Home & Garden

Ask Angie: How much of a down payment should a contractor get?

Angie Hicks
Angie Hicks MCT

Dear Angie: I want to renovate my bathroom. How much should I expect the contractor to ask for a down payment? — Anne S., Montclair, N.J.

Answer: Down payments are a standard practice in the remodeling industry, but you should be careful about how much to put down. Never, of course, pay the full costs upfront.

A reasonable down payment is acceptable.

Don't pay anything, though, until you have a contract that spells out the payment structure. I recommend tying future payments to progress on the job and holding back at least 10 percent until the job is complete to your satisfaction.

Some contractors might ask for a small down payment to secure your spot on their schedule or to help cover early upfront costs, like pulling permits.

There are, of course, some exceptions. If, for example, you are special-ordering a bathroom fixture or are having one custom made, expect to include the cost of that with your down payment. Your contractor doesn't want to pay for that upfront only to have you change your mind midway through the project, leaving him or her stuck with something they can't use.

New Jersey doesn't have any specific rules related to down-payment limits, so depending on the contractor, you might be able to negotiate how much you pay up front. California, for example, limits down payments to 10 percent of the project price or $1,000, whichever is less. New York requires a contractor to put a homeowner's down payment into an escrow account, with specific rules about how it may be used, or prove he or she is bonded to insure the down payment. In New Jersey, contractors are required to be registered with the state Division of Consumer Affairs, so that's something you'll want to check.

Kentucky doesn't have any laws that govern down payments, according to the state Department of Housing, Buildings and Construction.

Be sure the details of your project — including payment terms — are spelled out in a contract signed by you and the contractor. Keep in mind that, by law, your contractor must allow you three business days to void the contract, should you change your mind.

Of course, you don't want to hand over your hard-earned money to just anyone. Be sure to get at least three estimates and thoroughly research those contractors' backgrounds before you decide whom to hire.