Blog · September 19, 2026

Contractor deposit: money due before work exists

A contractor deposit is the first money the paper asks for. I record it as a percent, whether it is due before permit or mobilization, and whether it is labeled for custom materials or just to get on the schedule. Draws that follow a calendar are different from draws tied to a visible milestone. I do not set a “correct” percent for your state or province.

“How much deposit before work starts” is one of the highest-intent questions in this niche. I will not invent a statute. Some US states cap home-improvement down payments. Canadian jobs have holdback rules that are not mine to recite as a verdict. I read your PDF. I tell you what it asks for, and I give you a question.

What I mark on a deposit line

I look for deposit / first payment as a percent of the stated total. Money far ahead of work is the pattern. If the percent is above about 10%, I mark unclear. If it is 20–30% or more before permit or mobilization, I mark missing protection. That is not an accusation and it is not a rule of law. It is a flag that the paper wants cash before that work exists on site.

Cedar Ridge — fictional, on the homepage — asks 50% ($7,425) due on signing, before materials are ordered. That is a start fee, not a materials deposit with a PO behind it. The question is: is this deposit for materials already ordered and non-returnable, or just to start?

Materials deposit versus a start fee

Fifty percent for custom cabinets that cannot go back to the shop is a different fact from fifty percent for “we are busy.” I look at whether the deposit is labeled for custom or non-returnable materials. If it is a generic start fee, ask why this much is due before that work exists. If it is materials, ask for the order, the lead time, and what you get back if the job never starts.

Draws tied to time versus draws you can walk

A draw schedule tied only to dates pays for the calendar. A draw tied to a visible milestone — foundation, rough-in you can photograph, drywall hung, substantial completion — pays for something you can stand in. I look for who certifies a pay application. Someone has to check the work. Front-loaded draws leave no unpaid money at punch. Ask whether the schedule leaves enough unpaid at the end to cover punch-list work.

• Deposit: percent, timing, materials versus start fee.
• Mid-job draws: milestone or date.
• Who confirms the work in this draw is actually done.
• What remains unpaid after substantial completion.

The unpaid tail: retainage and holdback

US jobs often name retainage. Canadian jobs often name holdback. Both are money held back from payments and released later. I record amount, from which payments, and what has to happen before they invoice for it. Extras billed at 100% immediately can skip that tail. If the change-order paper is silent, ask whether retainage or holdback applies to the extra the same as the original work. The longer note is retainage versus holdback.

If work never starts

Signed, materials “ordered,” months of silence. I look for cancel language and what happens to the deposit. Ask: if you have not started by [date], how do I cancel, and what do I get back? I cannot tell you what a court would do. I can tell you whether the paper even has a sentence.

GST, HST, and tax silence

I look for total price, currency, and whether tax is in or extra. Silence on GST/HST or sales tax is a question, not a rate I invent. CAD and USD labels matter when the PDF mixes them. Ask: is tax included in this number?

Questions to send on a deposit

1. Why is this much due before that work exists on site?
2. Is this deposit for materials already ordered and non-returnable, or just to start?
3. Can we tie each draw to a visible milestone I can walk?
4. What percent is held back, from which payments, and what releases it?
5. If you have not started by [date], how do I cancel, and what do I get back?

A calendar-draw example, without a market lecture

Remainder billed monthly, no milestones, no retainage named, 30% up front. That is cash ahead of the walls. I will not say it is rare or common. I will say the paper wants a large first payment and then pays for months, not for rooms you can walk. Ask to retie draws to visible work. Ask what is unpaid at punch. If they need a large materials deposit, ask for the purchase order, the lead time, and what happens to that money if the SKU is cancelled.

Some papers mix a small mobilization fee with a later materials invoice. That can be cleaner than one fat start fee, or it can be two ways to get paid early. I record both lines. I add them. I ask whether together they still sit in front of permit and mobilization. Percent of the stated total is the unit I use, not a feeling about the builder.

If you are comparing bids, deposit terms belong next to each quoted total. A lower number with a larger early deposit may change your cash timing. I show the supported passages side by side and ask which work or document makes each payment due; I do not invent a common adjusted total or pick a winner.

Lien waivers (US) sit next to draws, not instead of the unpaid tail. Paying the GC does not stop a sub’s claim. On Canadian files I do not tell you to take a waiver in lieu of holdback. That pairing is in the retainage versus holdback note. Here I only ask whether the deposit and the first draws leave anything unpaid when the punch list exists.

Weather-permitting schedules with monthly billing are a related smell: you pay for time while the end date slides. I look at that on the contract checklist under schedule, not only under deposits. If the first payment is large and the completion language is “approximately four to six months,” you have paid for a window, not a date. Ask what is the substantial completion date, and what happens if they miss it for reasons in their control.

Keep a running note of what you have already paid, even before extras. The deposit line is only the first row. If a second “materials invoice” arrives next week, it is another row, not a surprise you have to treat as a change order unless the paper says so. Upload both if you want me to see the stack.

What I will not do

I will not name a cap from California, Ontario, or anywhere else as if I were applying it to your file. I will not say a 10% deposit is “standard.” I will not say a 30% deposit is a crime. I quote the percent, the timing, and the label. You decide. Upload the paper to the contract / bid audit if you want that pass on your PDF. First check free, then $9.