Contractor Deposit Limits by State: How Much Can a Contractor Ask Up Front?

Why deposit limits exist

When a contractor takes a big payment up front and the job never starts, the homeowner is the one left trying to get the money back. Deposit limits keep the amount at risk small. They also give the contractor a reason to keep showing up, because most of the money is paid as the work gets done.

Most limits apply only to home improvement work on homes people live in. Many also only kick in above a certain contract amount, so check the details for your state below.

States with a set deposit limit

California: the deposit can't be more than 10% of the contract or $1,000, whichever is less. This applies to licensed home-improvement contractors (Cal. Bus. & Prof. Code §7159.5).

Nevada: on owner-occupied single-family homes, the deposit can't be more than 10% or $1,000, whichever is less (NRS 624.940). A contract that breaks this can be canceled by the homeowner.

Maryland: no money before the contract is signed, and no more than one-third of the price at signing (Md. Code, Business Regulation §8-617).

Massachusetts: on jobs over $1,000 at owner-occupied homes with one to four units, the deposit can't be more than one-third of the price, or the cost of special-order materials if that is higher (M.G.L. c. 142A §2).

Maine: on home construction or repair contracts over $3,000, the down payment can't be more than one-third of the price (10 M.R.S. §1487).

Pennsylvania: on home improvement contracts over $5,000, the deposit can't be more than one-third of the price plus the cost of special-order materials (73 P.S. §517.9).

Ohio: on covered home construction contracts over $25,000, the deposit is limited to 10%, with an allowance for special-order items (Ohio Rev. Code §4722.04).

Vermont: for registered residential contractors on most jobs over $10,000, the down payment can be up to half the labor cost or half the materials cost, not half the whole contract (26 V.S.A. §5509).

States with narrower rules for insurance or disaster work

Kentucky: when a job is paid from insurance money, the contractor can't require any payment until the homeowner's cancellation window ends (KRS 367.626).

North Carolina: for roof work tied to an insurance claim, the contractor can't start work or take payment during the five business days after the claim is denied (N.C. Gen. Stat. §14-401.13).

Texas: out-of-area contractors doing disaster cleanup or repair can't require payment before work starts. Contractors with a local business address for at least a year are not covered (Tex. Bus. & Com. Code ch. 58).

These rules only cover the situations described. They don't set a limit for everyday remodels or repairs.

States without a statewide limit we could confirm

We checked the laws in every other state and DC and couldn't confirm a statewide cap on home improvement deposits: Alabama, Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin, Wyoming.

That doesn't mean anything goes. Many of these states still require a written contract that lists the deposit and payment schedule, and cities or counties can have their own rules. Some state agencies also publish advice, like keeping the deposit to about 10% or a third. That's guidance, not law.

A safe rule of thumb anywhere

Keep the deposit around 10% of the job, and link everything after that to finished stages of work. If special-order items like windows or cabinets need to be paid up front, ask for the supplier invoice so you know what that money is for.

Put the deposit amount, what it covers and the payment schedule in the signed contract. If someone asks for most of the money before work starts, see it as a warning sign, especially if they want cash.

How Henry Pay will use these limits

Henry Pay is coming soon. When you build a payment schedule, the deposit is set at no more than 10% of the job, and lower when your state's limit is lower (like California's and Nevada's $1,000 cap). You can try it now with your own estimate. No payment is collected yet.

Common questions

Sources

• Cal. Bus. & Prof. Code §7159.5
• Maryland Business Regulation §8-617
• Massachusetts G.L. c. 142A §2
• 10 M.R.S. §§1486, 1487(5), 1489; 9-A M.R.S. §3-502
• Pennsylvania Home Improvement Consumer Protection Act
• Ohio Rev. Code §4722.04
• Vermont 26 V.S.A. §5509
• Nevada State Contractors Board Handbook
• Kentucky KRS 367.620
• N.C. Session Law 2024-11
• Texas Bus. & Com. Code ch. 58

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