Contractor deposits, liens and getting paid: what each state's law says (2026)

Chapters

1. 0:00 How much deposit is normal, and when is it too much?
2. 2:02 Does my state cap deposits?
3. 5:05 The contractor took my deposit and disappeared: what does the law say?
4. 7:54 Can a contractor put a lien on my house?
5. 9:20 How long does a contractor have to file a lien?
6. 12:15 I paid in full: can a subcontractor still lien my house?
7. 14:05 The contractor walked off the job
8. 15:14 The customer won't pay: what can a contractor do?
9. 16:41 Can I hold back the final payment? (retainage)
10. 17:35 Can I cancel, and what must the contract say?
11. 19:15 How InstaBids works

Transcript

0:00 How much deposit is normal, and when is it too much?

A deposit, a lien, a final payment. Those are the three moments where a home job can turn into a fight, for the homeowner who paid up front and for the contractor who is still waiting to be paid. Many states write the answer down.

In this film we read those words out, state by state, with the section number on screen. Where a page is an attorney general's advice and not a law, we say so. This is general information, not legal advice; rules change, check your state.

The Federal Trade Commission says: “Don't pay the full amount for the project up front.” And: “Some states actually limit the amount of money a contractor can ask for as a down payment.” Some state attorneys general put numbers on it, on advice pages, not laws.

Georgia's, on its Storms and Fraud page: “Consider paying no more than one-third of the total cost as a down payment”. Indiana's, in its Storm Chasers brochure: “Do not pay more than 1/3 of the total cost as a down payment.”

New York's: “If the contractor requires a deposit, try to negotiate a small amount.” And: “Never give a contractor a cash deposit before you sign a contract.” And from the contractor's side of the table, Pennsylvania's attorney general says: “The law does not address how the balance should be paid. Discuss and negotiate between the consumer and contractor for incremental payments as work progresses, with a final payment upon completion.”

So the common thread is a written plan: what is paid up front, what is paid as the work moves, and what is paid at the end. On InstaBids, you describe the job once, and it becomes one written scope.

Contractors bid in writing on that same scope.

2:02 Does my state cap deposits?

Some states do write a cap into law. California. Business and Professions Code section 7159.5(a)(3): “If a downpayment will be charged, the downpayment shall not exceed one thousand dollars ($1,000) or 10 percent of the contract amount, whichever amount is less.”

Nevada. For owner-occupied single-family homes, on contracts from the first of October 2023, NRS 624.970 says the contract must contain in writing, at (2)(g): “The amount, not to exceed $1,000 or 10 percent of the aggregate contract price, whichever is less, of any initial down payment or deposit paid or promised to be paid to the residential contractor by the owner before the start of the work.”

Maryland. Business Regulation section 8-617(b): “A person may not receive a deposit of more than one-third of the home improvement contract price before or at the time of execution of the home improvement contract.” Massachusetts. Chapter 142A, section 2(a)(6): a deposit paid in advance of the work “shall not exceed the greater of one-third of the total contract price or the actual cost of any materials or equipment of a special order or custom made nature”; the rest of the clause is on screen.

Maine. Title 10, section 1487(5), for contracts over $3,000: “The method of payment, with the initial down payment being limited to no more than 1/3 of the total contract price”. Pennsylvania. Title 73, section 517.9(10)(i). For contracts over $5,000, its list of prohibited acts bars a deposit above one-third of the contract price, or one-third plus the cost of special order materials.

The section opens “Except as provided under subparagraph (ii)”, and (ii) carves out certain home improvement retailers. Vermont. Title 26, section 5509(c)(1), for a registered contractor's contract with a maximum price: “the contract may require a down payment of up to one-half of the cost of labor to the consumer, or one-half of the price of materials, whichever is greater.”

Arizona, residential in-ground pools and spas only. Section 32-1158.01(A)(2)(a): “A down payment payable on the execution of the contract of not more than fifteen percent of the original contract price.” A cap is a number on paper, so it starts with the paper.

On InstaBids, you describe the job once, and it becomes one written scope. Contractors bid in writing on that same scope.

5:05 The contractor took my deposit and disappeared: what does the law say?

