# Massachusetts Contractor Deposit Law: The One-Third Rule Page: https://magnoandco.com/blog-contractor-deposit-massachusetts > Massachusetts contractor deposit law in plain English: the one-third cap, the special-order exception and what a fair deposit looks like in Somerville. Hiring & Planning ## Massachusetts contractor deposit law: how much can a contractor ask for upfront? Massachusetts contractor deposit law in plain English: the one-third cap, the special-order exception and what a fair deposit looks like in Somerville. **Mateus Magno** Licensed Construction Supervisor · November 2, 2026 · 4 min read Quick answer Under M.G.L. c. 142A, section 2, a Massachusetts home improvement contractor cannot take an advance deposit larger than one-third of the total contract price, or the actual cost of special-order or custom materials that must be ordered before work starts, whichever is greater. The deposit belongs in a signed written contract, and final payment cannot be demanded until the work is complete. The Massachusetts contractor deposit law is short and clear: before work starts, a home improvement contractor can ask for no more than **one-third of the total contract price**, unless special-order materials cost more. I sign contracts under this rule in Somerville, Cambridge and Medford, so here is how it works in real life. The rule lives in [M.G.L. c. 142A, section 2](https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXX/Chapter142A/Section2), the state's Home Improvement Contractor law. If someone asks for half or more upfront on a normal remodel with no special orders, treat it as a red flag. ## What the Massachusetts contractor deposit law says Section 2 says an advance deposit cannot exceed the **greater** of: - **One-third of the total contract price**, or - The **actual cost of special-order or custom-made materials** that must be ordered before work begins so the project stays on schedule. The same section adds two payment rules that go hand in hand with the deposit cap: - The contract needs a **payment schedule** that states each payment in dollars, including any finance charges. - The contractor **cannot demand final payment** until the work is completed to the satisfaction of the parties. The state's Office of Consumer Affairs and Business Regulation (OCABR) repeats the rule on its [contract requirements page](https://www.mass.gov/info-details/home-improvement-contract-requirements-details-and-sample-language), and its sample contract puts a deposit line right at the top of the payment schedule. ## Who the deposit rule covers Chapter 142A covers work on a **pre-existing, owner-occupied building with one to four dwelling units**, per the definitions in [section 1](https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXX/Chapter142A/Section1). That includes most single-families, two-families and owner-occupied triple-deckers around Davis Square, Union Square and East Somerville. Brand-new construction falls outside that definition. Any contract over **$1,000** must be in writing, and the deposit rule only protects you fully when the contractor is registered. You can check any contractor's registration on the state's [MA Contractor Hub](https://contractorhub.mass.gov/s/), or follow my guide on [checking a contractor's license in Massachusetts](https://magnoandco.com/blog-check-contractor-license-massachusetts). MAGNO & CO Planning a project in Somerville? Licensed builder & owner's rep · free walkthrough · written budget in about 48 hours. [Book a free consultation](https://calendar.google.com/calendar/appointments/schedules/AcZssZ3YJnElSsR4HsHaWVd6BsIBm7JOsDl2n-1EMy9trS9rj8PCyepopoQtl6O7um0eJcFcp5XXYk-Z)[978-397-5700](tel:+19783975700) ## What is a reasonable deposit for a contractor? For most remodels, a reasonable deposit is **up to one-third**, and often less. Here is the math on a made-up example: on a $60,000 contract, the cap is **$20,000**. The only way it goes higher is if custom items that must be ordered before demolition actually cost more than $20,000. What I consider fair, from my own jobs: - **Small repairs:** a small deposit or none, because there is little to order. - **Kitchens and baths:** a deposit sized to the cabinets, tile, windows or fixtures with long lead times. - **Gut renovations and additions:** a deposit, then progress payments tied to milestones the inspector can see. ## The special-order exception, explained Custom cabinets, made-to-measure windows and special-order doors often need money before anyone picks up a hammer. That is what the exception is for. To use it the right way: - List each special-order item in the contract with its **dollar amount**. OCABR's sample contract has a section built for exactly this. - Ask for the supplier quote or order confirmation. - Make sure the item really has to be ordered before work starts. Standard stock items do not qualify. ## How