers material only or material and installation, and how an overage is billed.
11. A prefab dealer sells a “turnkey” ADU with no builder for the site
A factory-built unit still needs a foundation, utility trenching and connections, a delivery plan, and permits and inspections on your lot. Ask the seller who holds the license for that site work and whose name will be on the permit. CSLB’s guidance is that a C-47 manufactured housing contractor can install an ADU that is a manufactured home, while a B general building contractor can build or install ADUs. If the unit is a manufactured home, some permits may come from the state Department of Housing and Community Development rather than the city. If the answer to “who does the foundation and the utilities?” is “your contractor”, the brochure price buys the unit, not a finished ADU. Our comparison of prefab vs. site-built ADUs lists what the brochure price leaves out. We build site-built ADUs only, so we are not neutral, but the questions apply either way.
12. Pressure tactics and permit promises
“This price expires Friday.” “We know someone at the city.” “Permit guaranteed in four weeks.” Nobody controls plan check: the state’s 60-day decision clock starts only when the city has a complete application, and the city decides when it is complete. CSLB’s ADU fact sheet also notes the right to cancel a home improvement contract within three days of signing (five if you are 65 or older, seven in a disaster area). Read the cancellation notice in your contract for the terms that apply to you.
How to check an ADU builder in about 20 minutes
- Look up the license by number on CSLB. Check that it is active, the classification is B (or C-47 for a manufactured home), the bond is current, workers’ compensation is on file, and read any disciplinary history.
- Look up the salesperson. The same CSLB page searches Home Improvement Salesperson registrations by name or number.
- Ask for the addresses of two or three ADUs the company has finished, preferably in your city, and look up the permits. In the City of Los Angeles that is the LADBS Permit & Inspection Report; other cities have their own portals. Check that the permits exist and reached final inspection.
- Visit a job in progress if you can. It shows you how the yard is protected and how the crew answers questions.
- Read reviews that mention ADUs specifically. A company with strong kitchen reviews may never have taken an ADU through plan check. Ours are on our customer reviews page.
- Get at least three bids (CSLB’s own advice), then read each contract against the twelve red flags above before you sign anything.
Questions to ask an ADU builder before you sign
Ask every builder the same questions, in writing if you can. The right-hand column is what should end the conversation.
| Question | A good answer | Walk away if |
|---|---|---|
| What license classification will be on this contract? | B General Building, with the license number printed on the contract | B-2 or a specialty license for a new unit, or a number that doesn’t match the company |
| Who prepares the plans, structural calculations and Title 24 documents? | A named designer and engineer, coordinated by the builder | “You bring the plans” with no one assigned to plan-check corrections |
| Whose name goes on the permit? | The contractor’s | Yours, as owner-builder |
| Which site work and utility connections are included? | A line-by-line list: sewer, trenching, electrical service, fees, grading, demolition | “Standard site work” or “by others” |
| What is the down payment and payment schedule? | $1,000 or 10 percent, whichever is less, then payments tied to completed stages | A large deposit, or payments on calendar dates |
| What are the approximate start and completion dates? | Both dates in the contract, plus a phase plan | “Whenever the permits come through” |
| Which subcontractors will you use? | A list with license numbers, on request | A refusal |
| What is your workmanship warranty? | A written warranty with a stated length and claim process | A verbal promise |
| Can I see an ADU you have built near me? | Addresses and permit numbers | No completed ADUs to show |
How we handle these points at Green Design and Build
Hold us to the same list. Here is how each point works on our ADU contracts:
- License: Class B General Building, CSLB #1110975. Look it up before you call.
- Plans and permits: one contract covers design, engineering, permits and construction. Structural calculations and Title 24 documents come from outside consultants we coordinate, and we pull the permits under our contract. You approve a 3D rendering of the unit before we build. Our page on how our design-build process works explains each step.
- Trades: electrical, plumbing and other regulated work is done by licensed specialty contractors we schedule and supervise.
- Payments: the down payment is $1,000 or 10 percent, whichever is less. Later payments follow completed milestones, and changes are made by signed written change order.
- Warranty: a one-year labor warranty in writing. The terms are on our workmanship warranty page.
- Response times: we reply within one business day, site visits take about two hours, and the written proposal follows within 48 hours.
- Funding: if you are working out how to pay for the unit, our home improvement financing options page covers the third-party lenders we work with.
We are rated 4.7 stars across 146 Yelp reviews. More detail on how we work is on our ADU builder in Los Angeles page.
Choosing an ADU Builder FAQs
What license does an ADU contractor need in California?
A contractor running a site-built ADU project needs a Class B General Building license from the Contractors State License Board. CSLB’s ADU guidance says B contractors can build or install ADUs, and that a C-47 General Manufactured Housing contractor can install an ADU that is a manufactured home. Specialty licenses such as electrical or plumbing cover only that trade.
Can a B-2 residential remodeling contractor build an ADU?
Not a new one. Under Business and Professions Code §7057.5, the B-2 classification covers improvements to an existing residential wood-frame structure and may not contract for structural changes to footings, foundations, load-bearing walls or roof structures. A new detached ADU, or a conversion that involves that structural work, calls for a Class B General Building contractor.
How much deposit can an ADU builder ask for?
No more than $1,000 or 10 percent of the contract price, whichever is less, under Business and Professions Code §7159, and CSLB has confirmed the rule applies to ADU construction. After that, payments may not exceed the value of the work performed or material delivered.
Should I pull the ADU permit myself as an owner-builder?
Only if you genuinely intend to run the project yourself. The LADBS owner-builder notice warns that if you hire anyone other than licensed contractors, you may be treated as an employer, responsible for payroll taxes and workers’ compensation, and liable for injuries to unlicensed workers. A builder who asks you to take the permit is shifting that risk to you.
Who is responsible for ADU plans and engineering?
Whoever the contract says is responsible, which is why it has to be written down. With a design-build contractor, the builder coordinates the designer, the structural engineer and the Title 24 energy documents and answers plan-check corrections. If you hire a designer separately (the trade-offs are in our comparison of design-build vs. design-bid-build), decide in writing who handles corrections and who pays when drawings and field conditions disagree.
Is a prefab ADU company the same as a contractor?
Not necessarily. Some prefab companies hold a contractor’s license and install the unit, and others sell the unit while the foundation, utilities and permit are left to a contractor you hire. Ask who holds the license for the site work and whose name will be on the permit before you compare prices.
How do I check an ADU builder’s past permits in Los Angeles?
Ask the builder for the addresses of ADUs it has completed, then search those addresses in the LADBS Permit & Inspection Report, or on the permit portal of the city where the ADU was built. A finished ADU should show issued permits that reached final inspection.
How many ADU bids should I get?
CSLB recommends at least three. Bids are only comparable when they price the same scope, so compare site work, exclusions, allowances and payment schedules line by line, not just totals.
Check us the same way, then talk to us
If you are planning an ADU anywhere from the San Fernando Valley to Orange County, look up our license, read our reviews, and then let us walk your lot. We will look at the sewer, the electrical panel, the access path and the setbacks, tell you what your lot can hold, and give you a written proposal that lists the site work, the allowances, the payment schedule and the dates. Site visits take about two hours and proposals follow within 48 hours.