Some states also set a refund rule. Connecticut. Section 20-427(b)(8). Under the statute, no person shall “fail to refund the amount paid for a home improvement within ten days of a written request mailed or delivered to the contractor's last-known address”, when no substantial work has been done and the contract's start date is more than thirty days past; the exact conditions are on screen.

Pennsylvania has a similar refund rule, section 517.9(2): refund within ten days of a certified-mail written request, if no substantial portion of the work has been done and more than 45 days have passed since the starting date in the written contract; its full text is on screen.

Florida. Under section 489.126(2)(a), a contractor who takes more than 10 percent of a residential contract price as initial payment must: “1. Apply for permits necessary to do work within 30 days after the date payment is made, except where the work does not require a permit under the applicable codes and ordinances”.

New York. Lien Law section 71-a(4)(a): “Under a home improvement contract, payments received from an owner by a home improvement contractor prior to the substantial completion of work under the contract shall be deposited within five business days thereafter by the recipient in an escrow account in a bank, trust company, savings bank, or state or federal savings and loan association, located in this state.”

And: “Such deposit or deposits shall remain the property of such owner except as otherwise provided herein.” The next paragraph, 71-a(4)(b), gives the contractor another route. Instead of the escrow deposit, the contractor may post with the owner “a bond or contract of indemnity” or “an irrevocable letter of credit”, “in which case the recipient shall not be required to deposit such payments in an escrow account.”

Who may issue it, and the ten-business-day delivery rule, are on screen. Some states also run a public recovery fund. Each statute's cap and conditions are on screen: Maryland, Virginia, Connecticut, Florida, Arizona, Nevada and Minnesota. Each rule and fund has its own conditions; the full text is on screen.

7:54 Can a contractor put a lien on my house?

A lien is a claim for payment recorded against the property itself. Some states make the contract warn you about it. Florida, section 713.015(1). A residential contract over $2,500 must carry, in bold capitals: “ACCORDING TO FLORIDA'S CONSTRUCTION LIEN LAW (SECTIONS 713.001-713.37, FLORIDA STATUTES), THOSE WHO WORK ON YOUR PROPERTY OR PROVIDE MATERIALS AND SERVICES AND ARE NOT PAID IN FULL HAVE A RIGHT TO ENFORCE THEIR CLAIM FOR PAYMENT AGAINST YOUR PROPERTY.”

The same notice says: “IF YOU FAIL TO PAY YOUR CONTRACTOR, YOUR CONTRACTOR MAY ALSO HAVE A LIEN ON YOUR PROPERTY.” Can it happen without you knowing? In California, Civil Code section 8204(a): “A preliminary notice shall be given not later than 20 days after the claimant has first furnished work on the work of improvement.”

And section 8200(e)(1): “A laborer is not required to give preliminary notice.” In Florida the lien warning goes in the written contract; in California the notice comes from a subcontractor or supplier, so keep a written record of who is on your job.

On InstaBids, you describe the job once, and it becomes one written scope. Contractors bid in writing on that same scope.

9:20 How long does a contractor have to file a lien?

Now the contractor's side. A lien right has a clock, and the clock differs from state to state. Texas, for an original contractor on a residential project: Property Code section 53.052(a)(2), “not later than the 15th day of the third month after the month in which the original contractor's work was completed, terminated, or abandoned”.

Florida, section 713.08(5): “not later than 90 days after the final furnishing of the labor or services or materials by the lienor”. Under section 713.22, a lien “does not continue for a longer period than 1 year after the claim of lien has been recorded”, unless within that time an action to enforce it is commenced.

An owner's Notice of Contest limits the time to sue to “60 days from the date of service of this notice.” New York, Lien Law section 10(1): “within eight months after the completion of the contract”. Where the improvement is a single family dwelling, the statute says “within four months after the completion of the contract”.

Section 17: a lien lasts one year from the filing of the notice of lien, unless within that time a foreclosure action is commenced and a notice of its pendency is filed; the section also allows extensions, and for a single family dwelling only by court order.

The full text is on screen. California, Civil Code section 8412: “A direct contractor may not enforce a lien unless the contractor records a claim of lien after the contractor completes the direct contract, and before the earlier of the following times: “(a) Ninety days after completion of the work of improvement.” (b) Sixty days after the owner records a notice of completion or cessation.”

