Does an ADU bid have to include permit fees?

Not necessarily as part of the labor price, but a complete bid should name who is pulling the permit and whether the permit and plan-check fees are included in the contract total or billed separately. If a bid doesn't mention permits at all, ask before you sign.

What's a normal deposit for an ADU project?

It depends on your state. California caps contractor down payments at $1,000 or 10% of the contract price, whichever is less, under Business and Professions Code 7159.5. Check your own state contractor licensing board's rules, since limits and enforcement vary.

Is it normal for a bid to include allowances instead of fixed prices?

Yes, especially for finishes like flooring, cabinets, and fixtures you haven't picked out yet. What matters is whether the allowance states a unit price and explains what happens if you choose something above or below that number.

Why does a bid need an exclusions section?

Exclusions tell you what the contractor is not doing — utility hookups, landscaping, or contingencies for hidden conditions like bad soil are common examples. A bid with no exclusions listed usually means the scope wasn't fully worked out, not that everything is covered.

How many ADU bids should I get before choosing a builder?

More than one. A single bid only tells you what one builder thinks the job costs; comparing itemized bids from several licensed, insured builders is what tells you whether any given price is actually reasonable for your project.

What Should Be in an ADU Builder's Bid? A Line-Item Checklist

Two ADU bids can land within a few thousand dollars of each other and still cover completely different amounts of work. The bottom-line number only means something once you know what the line items above it actually promise — and what they quietly leave out. Here's what a complete builder's bid should spell out, and where vague wording tends to cost homeowners later.

What line items should actually be in the bid?

A real bid breaks the job into phases, not just a single lump sum. That's what lets you compare a builder who's pricing the work thoroughly against one who's guessing — or lowballing the number to win the job and making it up later with change orders.

Bid Section	What It Should Cover	Watch For
Site work & demolition	Grading, utility trenching, removing trees or fencing	Unforeseen soil or grading conditions are often excluded
Foundation	Slab or crawlspace per the engineered plans	Rock, poor soil, or engineering changes can trigger add-ons
Framing & structural	Lumber, sheathing, structural connectors	Some contracts include a lumber price-escalation clause
Rough plumbing, electrical, HVAC	Rough-in for all systems tied to the plans	Utility company connection fees are frequently excluded
Exterior & roof	Siding, roofing, windows, doors	Check whether brand and grade are named or left open
Insulation & drywall	Code-required insulation, drywall, texture	Usually a fixed price once plans are set
Finishes	Flooring, cabinets, countertops, fixtures, paint	Almost always an allowance, not a locked price
Permits & fees	Building permit, plan check, impact fees	Sometimes passed through separately from the labor price

If a bid you're holding collapses several of these rows into one vague line — "finish work: $45,000" — that's a sign to ask for a breakdown before you compare it to anyone else's number.

What's the difference between an allowance and a flat price?

An allowance is a placeholder budget for something that hasn't been picked out yet — flooring, light fixtures, a countertop material, appliances. It's normal to see allowances in an ADU bid, since you often haven't chosen finishes before construction starts. The problem is when an allowance is listed as a dollar figure with no unit basis and no reconciliation method attached. A well-written allowance says something like "$12/sq ft flooring allowance, homeowner pays the difference for anything above that price." A poorly written one just says "flooring allowance: $6,000" with no explanation of what happens if you pick something pricier — or cheaper.

Ask every builder bidding your project the same question for each allowance line: what happens if I choose above this number, and what happens if I choose below it? If a bid can't answer that in writing, treat the allowance total as a floor, not a final cost.

What should be marked as excluded?

Exclusions are the work a contractor isn't doing at all, and a bid without an exclusions section is usually a bid with an incomplete scope, not a bid that includes everything. Items that commonly show up as exclusions rather than inclusions: utility company connection and meter fees, landscaping and hardscape outside the ADU footprint, and contingencies for conditions nobody can see before digging — unexpected soil issues, hidden asbestos in an older structure being converted, or errors discovered in the building plans once framing starts. None of that makes a builder dishonest. It makes the exclusions list one of the more important pages in the bid, because it tells you what's not covered by the number you're comparing.

Who pulls the permits — and is that cost included?

Permits should be a named line item, not an assumption. Confirm who is pulling the permit (the builder or you), what the estimated permit and plan-check fees are, and whether those fees are included in the contract price or billed as a pass-through. For more on what permitting actually requires and how long it adds to a project, see Do I Need a Permit for an ADU? What the Law Actually Requires.

What's a legal deposit, and what's a red flag?

Deposit limits vary by state, so check your state contractor licensing board's rules before signing. In California, for example, a licensed contractor generally can't collect more than $1,000 or 10% of the contract price, whichever is less, as a down payment on a home improvement contract — a cap set by Business and Professions Code 7159.5 and enforced by the Contractors State License Board. Calling the upfront payment a "mobilization fee" or "material deposit" doesn't change the cap. A bid asking for a large deposit well above your state's limit, with payments front-loaded before much work is done, is worth a direct question before you sign.

How do you compare bids that are built differently?

Builders don't structure bids the same way, which is exactly why line-by-line comparison matters more than the bottom line. One builder's number might include permit fees and a generous finish allowance; another's identical-looking total might exclude both. Getting more than one detailed bid — and lining up the same line items side by side — is how you find out whether a price is actually fair instead of just hoping it is. The Federal Trade Commission's guidance on hiring a contractor specifically recommends collecting multiple written estimates for this reason: a single bid gives you a number, but only a comparison gives you context. If you're weighing how to pay for the project once bids are in hand, How Do I Finance an ADU? Comparing Your Loan Options covers the common paths, and Prefab vs. Custom ADU: Which Is Actually Cheaper? walks through how build method changes what belongs in the bid in the first place.

What to do about it

Before you sign anything, ask each builder bidding your ADU for the same three things: a line-item breakdown matching the phases above, a written allowances list with unit pricing and a reconciliation method, and a written exclusions section. Confirm in writing who pulls permits and whether those fees are in the price. Check your state contractor board's deposit rules before agreeing to any upfront payment. And don't stop at one bid — request comparable, itemized quotes from more than one licensed, insured builder so you're comparing scope against scope, not just number against number.