By law, the contractor cannot collect more than one-third of the cost of the contract in advance, unless special order materials are needed. This is the maximum deposit required by law. You may negotiate with the contractor for a lesser amount. It is a good idea to have the payment schedule be based upon the contractor’s performance. Never let your payments get ahead of the contractor’s work.

For a large remodeling project that involves a substantial financial commitment, you may want to consult with an attorney about how you can protect yourself from mechanic liens against your home. Generally, a mechanic’s lien is a way that anyone who provides labor or materials to your home can record a security interest in your home if they are not paid. Even if you have paid your general contractor, if he or she fails to pay a subcontractor who performed work on the project, you still may be at risk of having a mechanic’s lien filed on your property. Such a filing may require you to pay a bill twice, initially to the general contractor and then to the unpaid subcontractor, in order to avoid losing your home in a foreclosure proceeding.

If you are financing your home improvements, be aware that contractors are not allowed to lend you the money, or act in association with any lending institution if the loan is secured by a mortgage on your home. Similarly, a contractor cannot offer you financing with a specific lender if your home is used as collateral. You have the right to choose any lender who is willing to negotiate your loan. Get a cost estimate from the contractor for the work that needs to be done, and then shop around for the best financing option.

Understand your rights before you sign the contract.