Contracts, deposits and paying as work progresses

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It has to be in writing

In California, a home improvement contract must be in writing and given to you before any work begins. That is not a formality you can waive to be agreeable. It is the document that decides who is right when a disagreement starts, and a project without one is a project where the loudest memory wins.

The law requires certain elements, including a description of the work and materials, the contract price, a payment schedule, and approximate start and completion dates. Treat that list as a floor rather than a target.

What a good contract adds beyond the minimum

• What is excluded, stated as plainly as what is included.
• How change orders are priced and approved, in writing, before the work happens.
• What happens if hidden conditions are found once walls or floors are opened.
• Who pulls the permit, and who pays the fee.
• What "complete" means, and what must be true before the final payment is released.
• Who is responsible for cleanup and disposal.
• The workmanship warranty, its length, and what it covers.

The deposit, and the legal limit

California limits the down payment on a home improvement contract to one thousand dollars or ten percent of the contract price, whichever is less, excluding finance charges. That is the law, not a negotiating position.

A contractor asking for thirty or fifty percent up front is either unaware of the rule or has decided it does not apply to them. Neither is reassuring, and both are worth asking about before you write a cheque.

There is a legitimate exception worth understanding: special-order materials made specifically for your job may need to be paid for separately. That is reasonable, and it should be identified in the contract as a specific item rather than folded into a large general deposit.

Progress payments that track completed work

After the deposit, payments should follow work that has actually been done. Tie each one to a milestone you can see.

For a bathroom that might be: demolition complete, rough plumbing and electrical passed inspection, drywall complete, tile complete, fixtures set, punch list cleared. Six payments against six visible states.

The alternative — paying on dates, or paying whenever asked — quietly moves the risk onto you. A contractor paid ahead of progress has less reason to come back, and if their business runs into trouble you are an unsecured creditor.

Hold back the final payment until the punch list is done

The last payment is the only leverage that exists at the end of a project, and it is the moment when everyone's incentives finally point the same way. Walk the job, write down what needs attention, agree a date, and release the money when those items are complete.

Make the list specific and unemotional. "Chip in the grout to the left of the vanity" gets fixed. "The bathroom needs finishing" starts an argument.

Change orders are normal, surprises are not

On any project involving an existing building, something unexpected will come up. That is not a failure and it does not mean anyone did anything wrong.

What matters is the process. A change should be raised when it is discovered, priced before the work is done, and approved by you in writing. Handled that way, it is a decision you made. Handled badly, it is a number on the final invoice that you first learn about when it is too late to say no.

Lien releases, and why they matter

Subcontractors and material suppliers who have not been paid may be able to place a mechanics lien against your property, even if you paid your contractor in full. It is an uncomfortable feature of construction law and it is real.

Protect yourself by asking for lien releases from subcontractors and suppliers as payments are made, particularly on larger jobs. A contractor who works with subs regularly will not find this an unusual request.

Keep the paper

The contract, every change order, every invoice, every receipt, and photographs of anything that got covered up. Store them together somewhere you will find them in five years.

You will want them at three moments: if a dispute arises, when a warranty question comes up, and when you sell the house and a buyer asks what was done and whether it was permitted.