Before You Put Down a Deposit
The Due-Diligence Checklist for Prefab, Modular, and Tiny Homes
The fastest way to turn an exciting prefab project into an expensive problem is to put down a large deposit before you know whether the product, parcel, permitting path, delivery plan, and site work actually fit together.
A beautiful floor plan is not due diligence.
Neither is a salesperson telling you they build all over California.
Before significant money changes hands, you want answers to five basic questions:
What exactly am I buying?
Can it legally be used the way I intend?
Can it actually be permitted on my parcel?
Can it physically get to and function on my site?
What will the entire project cost after the building price?
If those questions are still fuzzy, you are not ready for the deposit.
The goal is not to eliminate every unknown. The goal is to identify the expensive unknowns before they become your problem.
Step One: Identify What You Are Actually Buying
Do not begin with countertops, colors, or floor plans.
Begin with the legal construction category.
Ask the seller to state in writing whether the product is:
California Factory-Built Housing.
A modular product regulated as Factory-Built Housing.
HUD-code manufactured housing.
A panelized building system.
A site-built kit or material package.
A recreational vehicle.
A park model or park trailer.
Another construction type.
Prefab and tiny home are not enough.
Those are broad marketing descriptions.
The classification affects the codes, approvals, inspections, installation, financing, and legal use of the unit.
If the salesperson cannot clearly tell you what the product legally is, stop there.
Step Two: Ask What Approval Documentation Comes With It
For a factory-produced product, ask what official documentation demonstrates how it was designed, reviewed, inspected, or certified.
For California Factory-Built Housing, HCD explains that design and construction are approved through HCD-certified third-party agencies, and an HCD insignia tells the local building official that the factory-built unit or component was inspected and approved according to the approved plans.
But installation is still subject to local building-department inspection.
Ask for:
The applicable approval information.
Sample approved plans if available.
The name of the design approval agency or other approving entity.
The inspection or quality-assurance pathway.
The insignia, label, certification, or documentation the finished product will carry.
A written explanation of what remains subject to local approval.
Do not accept 'HCD approved' as the end of the conversation. Ask what is approved and what is not.
Step Three: Verify That the Product Can Be Used for Your Intended Purpose
A structure can be legal as one thing and completely wrong for what you want to do with it.
If your goal is an ADU, ask whether the product can legally be permitted as an ADU.
If your goal is a primary single-family residence, ask whether it can be permitted as a permanent residence.
If it is a tiny home on wheels, determine whether it is actually an RV or park-model product rather than a permanent dwelling.
Ask:
Can this exact construction type be approved for permanent residential occupancy?
Can it qualify for the use I intend?
Has this model or construction system been permitted for that use in California?
What local approvals are still required?
Do not rely only on the manufacturer's interpretation.
The jurisdiction that will issue the local permits needs to agree with the proposed use.
Step Four: Talk to the Local Jurisdiction Before You Order the House
You do not necessarily need a complete permit before selecting a manufacturer.
But before making a large nonrefundable commitment, you should understand the local path.
Depending on the project, that may mean contacting:
Planning.
Building.
Environmental Health.
Fire.
Public Works.
Water or sewer district.
Other local agencies with jurisdiction over the parcel.
Questions may include:
Is the proposed use allowed?
What setbacks apply?
What height and lot-coverage rules apply?
What foundation and installation documents will be required?
Is grading review required?
What fire-access requirements apply?
What utility information is required?
If the property is unsewered, what septic approval is required?
Are there known flood, environmental, access, or other site constraints?
HCD's Factory-Built Housing guidance specifically distinguishes factory approval from local installation inspection.
The factory approves the factory work. Your parcel still belongs to the local permitting world.
Step Five: Confirm the Model Fits the Parcel - Not Just the Setbacks
A rectangle may fit on the site plan and still be a terrible project.
Look beyond the building footprint.
You may need room for:
Foundation excavation.
Grading.
Utility trenches.
Septic system and replacement area.
Well setbacks.
Driveway and fire access.
Drainage.
Retaining walls.
Construction staging.
Delivery trucks.
A crane.
Module maneuvering.
Required setbacks from creeks, easements, property lines, or other constraints.
A modular home may fit beautifully once installed but be impossible to deliver around the last curve in the road.
A tiny home may fit beside the house but conflict with septic or fire-access requirements.
Fit means the whole construction process works, not merely that the finished walls fit inside a setback envelope.
Step Six: Investigate Water and Wastewater Early
For rural projects especially, water and wastewater can decide feasibility.
If the property is on sewer, determine where the connection is and whether the project can actually connect to it.
If the property uses septic, determine whether the existing system can support the proposed development or whether a new or expanded system is needed.
Ask:
What was the existing septic system approved for?
Where are the tank, disposal field, and replacement area?
Does the proposed building conflict with them?
