As part of our reporting on how some prefab home builders have been making promises to customers they can’t keep, we spoke to Casita Coalition, a California nonprofit who advocates for affordable housing, to hear about what buyers can do to safeguard themselves from bad actors. Here’s what they say you should do first if you’re thinking about building an accessory dwelling unit (ADU) specifically, whether prefab or otherwise.

Homeowners considering building or purchasing an ADU or junior ADU should consider first taking an ADU education course with a HUD-certified housing counseling agency or other nonprofit organization.
When selecting a builder or designer for an ADU or other home improvement project, ask to see completed projects near your home before choosing. If they are licensed, check their license status at the Contractors State License Board (CSLB).
Use caution if offered an “everything included” price before the details of your specific property are examined.
Read your contract carefully before signing. It should state specifically what work it covers and provide detailed payment schedules.
For factory-built ADUs, confirm that the purchase contract includes delivery, storage, installation, plan check corrections, and all phases up to and including final inspection and occupancy approval.
Use caution if asked to pay more than 30 percent of the total “all-in” costs as a down payment for modular/prefab ADUs.
For manufactured ADUs, consumer protections require payments to be placed in escrow accounts. Confirm that the escrow company is licensed. Use caution and understand completion of work and project status when asked to release funds from the escrow account.
For site-built projects, pay only as the work progresses. If you have a renovation/construction mortgage, your lender will only make “progress payments” as work progresses through a managed escrow that reviews your contractor bills and confirms that the completed work was done. If you do not have a renovation/construction mortgage lender or borrowed funds as a cash-out refinance/HELOC, you can choose to use this same procedure and only make payments as work is completed, tying the payments to specific progress contract milestones. You can also engage a funds control or managed escrow company to assist.
Your ADU project may involve more than one professional. Make sure that their responsibilities are clearly stated in each contract.
Check that a contingency amount is included to cover unexpected expenses.
Be alert when rebuilding after disasters. CSLB and the California Attorney General’s Office website have tips and resources to avoid fraud and scams.