Section 8414: “A claimant other than a direct contractor may not enforce a lien unless the claimant records a claim of lien within the following times: “(a) After the claimant ceases to provide work.” (b) Before the earlier of the following times: “(1) Ninety days after completion of the work of improvement.” (2) Thirty days after the owner records a notice of completion or cessation.”

Every one of those clocks runs from a date tied to the work, such as completion or the last day of work, or from a recorded notice of completion. You see the job first, then bid in writing on that same scope.

12:15 I paid in full: can a subcontractor still lien my house?

California's official preliminary notice form answers it in capitals: “EVEN THOUGH YOU HAVE PAID YOUR CONTRACTOR IN FULL, if the person or firm that has given you this notice is not paid in full for labor, service, equipment, or material provided or to be provided to your construction project, a lien may be placed on your property.”

That is why several states require early notice from subcontractors and suppliers. Florida, section 713.06(2)(a), which covers “All lienors under this section, except laborers”: “The notice must be served before commencing, or not later than 45 days after commencing, to furnish his or her labor, services, or materials”.

Some states call construction payments a trust fund. Michigan, section 570.151: “In the building construction industry, the building contract fund paid by any person to a contractor, or by such person or contractor to a subcontractor, shall be considered by this act to be a trust fund, for the benefit of the person making the payment, contractors, laborers, subcontractors or materialmen”.

Texas, Property Code section 162.003(b): “A property owner is a beneficiary of trust funds described by Section 162.001 in connection with a residential construction contract”. Who these trust-fund rules cover, and when, differs by state; each statute's full sentence is on screen.

14:05 The contractor walked off the job

Several states name abandonment outright. Virginia's contractor regulations, 18 VAC 50-22-260 B, list as prohibited: “Abandonment, defined as the unjustified cessation of work under the contract for a period of 30 days or more.” Pennsylvania, section 517.9(5). Among the acts no person shall do: “Abandon or fail to perform, without justification, any home improvement contract or project engaged in or undertaken by a contractor.”

And, for the contractor's side: “For the purposes of this paragraph, the term "justification" shall include nonpayment by the owner as required under the contract or any other violation of the contract by the owner.” Florida, section 489.126(3)(a): a contractor paid more than the value of the work performed on a residential job “may not fail or refuse to perform any work for any 90-day period or for any period that is mutually agreed upon and specified in the contract.”

Notice how many of these clocks start from a date written in the contract.

15:14 The customer won't pay: what can a contractor do?

Back to the contractor. Some states set a payment clock for the owner. First, on screen: New York's prompt payment article covers projects whose aggregate cost “equals or exceeds one hundred fifty thousand dollars”, and it excludes “an individual one, two or three family residential dwelling”, plus smaller residential projects.

Illinois' act excludes “single family residences or multiple family residences with 12 or fewer units in a single building.” Texas. Property Code section 28.002(a): “the owner shall pay the amount to the contractor, less any amount withheld as authorized by statute, not later than the 35th day after the date the owner receives the request.”

Section 28.004(b): “An unpaid amount bears interest at the rate of 1-1/2 percent each month.” Can a contractor stop work? In Texas, if the owner fails to pay the undisputed amount on time, section 28.009(a) says “the contractor or any subcontractor may suspend contractually required performance the 10th day after the date the contractor or subcontractor gives the owner and the owner's lender written notice”.

Every one of those rules turns on a written contract and an agreed amount. You see the job first, then bid in writing on that same scope.

16:41 Can I hold back the final payment? (retainage)

Massachusetts writes it into the statute, chapter 142A, section 2(a)(6): “No final payment shall be demanded until the contract is completed to the satisfaction of the parties thereto”. The FTC's guidance: “And never make the final payment until the work is done and you’re satisfied with it.”

Some states tie each payment to the work. California, section 7159.5(a)(5): “Except for a downpayment, the contractor shall neither request nor accept payment that exceeds the value of the work performed or material delivered.” What counts as done depends on what the job was.

On InstaBids, you describe the job once, and it becomes one written scope. Contractors bid in writing on that same scope.

17:35 Can I cancel, and what must the contract say?

