How to structure a safe payment schedule
Never pay ahead of work completed. Tie payments to milestones: deposit, demo complete, rough inspection, substantial completion, final walkthrough.
What's a fair payment schedule for a kitchen remodel?
A typical safe schedule for a kitchen remodel ($50,000-80,000): Deposit at signing: $1,000 (legal maximum). Demolition complete: 20% of contract. Rough inspection passed (plumbing, electrical, framing): 25%. Cabinets and countertops installed: 25%. Substantial completion (tile, paint, fixtures): 20%. Final walkthrough and punch list complete: 10%. The key: hold back 10% until everything on the punch list is done. This is your leverage to ensure quality. Get a lien waiver with every payment.
Should I pay progress payments or wait until the end?
Progress payments tied to milestones are the industry standard and the safest approach for both parties. Paying everything at the end creates risk for the contractor (they've fronted all costs). Paying too much too early creates risk for you (if they abandon the job, you've overpaid). Milestone-based payments balance the risk: the contractor gets paid as they complete work, and you only pay for verified completed work. Always verify the milestone is actually complete before releasing payment.
What if my contractor threatens to stop work unless I pay more?
This is a pressure tactic and may be a breach of contract. First, review your contract - the payment schedule should be clearly defined. If you've paid according to the agreed schedule and the contractor is demanding more, document everything in writing. Send a written response: 'Per our contract dated [date], the next payment of [amount] is due upon [milestone]. Please confirm when this milestone will be complete.' If they abandon the job, file a complaint with the CSLB and consult an attorney. Do not make payments outside the agreed schedule under pressure.
Related guides in Money & Payments
California law (B&P Code 7159.5) limits deposits to $1,000 or 10% of the contract, whichever is less. Any contractor asking for more is breaking the law.
A lien waiver is your proof that you paid. Without one, a subcontractor or supplier could file a lien on your home even if you already paid your contractor.
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