What Happened

On October 20, 2026, CSLB announced that Colton Paulhus and Austin Paulhus, the brothers behind the former company Anchored Tiny Homes, have been charged with 35 felony counts related to unfinished accessory dwelling unit (ADU) projects. According to CSLB, each brother faces:

• 33 counts of diversion of construction funds
• 1 count of conspiracy to commit a crime
• 1 count of employee wage theft

CSLB says the charges came after it investigated more than 200 consumer complaints across 18 California counties. The complaints alleged abandoned ADU projects, unpaid subcontractors, payments taken in advance of work that was performed or often not performed, and homeowner money that was not used for the homeowners’ projects.

Timeline of the Case

• Before November 2024: Because of the volume and severity of the complaints, CSLB opened a criminal investigation and filed an accusation with the California Attorney General’s Office seeking revocation of the company’s contractor license. CSLB calls this the most serious administrative action available to the Board.
• November 2024: CSLB revoked Anchored Tiny Homes’ contractor license.
• After the revocation: CSLB kept receiving and investigating complaints and, working with the Sacramento County District Attorney’s Office, began referring cases for possible criminal charges.
• October 14, 2026: The brothers appeared virtually in court, ABC10 reported.
• January 12, 2027: The continued date for the settlement conference hearing, according to CSLB.

The defense disputes that the company’s collapse was criminal. Blair Goss, the attorney for Austin Paulhus, told ABC10 that a business failing “does not necessarily mean that there was fraudulent or criminal activity involved.” Everyone charged is presumed innocent unless proven guilty in court.

Why This Matters If You Are Building an ADU

Whatever the outcome of the criminal case, the complaints describe a pattern every homeowner can learn from: money paid far ahead of the work. When a contractor collects large payments before anything is built, the homeowner is the one carrying the risk if the company runs out of money, closes, or walks away.

California law already limits how much an ADU contractor can collect up front. CSLB used this announcement to remind both homeowners and contractors of those rules.

The ADU Payment Rules That Protect You

CSLB treats building an ADU as a home improvement project under the Contractors State License Law. That brings these protections:

• Down payment limit: The down payment can never be more than $1,000 or 10 percent of the total project cost, whichever is less. On a $250,000 ADU, that is $1,000, not $25,000.
• Progress payments follow the work: Any payment after the down payment cannot be more than the value of the work already performed or the materials already delivered.
• A written Home Improvement Contract is required. CSLB says it should include the scope of work, the project timeline, the payment schedule, materials and finishes, the contractor’s license number, and a notice of your cancellation rights.
• You can cancel after signing. You have three days from the day you sign to cancel, five days if you are 65 or older, and seven days in disaster zones.
• Document everything. Keep a record of every payment, get receipts, and get every change order in writing.

What a Fair ADU Payment Schedule Looks Like

CSLB’s ADU guide includes a sample progress payment schedule. Every payment is tied to a finished stage of construction:

Notice that no stage asks for a large payment before work starts, and the last 5% is held until the final inspection and punch list are done.

Red Flags Before You Sign an ADU Contract

• A deposit over $1,000. If a contractor asks for 10%, 20% or 30% “to get started” on an ADU, that is more than the law allows.
• Payments for “plans” or “permits” before work starts. CSLB warns about this. Ask for an accounting of the plan costs or call the architect or engineer to confirm they were paid, and check permit costs with your city or county building department. Permits are issued by your local city or county.
• A payment schedule tied to dates instead of finished work. Payments should match stages of construction you can see, not the calendar.
• No license number on the contract, or a license that does not match the company name.
• Verbal promises that are not in the written contract. CSLB notes that verbal agreements offer little to no legal protection in a dispute.
• “Cash deals” or vague estimates. CSLB specifically warns about unlicensed individuals who offer them.

Check the License Before You Pay Anything

Building or installing a full ADU generally takes a B (General Building) contractor, according to CSLB. A C-47 manufactured housing contractor can install a factory-built ADU, and specialty contractors such as electricians and plumbers can work on an ADU as subcontractors.

You can check any California contractor in seconds with our free CSLB License Lookup tool, by license number or business name. It shows whether the license is current, its classifications and its bond and workers’ compensation details. Our tool lists only current licenses: a search for “Anchored Tiny Homes” today returns no current license, because CSLB revoked it in 2024.

A current license is the minimum, not a guarantee. CSLB also recommends getting at least three bids, asking for references from similar projects, and asking to see the contractor’s pocket license and insurance. For a full checklist, read our guide to finding your ADU contractor.

If Your ADU Contractor Took Your Money and Stopped Working

• Gather your paperwork: the contract, every payment record and receipt, change orders, texts and emails, and photos of the work as it stands.
• Look up the license in our license lookup tool and write down the license number and status.
• File a complaint with CSLB. The Anchored Tiny Homes case grew out of individual consumer complaints, and CSLB used them to build its case.
• Find out where your permit stands before anyone else picks up the job. You can check the permit record for your address with our permit lookup.
• Get the project assessed by a licensed contractor before you pay anyone else. Our article on dealing with an unfinished construction job walks through the next steps.

Frequently Asked Questions

Sources

• Contractors State License Board – press release CSLB #26-02, “Former Contractors Behind Anchored Tiny Homes Face 35 Felony Charges” (October 20, 2026), cslb.ca.gov
• Contractors State License Board – Fast Facts: Tips for Building a Residential Accessory Dwelling Unit (ADU) (rev. 11/2025)
• ABC10 – “For the first time, Anchored Tiny Homes defense responds as criminal case moves forward” (October 14, 2026)

Related Reading

• How To Find Your ADU Contractor – The Complete Guide
• Unfinished Construction Job – Dealing With Your Contractor
• Warning for LA Fire Victims: 17 Unlicensed Contractors Charged in the Palisades and Eaton Fire Zones
• AB 956 Signed: Two Detached ADUs Starting January 1, 2027