Will Environmental Health require a new evaluation?
Is there adequate area for the proposed development?
For water:
Is there public water?
Is a new meter required?
Is there a private well?
Is production adequate?
Is storage needed?
Do well/septic setbacks affect the design?
Do not order a dwelling for a parcel that has not demonstrated a workable way to provide water and dispose of wastewater.
Step Seven: Check Electrical Capacity
A factory-built home may arrive fully wired.
The property still has to power it.
Find out:
What electrical service exists?
Is there enough capacity?
Will the main panel need replacement?
Is a new meter required?
How far is the building from the service?
Will trenching be required?
Does the utility need to upgrade a transformer or other infrastructure?
Utility-company work can have its own schedule.
That matters if the manufacturer's sales pitch is built around a very fast construction timeline.
Step Eight: Verify Delivery Before You Buy
Do not let the first delivery feasibility study occur when the house is already on a truck.
Ask the manufacturer or transporter to evaluate:
Road width.
Turning radius.
Bridges.
Culverts.
Grades.
Overhead utilities.
Trees.
Gates.
Private-road conditions.
Easements.
The final approach to the building pad.
Where delivery vehicles will stage.
For large modules, route feasibility can determine whether the project works at all.
Get the assumptions in writing.
'We deliver throughout California' does not mean they can deliver to your building pad.
Step Nine: Verify the Crane and Set Plan
If the project requires a crane, determine where it will sit before the unit is manufactured.
Ask:
What size crane is anticipated?
Where will it set up?
Does that area need grading or compaction?
Can the crane reach the foundation?
Where will the modules wait?
Are power lines or trees in the way?
Who coordinates the crane?
Who pays for additional crane time?
What happens if weather prevents the set?
A crane problem is not something you want to discover while multiple modules are waiting on trucks.
Step Ten: Identify Every Party in the Project
Prefab projects can involve more companies than buyers realize.
You may have:
Manufacturer.
Dealer.
Designer.
Engineer.
Permit consultant.
Licensed general contractor.
Foundation contractor.
Site contractor.
Installer.
Crane company.
Utility contractors.
Other subcontractors.
Write down who is responsible for each major scope item.
Do not accept a chain of assumptions where the manufacturer thinks the installer is doing something and the installer thinks the owner is doing it.
Every major scope item should have one clearly identified responsible party.
Step Eleven: Find Out Who Handles Local Permitting
Ask exactly what permit assistance means.
Does the company:
Prepare the site plan?
Prepare foundation plans?
Provide site-specific structural information?
Provide energy documentation?
Submit the application?
Respond to plan-check corrections?
Coordinate factory documents with local plans?
Coordinate fire review?
Coordinate septic or sewer information?
Schedule inspections?
Handle final approval?
Or do they simply give you the factory plans and wish you luck?
Neither business model is inherently wrong.
But the price comparison changes dramatically depending on which one you are buying.
Step Twelve: Get a Complete Price - Then Build Your Own Complete Price
Ask for the company's written scope and exclusions.
Then create your own project budget.
Include:
Building/product price.
Design.
Engineering.
Survey.
Local permitting.
Permit and impact fees.
Foundation.
Grading.
Drainage.
Transportation.
Crane/set.
Onsite assembly.
Electrical.
Water.
Sewer or septic.
Driveway/fire access.
Retaining walls.
Demolition.
Finish work.
Site restoration.
Financing.
Contingency.
If the manufacturer does not provide one of those items, it does not disappear.
It moves into someone else's column.
The missing number is still a number.
Step Thirteen: Read the Exclusions Like They Are the Most Important Part of the Proposal
They often are.
Watch for:
By owner.
By others.
Not included.
Allowance.
TBD.
Subject to site conditions.
Permit fees excluded.
Utility work excluded.
Foundation by others.
Delivery subject to route review.
Crane not included.
Local engineering excluded.
None of those automatically makes a proposal bad.
They tell you where the risk is sitting.
Put a realistic estimate beside each exclusion before deciding whether the project fits your budget.
Step Fourteen: Ask What 'Preapproved' Means
If the company says the home is preapproved, ask:
Preapproved by whom?
It may mean:
The factory design has an HCD/state approval pathway.
The plan has been preapproved by a particular city or county.
A third-party agency approved the factory design.
The company has engineered a standard plan.
The company is using the term loosely.
Then ask:
Does that approval apply to this exact model?
Does it apply in my jurisdiction?
What local review remains?
Will my site-specific foundation need separate approval?
Will the local agency still review utilities, access, grading, fire, and other site work?
Preapproved does not mean approved on your parcel.
Step Fifteen: Research the Company Beyond Its Own Website
Look for evidence that the company actually delivers what it sells.
Ask for:
Completed California projects.
Projects in jurisdictions similar to yours.
Recent customer references.