progress payments should work After the deposit, every payment should match work you can see. Section 2 also bans **acceleration clauses** that let a contractor call the whole balance due because they feel "insecure." If a contractor has a real concern, the law lets them ask that the remaining funds go into a **joint escrow account** instead. - Deposit at signing (within the cap). - Payments at milestones such as demolition done, rough inspections passed, drywall finished. - Final payment after the punch list and final inspections. **Builder's tip:** Tie payments to milestones, not calendar dates. In a 1920s triple-decker the schedule can slide once we open a wall, but "rough plumbing and electrical inspections passed" means the same thing no matter what week it happens. It keeps everyone honest, including me. ## Red flags when a contractor asks for money upfront - **Half or all of the price before starting**, with no special-order list to explain it. - **No written contract**, or no HIC registration number on it. OCABR says the number belongs on the first page. - **"You pull the permit."** Under section 2, homeowners who pull their own permits are excluded from the state Guaranty Fund. - **Pressure to sign today.** If you sign at home, [M.G.L. c. 93, section 48](https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXV/Chapter93/Section48) gives you until midnight of the third business day to cancel in writing. My [contractor hiring checklist](https://magnoandco.com/blog-hiring-a-contractor-massachusetts-checklist) covers the rest of what to check before you sign. ## What if you already paid too much? Put your concern in writing to the contractor first and keep copies of every payment. If that goes nowhere, OCABR runs a consumer hotline at (617) 973-8787, and homeowners can bring disputes with registered contractors to a state-approved arbitration program under [section 3](https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXX/Chapter142A/Section3). For your specific situation, talk to a lawyer. ## Need a hand? I write every contract with a clear deposit, a special-order list and milestone payments. [Book a free walkthrough](https://magnoandco.com/contact) and I will send a written line-item budget, usually within 48 hours. I work in Somerville, Cambridge and across Greater Boston. ## Frequently asked questions What is the maximum deposit a contractor can ask for in Massachusetts? Under M.G.L. c. 142A, section 2, the deposit cannot exceed one-third of the total contract price or the actual cost of special-order or custom materials that must be ordered before work starts, whichever is greater. What is a reasonable deposit for a contractor? For most home renovations in Massachusetts, a reasonable deposit is up to one-third of the contract price, and often less on small jobs. Anything higher should be backed by a written list of special-order items and their costs. Can a contractor ask for 50% upfront in Massachusetts? Only if special-order or custom materials that must be bought before work begins actually cost that much. Otherwise the law caps the advance deposit at one-third of the total price. Does the one-third deposit rule apply to new construction? Chapter 142A covers work on pre-existing, owner-occupied buildings with one to four units, so brand-new construction is outside that definition. Renovations and additions to an existing owner-occupied home are covered. **Want someone on your side?** See [what I do as an owner's representative](https://magnoandco.com/owners-representative-somerville) and [how I price work](https://magnoandco.com/pricing). **Good to know:** this article is general information, not legal or engineering advice. Rules change and every property is different — confirm the details for your home with your city's building department, or [ask me](https://magnoandco.com/contact). See our [Terms & Disclaimers](https://magnoandco.com/terms). **About the author** Mateus Magno founded Magno & Co in 2020. He is a licensed Massachusetts Construction Supervisor (CS-123658), registered Home Improvement Contractor (HIC #220484) and certified Lead-Safe Renovator Supervisor who has renovated and managed over $5 million in projects across Greater Boston. [More about Mateus →](https://magnoandco.com/about) Keep reading ## More from the blog [Hiring & Planning ### Massachusetts home improvement contract requirements: what must be in writing Massachusetts home improvement contract requirements under c. 142A: required terms, notices and your 3-day right to cancel, from a Somerville builder. 4 min read · Read article →](https://magnoandco.com/blog-home-improvement-contract-massachusetts) [Hiring & Planning ### Buying an old house that needs work: a Somerville, Cambridge and Medford checklist Buying an old house that needs work in Somerville, Cambridge or Medford? 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