The federal Cooling-Off Rule, 16 CFR 429.1(a), puts these words in the notice: “You, the buyer, may cancel this transaction at any time prior to midnight of the third business day after the date of this transaction.” Its dollar thresholds, $25 or more at the buyer's home and $130 or more elsewhere, with exclusions listed in the rule, are on screen.

Illinois, 815 ILCS 513/22: “A person age 65 or older who purchases home repair or remodeling services from an uninvited solicitor may cancel any contract with a person engaged in home repair or remodeling by notifying that person within 15 full business days following the day on which the contract was signed...”

Maryland, section 8-617(a): “A person may not demand or receive any payment for a home improvement before the home improvement contract is signed.” Texas, Property Code section 53.255(b), in its notice to homeowners: “GET IT IN WRITING.” The list that follows starts with “a description of the work the contractor is to perform”, and runs through time, cost and “the procedure and method of payment”.

Several states also set a dollar line above which the contract must be written; the table is on screen. A description of the work comes first on that list. On InstaBids, you describe the job once, and it becomes one written scope.

Contractors bid in writing on that same scope.

19:15 How InstaBids works

Here is how InstaBids works. On InstaBids, you describe the job once, and it becomes one written scope. Contractors bid in writing on that same scope. Contact details stay hidden until the homeowner picks a contractor and they confirm the connection.

The contact-detail filter can miss disguised contact details. InstaBids: let contractors be contractors. This is general information, not legal advice; rules change, check your state.

Sources quoted in the video

• Source: FTC, How To Avoid a Home Improvement Scam, read 18 October 2026.
• Source: MD 8-617, read 18 October 2026.
• Source: GA Storms and Fraud, read 18 October 2026.
• Source: IN AG Storm Chasers, read 18 October 2026.
• Source: NY AG, read 18 October 2026.
• Source: PA AG FAQ, read 18 October 2026.
• Source: CA B&P 7159.5, read 18 October 2026.
• Source: NRS 624, read 18 October 2026.
• Source: MA 142A s2, read 18 October 2026.
• Source: ME 10-1487, read 18 October 2026.
• Source: PA 517.9, read 18 October 2026.
• Source: VT 5509, read 18 October 2026.
• Source: AZ 32-1158.01, read 18 October 2026.
• Source: CT ch.400, read 18 October 2026.
• Source: FL 489.126, read 18 October 2026.
• Source: NY Lien 71-a, read 18 October 2026.
• Source: FL 713.015, read 18 October 2026.
• Source: TX Prop ch.53, read 18 October 2026.
• Source: CSLB Preliminary Notice, read 18 October 2026.
• Source: MCL 570.151, read 18 October 2026.
• Source: 18VAC50-22-260, read 18 October 2026.
• Source: CA B&P 7159, read 18 October 2026.
• Source: 16 CFR 429, read 18 October 2026.
• Source: CA Civ 8204(a), read 22 October 2026.
• Source: CA Civ 8200(e)(1), read 22 October 2026.
• Source: CA Civ 8412, read 18 October 2026.
• Source: CA Civ 8414, read 18 October 2026.
• Source: FL 713.08, read 18 October 2026.
• Source: FL 713.22, read 18 October 2026.
• Source: FL 713.06, read 18 October 2026.
• Source: NY Lien 10, read 18 October 2026.
• Source: NY Lien 17, read 18 October 2026.
• Source: TX Prop ch.162, read 18 October 2026.
• Source: TX Prop ch.28, read 18 October 2026.
• Source: 815 ILCS 513/22, read 18 October 2026.
• Source: NY GBL 756, read 18 October 2026.
• Source: 815 ILCS 603/5, read 18 October 2026.

Also shown on screen

• Source: Md. Code, Bus. Reg. § 8-405, read 18 October 2026.
• Source: Va. Code § 54.1-1123, read 18 October 2026.
• Source: Fla. Stat. § 489.143, read 18 October 2026.
• Source: Minn. Stat. § 326B.89, read 18 October 2026.
• Source: P.L.2004, c.155 (N.J.S.A. 56:8-151), read 18 October 2026.
• Source: 815 ILCS 513/15, read 18 October 2026.
• Source: A.R.S. § 32-1158, read 18 October 2026.