Pennsylvania caps the deposit on a home improvement contract over $5,000 at one-third of the price, plus special-order materials

Sun, 01 Nov 2026 07:22:21 -0500

Pennsylvania’s Home Improvement Consumer Protection Act limits what a contractor can collect up front on a residential job priced at more than $5,000. Section 9(10) of the act bars a deposit above one-third of the contract price, or above one-third of the price plus the cost of special-order materials that the written contract designates. The law, Act 132 of 2008, took effect July 1, 2009, and contractors register under it with the Attorney General’s Bureau of Consumer Protection. On a $45,000 kitchen with $9,000 of custom cabinets written into the contract, that puts the deposit limit between $21,000 and $24,000, depending on how the one-third is figured.

The act sets three price bands. A job of $500 or less is outside the act’s definition of a home improvement. Above $500, the contract has to be in writing with the terms the act lists, and no payment can be taken before it is signed. The deposit limit starts above $5,000.

What the Home Improvement Consumer Protection Act requires at each contract price
Contract price	Covered by the act	Written contract required	Payment before the contract is signed	Deposit limit
$500 or less	No	No	The act does not apply	None in the act
More than $500, up to $5,000	Yes	Yes	Prohibited	None in the act
More than $5,000	Yes	Yes	Prohibited	One-third of the price or one-third plus designated special-order materials

Source: palegis.us

What counts as special-order material

The materials allowance is narrow. The act defines special-order material as a product that is not a stock item, has to be ordered from the factory or distributor, and is made or processed for the contractor for that one contract. It also has to be something the contractor cannot return for a refund or credit and could not use on another job. Custom cabinets built to a room’s dimensions or windows made to measured openings can fit that description. The definition leaves out stock items, such as standard shingles, standard-size doors and lumber from the yard.

The contract has to designate the materials for the allowance to count. Section 7(a)(9) requires the contract to state the down payment and any amount advanced for special-order materials, and to list the two separately. Calling something special order when it is not, or overstating its cost, is home improvement fraud under Section 8(a)(6). The act grades that offense as a third-degree felony when more than $2,000 is involved and a first-degree misdemeanor at $2,000 or less, one grade higher when the owner is 60 or older.

A worked example

The table below applies the limit to three made-up jobs in round numbers. Figures are examples only.

The act’s wording sets the limit at one-third of the contract price plus the cost of the special-order materials. It does not say whether the materials come out of the price before the one-third is taken. Read literally, on the full price, the kitchen’s limit is one-third of $45,000, or $15,000, plus the $9,000 of cabinets, for $24,000. Figured on the price left after the cabinets, it is one-third of $36,000, or $12,000, plus $9,000, for $21,000. The gap grows with the share of the job that is special order. On the window job, where the custom units make up half the price, the two readings land $4,000 apart.

Example deposit limits on three made-up jobs, in round numbers
Job (example)	Contract price ($)	Special-order materials ($)	Limit with no materials ($)	Limit with materials on full price ($)	Limit with materials on remaining price ($)
Roof replacement	$18,000	$0	$6,000	$6,000	$6,000
Custom window replacement	$24,000	$12,000	$8,000	$20,000	$16,000
Kitchen remodel	$45,000	$9,000	$15,000	$24,000	$21,000

Source: palegis.us

The act says nothing about how the balance gets paid after the deposit. The Attorney General’s FAQ says so directly and suggests that the owner and contractor negotiate payments as the work progresses, with a final payment at completion. Here is one way the example kitchen could be scheduled if the contractor takes the lower of the two deposit figures.

An example payment schedule for the $45,000 kitchen, in round numbers
Payment (example)	When	Amount ($)	Share of price (%)
Deposit	At signing	$21,000	46.7%
Second payment	Rough-in inspections passed	$10,000	22.2%
Third payment	Cabinets and counters installed	$8,000	17.8%
Final payment	Work complete	$6,000	13.3%

Source: attorneygeneral.gov

Where the limit does not apply

The act covers work on a private residence, which it defines as a single-family house, a building of no more than two units, or one unit in a larger building such as a condominium. Building a new home is excluded, and so is converting a commercial building to residential use. Emergency work done under the emergency provisions of the state’s consumer protection law falls outside it, and the Attorney General’s FAQ says the contractor must get the emergency waiver that law requires on each job.

The definition of owner also matters for contractors who work for landlords. A person who owns three or more private residences in Pennsylvania counts as an owner under the act only for their primary residence and any homes they use for recreation. A home improvement retailer of any size can skip the deposit limit if they post an irrevocable letter of credit with the bureau, $100,000 per store up to $2 million, and use registered, insured contractors.

When the job does not start

Taking a deposit brings two other obligations. Under Section 9(2), a contractor must refund the money within 10 days of a refund request sent by certified mail if no substantial part of the work has been done and more than 45 days have passed since the start date in the contract. Under Section 8(a)(2), keeping an advance payment without doing the work by the contract date, allowing for force majeure or an extension the owner agrees to, is also home improvement fraud. The owner can also cancel any home improvement contract within three business days of signing, without penalty, under Section 7(b).

What to check in your contract

Run your standard contract against the money terms the act requires. Section 7(a) makes each one a condition of a contract the owner can be held to.

Money and timing terms the act requires in every home improvement contract
Contract term	Section of the act
Your PA registration number	7(a)(1) and 6
Total sales price or a time-and-materials provision	7(a)(8)
The down payment	7(a)(9)
Any amount advanced for special-order materials, listed separately from the down payment	7(a)(9)
Approximate start and completion dates	7(a)(6)
Notice of the owner's three-business-day right to rescind	7(a)(13) and 7(b)

Source: palegis.us

On a job with custom product, put the special-order amount on its own line with the item named, and keep the supplier’s quote showing it is made for this job and not returnable. If your deposit figure depends on reading the one-third on the full price, ask your attorney which reading to use before you rely on it. For the registration rules behind all of this, including the $100 two-year fee and the insurance minimums, see how Pennsylvania’s home improvement contractor registration works.

Caveats

This is general information about the statute, not legal advice for a particular contract. The Attorney General’s FAQ calls itself an incomplete explanation and not a legal opinion, and it describes the deposit limit in looser terms than the act does. Court decisions applying Section 9(10) were not reviewed for this article, and they may settle the question of how the one-third is figured.

Section 10 makes any violation of the act a violation of the Unfair Trade Practices and Consumer Protection Law, so an owner can bring a claim under that law as well. Under Section 7(a), a contract that leaves out a required term is not valid or enforceable against the owner.

The statute and the Attorney General’s pages were checked on November 1, 2026.

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Pennsylvania caps the deposit on a home improvement contract over $5,000 at one-third of the price, plus special-order materials

What counts as special-order material

A worked example

Where the limit does not apply

When the job does not start

What to check in your contract

Caveats