The contract is where a project’s promises become enforceable. If it isn’t written down, assume it wasn’t agreed.
Licensing, permit, lien and tax rules vary by state and city and change over time. This guide is general information, not legal or tax advice; check with your local building department, state licensing board or a professional for your situation.
Checklist
- Describe the work, materials and price in detail, with no blank spaces.
- Tie payments to completed work, and keep the down payment small.
- Require written change orders for any change in scope or price.
- Know your cancellation rights; sales made at your home often come with three days to cancel.
A clear contract protects both you and the contractor. Use this checklist before you sign.
The checklist
- Who’s involved: names, addresses, phone numbers and the contractor’s license number.
- Scope of work: exactly what will be done, room by room or task by task.
- Materials: brands, models, colors and quantities where they matter, or allowances for items you’ll choose later.
- Price: the total, and what it does and doesn’t include.
- Schedule: start date, estimated completion date and working hours.
- Payment schedule: amounts tied to completed stages of work.
- Change orders: any change must be in writing, signed by both of you, with the cost and time impact.
- Permits and inspections: who obtains them and who pays.
- Cleanup and debris removal.
- Warranty: what’s covered, for how long and how to make a claim.
- Lien releases: the contractor provides lien waivers as payments are made. See mechanic’s liens.
- Insurance: proof of liability and workers’ compensation coverage. See contractor insurance.
Red flags
Never sign a contract with blank spaces. Cross out or fill in anything that doesn’t apply before you sign, and keep a copy signed by both of you.
Down payments
Keep the deposit small. Some states set limits. In California, for example, the down payment on most home improvement contracts can’t be more than 10% of the contract price or $1,000, whichever is less, and later payments can’t run ahead of the work completed. Check your state’s rules.
Your right to cancel
If you sign a contract for $25 or more at your home, rather than at the contractor’s place of business, the FTC’s Cooling-Off Rule generally gives you until midnight of the third business day to cancel. The contractor must tell you about this right and give you cancellation forms. Some states add their own rules for home improvement contracts.
Before the final payment
Inspect the work, make sure permits are closed out, collect warranties and manuals, and get final lien waivers. Then pay the balance.
If the work doesn’t match the contract, see when a contractor job goes wrong. For the full hiring process, start with how to hire a contractor without regrets.
Homeowners ask
Is a verbal agreement enforceable?
Sometimes, but proving what was agreed is hard. Many states require written contracts for home improvement work above a certain amount.
Should the contract include a completion date?
Yes. Include a start date and an estimated completion date, plus what happens if the work is delayed for reasons within the contractor’s control.
Can I write in a penalty for delays?
Some contracts include delay terms, but they need to be reasonable and agreed by both sides. Ask a lawyer for large projects.