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Do I Need to Give My Contractor a Deposit?

Do I Need to Give My Contractor a Deposit
Do I Need to Give My Contractor a Deposit

Let’s start this one with this. Any reputable contractor doing work in your home will likely require up to a 30% deposit on the work. Again, any reputable contractor doing work in your home will collect a deposit for the work to be done. This is not a scheme, but a way to cover initial costs leading up to your job.

There are material costs, labor costs, and overhead costs associated with doing work. And as the contractor isn’t going to be paid until the work is completed, they will need cash to float those expenses. This comes from the contractor deposit.

  • Suppliers
  • Landlords
  • Laborers
  •  Office Staff
  • Gas/Trucks

All these things require payment before they are used, and with many jobs taking days to complete, these costs need to be covered for the contractor to stay in business.

With larger jobs, the pay schedule may be split up 3 ways:

  1. Deposit
    1. Typically, up to 30% of the job total.
  2.  Half-way Payment
    1. A payment made half-way through the job to ensure the contractor can continue working. These are typically done on larger jobs that span weeks.
  3. Final Payment
    1. Due on completion of the job.

We’ve heard it all before: “I’ve never had to pay a deposit before.” “I don’t understand, why do you need a contractor deposit? I’m going to pay when the job is done.” “I don’t have the money for a deposit.” By the way, that’s a contractor’s “red flag.” EVERY contractor, reputable or otherwise, wants to be sure they are going to be paid for their work. AND YOU DO TOO. Because if they don’t get paid and go out of business, what is your warranty worth?

Read more about – How Do I Choose the Right Contractor?

Yes, there are contractors that do not collect deposits out there. This is true. The majority of them, however, work off Craig’s List and without contracts or without any backbone to the company. “Chuck in a Truck” as they are commonly referred to. These guys have very little overhead and are more fly-by-night operations. Do not think your warranty will be good with them long-term. Many of these companies will change names as soon as their liability or services get too large and cancel all warranties.

Hiring a reputable, honest contractor is the best way to preserve your money and your home for the long term. They will mostly require contractor deposits before completing the work, which is completely normal. Have a great week, and remember:

Not Everything’s Better When Wet!


Austin Werner

Austin Werner is the Owner of The Real Seal LLC, a basement waterproofing and foundation repair company. Austin believes that having a highly trained and happy team is the key to success. This is reflected through hundreds of 5 star customer reviews his company has received online.

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