How Much Deposit Can a Contractor Ask For in Massachusetts?
Massachusetts caps a home improvement deposit at the greater of one-third of the contract price or the cost of special-order materials, and backs homeowners with a Guaranty Fund.
Massachusetts limits the deposit on a home improvement job directly. Any deposit required in advance may not exceed the greater of one-third of the total contract price or the actual cost of special-order or custom materials.1 The work has to be under a written contract when it costs more than one thousand dollars,2 final payment cannot be demanded until the job is done to the parties' satisfaction,3 and a state Guaranty Fund can repay a homeowner's actual losses.4 This page walks through those protections.
The deposit cap and the written-contract rule
The deposit rule is the headline. Any deposit required under the contract to be paid in advance of the commencement of work may not exceed the greater of one-third of the total contract price or the actual cost of any materials or equipment of a special order or custom made nature.1 So on an ordinary job the ceiling is one-third; the special-materials exception exists so a contractor is not out of pocket for custom items ordered for you.
The contract itself has to be in writing. Every agreement to perform residential contracting services in an amount in excess of one thousand dollars must be in writing.2 A written contract is what fixes the price the one-third cap is measured against.
Final payment and the Guaranty Fund
Massachusetts also protects the end of the job. No final payment may be demanded until the contract is completed to the satisfaction of the parties.3 That keeps the last of your money as leverage until the work is actually finished.
If a registered contractor causes you a loss you cannot otherwise recover, there is a backstop. Massachusetts law establishes a Residential Contractor's Guaranty Fund within the office of consumer affairs and business regulation to compensate owners for actual losses they incur.4 The Fund is why registration is worth checking before you pay a deposit.
Sources
In Massachusetts, any deposit required in advance under a home improvement contract may not exceed the greater of one-third of the total contract price or the actual cost of special order or custom made materials or equipment.
In Massachusetts, every agreement to perform residential contracting services in an amount in excess of one thousand dollars must be in writing.
In Massachusetts, no final payment may be demanded until the contract is completed to the satisfaction of the parties.
Massachusetts law establishes a Residential Contractor's Guaranty Fund within the office of consumer affairs and business regulation to compensate owners for actual losses they incur.
Frequently asked questions
- How much deposit can a contractor ask for in Massachusetts?
- A deposit required in advance may not exceed the greater of one-third of the total contract price or the actual cost of special-order or custom materials. That is a statutory cap.
- Does a Massachusetts home improvement contract have to be in writing?
- Yes, whenever the residential contracting services amount to more than one thousand dollars the agreement must be in writing.
- Is there help if a Massachusetts contractor takes my money and fails?
- Massachusetts maintains a Residential Contractor’s Guaranty Fund that can compensate owners for actual losses, which is one reason to confirm the contractor is registered before paying.
Last reviewed August 3, 2026
This page is general information about state law, not legal advice. Laws change, and how they apply depends on the facts of your situation.