How Much to Pay a Contractor Upfront in Florida: Deposit Limits, Draw Schedules and Red Flags

The Deposit Question Every Florida Homeowner Asks

Before a single shovel hits the ground, almost every contractor asks for money. Sometimes it is a modest deposit to hold a spot on the schedule. Sometimes it is a third of the job. Homeowners in Hernando, Pasco and Citrus counties ask us the same question over and over: how much is normal, how much is too much and what does Florida law actually say?

The short answer surprises people. Florida does not set a maximum deposit for residential construction. What the law does is attach duties to larger deposits, give you tools to protect the money and make it a crime for a contractor to take your payment and walk away. Knowing those rules, and how a fair draw schedule is built, is the best protection you have against the most common way homeowners lose money on a project.

This guide covers the Florida statutes that apply to contractor deposits, what a reasonable upfront payment looks like for remodels and new builds, how draw schedules should track completed work, the paperwork that keeps you from paying twice, red flags that should stop you from writing a check and what to do if a contractor takes a deposit and disappears.

Is There a Legal Limit on Contractor Deposits in Florida?

No. There is no statute that caps how much a Florida contractor can ask for upfront on a residential job. The number that shows up in every conversation, 10 percent, is not a cap. It is a trigger.

Under section 489.126 of the Florida Statutes, when a contractor receives an initial payment of more than 10 percent of the contract price for repair, restoration, improvement or construction of residential real property, two deadlines start running:

• Permits within 30 days: the contractor must apply for the permits needed to do the work within 30 days after the payment is made, unless the work does not require a permit.
• Work within 90 days: the contractor must start the work within 90 days after the permits are issued.
• Exceptions: the deadlines do not apply if the contractor has just cause for the delay or if the person paying agreed in writing to a longer period.

If the contractor misses those deadlines, the statute expects the homeowner to send a written demand by certified mail, return receipt requested. If the contractor does not respond within 30 days of that demand, the law lets a court infer that the contractor had no just cause. That letter matters, so keep the receipt.

The same section also covers money that gets ahead of the work later in the job. A contractor who has received more than the value of the work performed may not fail or refuse to perform any work for a 90-day period, or for whatever period the contract sets, without just cause or proper notice.

When Keeping the Deposit Becomes a Crime

Section 489.126 has teeth. A contractor who violates it with intent to defraud can be prosecuted, and the penalty scales with the amount of money involved:

• Under $1,000: first degree misdemeanor.
• $1,000 to under $20,000: third degree felony.
• $20,000 to under $200,000: second degree felony.
• $200,000 or more: first degree felony.

The statute also says intent can be inferred if the contractor fails to refund the money within 30 days after a written demand, and that an intention to pay the money back later is not a defense. In plain terms: a contractor cannot take a large deposit, use it to finish someone else's job and promise to get to yours eventually.

Criminal penalties do not get your money back by themselves, though. The real protection is structuring payments so you never have much at risk in the first place.

How Much Is a Reasonable Deposit?

Because there is no legal cap, "reasonable" depends on the project and what the money actually pays for. A useful rule: the deposit should cover real costs the contractor incurs before work starts, not finance the contractor's business. Here is how that tends to play out:

• Small repairs and service work: little or no deposit. The work is short, and payment on completion is common.
• Remodels and additions: many reputable contractors ask for 10 percent or less, which keeps them under the 489.126 trigger, or a somewhat larger deposit tied to specific items such as permits, engineering and ordering long lead materials.
• Custom orders: custom cabinets, impact windows, specialty doors and similar items are made to order and often require payment when ordered. That is legitimate, but the payment should be tied to that line item and backed by a supplier order you can see.
• New construction: on a custom home, the upfront payment usually covers design, engineering, permits and site preparation. Once a construction loan closes, the lender typically pays the builder in draws tied to inspected progress, not in a lump sum.

Notice what all of these have in common: the money follows a documented cost. When a contractor asks for 30 or 50 percent upfront on a remodel with no explanation of what it pays for, the question to ask is simple. What will this money be spent on in the next 30 days?

Draw Schedules: Paying for Work That Is Done

After the deposit, payments should follow progress. A draw schedule, sometimes called a payment schedule, lists each payment and the milestone that must be complete before it is due. On a custom home, a typical schedule follows the construction stages:

• Foundation: slab or stem wall poured and inspected.
• Framing and dry in: walls, trusses, sheathing, roof underlayment, windows and exterior doors installed.
• Rough ins: plumbing, electrical and mechanical rough ins installed and inspected.
• Insulation and drywall: insulation inspected, drywall hung and finished.
• Finishes: cabinets, counters, flooring, trim and fixtures installed.
• Final: final inspections passed, certificate of occupancy issued and punch list complete.

Two features separate a fair schedule from a risky one. First, each payment should be roughly proportional to the value of the work completed at that point, so you are never far ahead of the job. Second, the last payment should be large enough to matter, held until the final inspection, the certificate of occupancy and the punch list are done. A contractor who has already been paid 95 percent has little reason to come back for the last details.