Addresses or photographs of completed installations where appropriate.
Names of local installers or contractors who have worked with the product.
Then ask former customers about:
Final cost.
Schedule.
Permit problems.
Delivery.
Factory defects.
Installation.
Communication.
Change orders.
Warranty service.
Whether they would buy from the company again.
A five-star review written when someone ordered the house tells you much less than a conversation with someone who has been living in it for a year.
Step Sixteen: Verify the Licensed Contractors
If a California licensed contractor will perform the site construction, installation, foundation, or other contracted work, verify the license directly through CSLB.
Check:
License status.
Classification.
Business name.
Bond information.
Workers' compensation information.
Available complaint or disciplinary history.
CSLB also recommends checking references and understanding the written contract before work begins.
A manufacturer having a good reputation does not automatically verify the local contractor who will actually work on your property.
Step Seventeen: Understand Which Deposit Rules Apply to Which Agreement
This part deserves care because prefab projects may involve more than one contract.
For applicable California home-improvement contracts, CSLB states that the down payment generally cannot exceed $1,000 or 10 percent of the contract price, whichever is less, and later progress payments cannot exceed the value of work performed or materials delivered. CSLB expressly notes that these protections apply to residential ADU construction.
But a separate agreement to purchase a factory-manufactured product may not be the same contract as the local home-improvement agreement.
Before paying anyone, determine:
Who is receiving the money?
What contract governs the payment?
What exactly are you purchasing?
Is the payment refundable?
What milestone does it correspond to?
What has actually been manufactured or delivered at that point?
When does ownership/title to the product transfer?
What consumer protections apply to that particular transaction?
Do not assume that a factory deposit and a licensed contractor's home-improvement down payment are legally the same thing.
If a large amount of money is at stake and the contract structure is unclear, have the agreement reviewed before paying it.
Step Eighteen: Ask What Happens If the Permit Is Denied or the Project Changes
This question should be answered before the deposit becomes nonrefundable.
Ask:
What happens if the jurisdiction will not approve the proposed use?
What happens if the site requires a different foundation?
What happens if fire access makes the project infeasible?
What happens if septic cannot be approved?
What happens if the local agency requires modifications to the factory design?
What happens if delivery is impossible?
Can the order be transferred to another model or site?
What portion of the deposit is refundable?
At what point does it become nonrefundable?
The company may have legitimate costs once engineering or manufacturing begins.
That is different from not knowing the cancellation rules until something goes wrong.
Step Nineteen: Ask What Happens If the Manufacturer Fails
Prefab often requires money to leave your hands before the product reaches your property.
That creates a risk that conventional progress-payment construction may not create in exactly the same way.
Ask:
How long has the company been operating?
Who actually owns the factory?
Is your contract with the manufacturer, a dealer, or another entity?
When does ownership of materials or the unit transfer?
Are customer deposits segregated or simply part of company operating funds?
Is any performance security or other protection offered?
What happens to work in progress if the company closes?
You may not get perfect protection.
But you should understand the exposure.
A low price is not useful if the company disappears before the house does.
Step Twenty: Understand the Warranty Before You Need It
Ask for the warranty in writing before purchasing.
Determine:
What does the factory warranty cover?
How long does it last?
What does the installer cover?
What does the local contractor cover?
Who handles structural issues?
Who handles plumbing or electrical defects?
Who handles leaks at module connections?
Who handles cosmetic damage from transportation?
Who pays travel costs?
Who actually comes to your property?
CSLB advises consumers to get contractor and manufacturer warranties in writing when they are part of the project.
The phrase manufacturer warranty sounds much better before you learn the nearest service person is six hours away.
Step Twenty-One: Check Financing Before the Deposit
Do not assume your lender will finance the product simply because the company calls it a home.
Tell the lender exactly what you are buying.
Provide the actual classification.
Ask:
Will the lender finance this construction type?
Can loan funds be used for factory deposits?
How are draws handled?
Does the lender require a licensed contractor?
When does the product become eligible collateral?
How will the finished property be appraised?
Are there special requirements for manufactured housing or other construction categories?
A financing problem discovered before the deposit is annoying.
A financing problem discovered after the deposit is expensive.
Step Twenty-Two: Check Insurance
Talk to your insurer before construction.
Ask whether they can cover:
The project during construction.
The finished dwelling.
The specific construction category.
Transportation or installation risks where relevant.
A manufactured home if that is what you are buying.
An ADU or second dwelling on the property.
Also verify appropriate insurance for contractors performing site work.
Do not assume the factory's insurance follows the unit through every stage of transportation and installation.
Step Twenty-Three: Know When the Design Becomes Final
Factory construction rewards decisions made early.
That can be a benefit.
It can also become expensive if you expect to keep changing things.
Ask:
When is the design frozen?
When are finish selections final?
What changes can be made after engineering?
