Should I pay a contractor upfront?

Short answer

A modest deposit is normal; paying most or all of the job upfront is not. Tie payments to completed milestones, keep a meaningful final payment until the work passes inspection and the punch list is done, and pay by a traceable method.

Full explanation

A deposit exists to cover materials and to hold your place in the schedule. It should not fund the contractor''s entire operation.

A reasonable structure on a typical residential job:
- A deposit at signing, sized to actual up-front material and mobilization costs.
- Progress payments released when defined milestones are complete — not on dates.
- A final payment held until the work is finished, inspections pass, and the punch list is closed.

Protect yourself:
- Pay by cheque or card, never in cash, and never to a personal name that does not match the contract.
- Get a receipt and a lien waiver or release for every payment, including from subcontractors and suppliers.
- Do not pay for materials that have not been delivered to your property.
- Never pay the full amount before work starts.

Some states cap deposits for home improvement contracts or impose specific duties once a deposit is taken. Rules differ, so check your state''s consumer-protection or licensing authority for the specific limits that apply to you.

State-specific rules

Florida does not set a flat percentage cap on residential deposits. Section 489.126, Florida Statutes, instead imposes duties on a contractor who takes an initial payment of more than 10 percent of the contract price for repair, restoration, improvement or construction of residential real property. That contractor must apply for any necessary permits within 30 days of the payment and start the work within 90 days after all necessary permits are issued — unless there is just cause, or you agreed in writing to a longer period.

If the contractor misses those deadlines, the statute requires you to send a written demand by certified mail, return receipt requested, to apply for the permits, start the work, or refund the payment. It may be inferred that the contractor lacked just cause if they do not respond within 30 days of that demand. The statute also addresses a contractor who takes money exceeding the value of work performed and then fails to work for a 90-day period.

Read §489.126 as a set of permit, start-work and refund obligations triggered by a larger deposit — not as a rule that limits deposits to 10 percent.

Common mistake to avoid

Never pay in cash and never pay in full before work begins. If a contractor needs the whole contract price up front, that is a financing problem you should not solve with your own money.

Sources & References

§489.126, Florida Statutes — Moneys received by contractors — Florida Legislature — Online Sunshine official source
How To Avoid a Home Improvement Scam — Federal Trade Commission official source
Consumer Pamphlet: Building or Remodeling a Home in Florida — The Florida Bar official source

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