How Much Deposit Should a Chicago Contractor Ask For?

There is no deposit number we can give you, because we can't point to a City of Chicago or State of Illinois rule that sets a cap or a percentage for a Chicago contractor deposit. Anyone who says "the law says 10 percent" or "never more than a third" is giving you a rule of thumb, not a rule. What you can do is control how the money moves, and that matters more than the number.

What does Illinois actually require?

The Illinois Home Repair and Remodeling Act applies to a residence of 1 to 6 units (815 ILCS 513/10). For home repair or remodeling over $1,000, the contractor must give you a written contract or work order to sign before starting. It must state the total cost, with parts and materials listed with reasonable particularity, plus the business name and address (815 ILCS 513/15). The contractor must also give you the pamphlet "Home Repair: Know Your Consumer Rights" before you sign, and for jobs over $1,000 you sign a dated acknowledgment form (815 ILCS 513/20).

The Act does not, as far as our sources show, set a deposit amount. Our post on what your Illinois home repair contract must say goes line by line. Check the current text, and ask an attorney if you need a legal read.

How should payments be structured?

This part is practice, not law. Ask for a payment schedule that follows the work, written into the contract:

1. A start payment that is clearly explained, such as materials ordered or permit and mobilization costs, with the contractor showing what it buys.
2. Stage payments tied to finished milestones you can see: for a porch, say, demolition done, framing done, then guards and stairs done.
3. A final payment held until the work is finished, any required City inspection has passed, and you have walked it with a punch list.

Ask: "What does each payment buy, and what happens if work stops?" If the answer is vague, so is the plan. Compare the structure between bids, not just the total, and see how to compare contractor estimates.

What are the warning signs on deposits?

• A large payment demanded up front for "materials," with no stages after it.
• A refusal to put the price, scope or schedule in a signed contract.
• A request for the full amount before work starts, or a rush ("the price is only good today").
• No business address, no license number you can look up, no permit conversation. Our guide to checking a Chicago contractor's license takes a few minutes.

If a contractor breaks the Act, a person who suffers actual damage can sue under the Consumer Fraud and Deceptive Business Practices Act, and the Attorney General or a State's Attorney can act on a pattern (815 ILCS 513/30). That is a remedy after the fact. Structure the payments so you never need it.

Our guide to hiring a contractor in Chicago covers the whole process. Akats puts the scope and payment schedule in writing before work starts, and you can ask us for a free estimate.

Common questions

This article explains general rules and common situations in Chicago. It is not legal advice, and City rules change. For a specific property, check with the Chicago Department of Buildings or a licensed professional.