If you are financing the build, the lender usually enforces this structure for you, sending an inspector before each draw. Our guide to the construction to permanent loan in Florida explains how lender draws work. And because changes in scope change the payment schedule, read our article on construction change orders in Florida before you sign.

The Paperwork That Protects Your Payments

Florida's construction lien law, Chapter 713, lets unpaid subcontractors and suppliers file a lien against your property even if you paid your contractor in full. That is how homeowners end up paying twice. A few documents prevent it:

• Mandatory disclosure in the contract: section 713.015 requires residential contracts over $2,500 to include a statutory notice explaining Florida's lien law and your right to protect yourself. If that notice is missing, ask why.
• Notice of commencement: under section 713.13, the owner records a notice of commencement with the county clerk before work begins, and it must be posted at the job site. It names the owner, the contractor, any surety and any lender. If the work does not start within 90 days of recording, the notice is void, and it is generally effective for one year unless the contract runs longer.
• Notices to owner: subcontractors and suppliers who work on your project may send you a notice to owner. Keep every one. They tell you exactly who needs to be paid.
• Lien waivers with each draw: before you release a draw, get waivers from the contractor and from every subcontractor and supplier who sent a notice to owner, covering the work being paid for.
• Final contractor affidavit: before the final payment, the contractor gives a sworn statement listing anyone who has not been paid.

None of this is exotic. A professional builder handles it as routine, and a construction lender will usually require it. If a contractor treats lien waivers as an inconvenience, treat that as information.

Red Flags Before You Write the Check

• No license, or a license you cannot verify: look the contractor up on the Florida Department of Business and Professional Regulation license portal before paying anything, and make sure the license type covers the work.
• Cash only, or payment to a personal name: payments should go to the business named on the contract and license, by check or another traceable method.
• A large deposit with no breakdown: if the contractor cannot say what the deposit buys, it is probably funding something else.
• Pressure to sign today: storm chasers and "special pricing that ends tonight" are classic Florida patterns after hurricanes.
• No written contract or a one page estimate: scope, price, schedule, payment milestones and the lien law notice belong in writing.
• The owner is asked to pull the permit: an owner-builder permit shifts legal responsibility to you and is a common way unlicensed contractors work around the rules.
• Payments that run ahead of the work: if you have paid for framing and the slab is not poured, stop and talk before paying more.

Our article on what to look for in a general contractor covers the vetting process in more detail.

The Florida Homeowners' Construction Recovery Fund

If a licensed contractor takes your money and fails to perform, Florida has a safety net that most homeowners have never heard of. The Florida Homeowners' Construction Recovery Fund, created under section 489.140 and following, can reimburse homeowners who suffer losses because of certain violations by a licensed contractor, such as abandoning the job or misusing funds.

The caps depend on when the contract was signed and the type of contractor. For contracts entered on or after July 1, 2024, section 489.143 sets a maximum of $100,000 per claim for Division I contractors, which include general, building and residential contractors, and $30,000 per claim for Division II specialty contractors. There are also aggregate caps per licensee: $2 million for Division I and $600,000 for Division II on those newer contracts. Older contracts have lower limits.

Two things to know. The fund is tied to licensed contractors, which is one more reason never to hire someone unlicensed. And section 489.1425 requires residential contracts over $2,500 with a licensed contractor to include a written notice telling you about the fund and how to contact it. A contract that leaves that notice out is a red flag on its own.

What to Do If a Contractor Took Your Deposit and Disappeared

• Gather the record: the contract, every receipt and cancelled check, texts, emails and photos of the site.
• Check the permit: look up whether a permit was ever applied for with the county building department. Many Florida building departments let you search permit records online.
• Send the written demand: by certified mail, return receipt requested, asking the contractor to perform or refund. That letter starts the 30-day clock in section 489.126.
• File complaints: with the Florida DBPR if the contractor is licensed, and with your local law enforcement if the deposit was not used for your job.
• Ask about the Recovery Fund: if the contractor is licensed and the loss qualifies.
• Talk to an attorney: for larger losses, a construction attorney can explain civil remedies alongside the criminal process. This article is general information, not legal advice.

How Protech Construction Handles Deposits and Draws

We would rather earn trust with paperwork than ask for it on faith. On every project we put the payment schedule in the contract before you sign: what the initial payment covers, which milestones trigger each draw, and what has to be finished before the final payment. Permits are pulled under our license, the statutory lien and Recovery Fund notices are in the contract, and lien waivers come with every draw.

Our custom home building service ties each payment to inspected progress, and our construction management service keeps the budget, draws and waivers in one place. The same approach applies to home additions and home remodeling projects.

We build across Hernando, Pasco and Citrus counties, including new construction in Brooksville, homes in Spring Hill and New Port Richey. Protech Construction Services LLC is a Florida Certified Building Contractor, license CBC1268979, at 9035 Jayson Dr, Brooksville FL 34613. Call (352) 710-5455 and we will walk you through exactly how payments work on your project before you sign anything.