What changes can be made after production starts?
What are the fees?
What happens if the building department requires a change?
Who pays for revisions caused by site-specific conditions?
If you are still unsure about the layout, do not let a production deadline force you into a house you do not actually want.
Step Twenty-Four: Confirm the Schedule Is a Project Schedule, Not Just a Factory Schedule
Ask for the major milestones:
Design completion.
Local permit submission.
Permit approval.
Site work.
Foundation.
Factory production slot.
Factory completion.
Delivery.
Crane/set.
Onsite completion.
Utility connection.
Final inspection.
A salesperson saying 'we can build it in eight weeks' may be describing factory production.
That does not mean you will be living in it eight weeks after signing.
Step Twenty-Five: Put Everything Important in Writing
If the salesperson says:
Delivery is included.
This model is HCD approved.
They handle permits.
The foundation is included.
Your deposit is refundable.
The house can be used as an ADU.
They have already permitted the model in your county.
The price includes installation.
ask for that representation in the written agreement or supporting documentation.
People leave companies.
Salespeople remember conversations differently.
Web pages change.
If a promise materially affects whether you are willing to spend the money, preserve it in writing.
The Red-Flag List
I would slow down considerably if I encountered:
A seller who cannot clearly identify the product's legal construction category.
Claims that HCD approval eliminates local permits.
A tiny home on wheels being marketed as a legal permanent ADU without a clear approval pathway.
Pressure to place a deposit before local feasibility is investigated.
A large nonrefundable deposit before the site has been evaluated.
No clear written scope.
No clear exclusions.
No explanation of who handles the foundation.
No delivery-route analysis.
No local installer identified.
No completed California references.
No written warranty.
Vague answers about permits.
A price that excludes nearly all site work but is marketed as a completed-home price.
A salesperson who becomes irritated when you ask regulatory questions.
A contract with a different entity than the company you thought you were hiring.
A promise that everything can be figured out after the unit is ordered.
One red flag may have an explanation.
A collection of them is an answer.
The Green-Flag List
Things I like to see:
The company clearly identifies the legal construction category.
Approval documents are easy to obtain.
The company openly explains what local permitting remains.
They want to understand the parcel before promising a price.
They have completed California projects.
They can identify experienced local installers.
The scope and exclusions are detailed.
Site responsibilities are clearly assigned.
Delivery and crane feasibility are evaluated early.
They are comfortable putting promises in writing.
They discuss what can go wrong without becoming defensive.
The deposit and cancellation terms are understandable.
The warranty identifies who actually performs service.
The schedule includes permits, site work, production, delivery, installation, and final inspection.
Competent companies generally do not need the project to remain mysterious.
The One-Page Pre-Deposit Checklist
Before I put significant money down, I would want to check these boxes:
I know the exact legal construction category.
I know what approval/certification documentation comes with the product.
I have confirmed the intended residential use is viable.
I understand the local permitting path.
I have evaluated the building location.
I understand water and wastewater feasibility.
I understand electrical requirements.
Delivery access has been evaluated.
Crane/set feasibility has been evaluated if applicable.
I know who handles the foundation.
I know who handles local permits and corrections.
I know who handles site work.
I know who handles installation.
I have a realistic completed-project budget.
I have reviewed every major exclusion.
I understand what 'preapproved' means in this specific proposal.
I have researched completed projects and references.
I have verified applicable licensed contractors.
I understand which contract governs each deposit/payment.
I know when deposits become nonrefundable.
I know what happens if local approval fails.
I know what happens if delivery is impossible.
I understand the warranty.
I have checked financing.
I have checked insurance.
I know when the design becomes final.
I have a realistic whole-project schedule.
Important promises are in writing.
If you cannot check several of those boxes, the solution is usually not to panic.
It is to delay the deposit and answer the questions first.
The Bottom Line
Prefab, modular, manufactured, panelized, and tiny-home projects can be excellent ways to build.
But they move some decisions - and sometimes a lot of money - much earlier in the process.
That makes due diligence especially important.
Know what you are buying.
Know whether it can be permitted for your intended use.
Know whether it works on your parcel.
Know how it will get there.
Know who is responsible for the work that happens after it leaves the factory.
Know the completed-project price.
And know what happens to your money if the project does not proceed as planned.
The right time to discover a fatal problem is before the deposit, not after the house has entered production.
Looking Ahead
Next: Who Is Responsible for What? Manufacturer vs. Contractor vs. Owner.
We will map the handoff points that cause some of the biggest prefab problems: plans, foundation, permits, site work, delivery, crane, installation, utility connections, inspections, corrections, and warranty responsibility.
If you are evaluating a California prefab, modular, manufactured, panelized, tiny-home, ADU, or SFR project, Buchanan Land Use Consulting can help investigate the parcel and permitting path before you commit significant money to the building.
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