How Long Does a Contractor Have to Refund Money?

When hiring a contractor for a home improvement or construction project, you expect smooth sailing. But sometimes, things don’t go as planned. Maybe the contractor didn’t finish the job, overcharged you, or delivered work that missed the mark. If you’re in this boat, you’re probably wondering, How long does a contractor have to refund money?

Let’s explore this hot question and uncover what to do, what the rules are, and what your chances are of getting your hard-earned cash back.

What Are Your Chances of Getting Your Money Back from a Contractor?

It’s common for contractors to ask for a deposit or down payment—sometimes up to a third of the entire project cost. That’s a lot of money! And that’s a lot of your credit score and finances on the line if things go sideways. 

So, the big questions: can you really get your money back for shoddy or unfinished work? And if so, how long does a contractor have to refund money?

The short answer: Yes, you often can. However, timelines and success rates depend on a few key ingredients.

Start with Your Contract

Your contract is your first port of call. A solid agreement should lay out the terms for payments, deposits, and, importantly, refunds.

• Deposit refunds: If the project hasn’t kicked off, you might be entitled to a refund of your deposit, minus reasonable expenses laid out in your agreement.
• Partial refunds: If the contractor performed some work but didn’t finish, a partial refund might be due, based on the contract price and what was completed.

Remember, “contractor” includes everyone from general contractors to specialist subcontractors on your home project. Both residential and commercial projects are covered, but rules may vary by type.

Don’t Forget About Licensing Boards

Contractors usually need a license to work legally in a state. This license isn’t just a formality—licensing boards set the minimum standards for quality, skill, and ethics. They’re the first oversight authority if a contractor’s not living up to the contract—or the law.

What Do State Laws and Licensing Boards Say About Refunds?

Each state, and sometimes the local county, has its own requirements about refund timelines, deposits, and how complaints are handled. Contractors must follow not just state and local laws, but also rules set by state contractor licensing boards.

If a contractor skips out on obligations—or you think you’ve been taken advantage of—you can:

• File a complaint with the licensing board. They’ll open an investigation, help mediate, and sometimes threaten license suspension or revocation to prompt a refund.
• Check your contract for refund clauses. Some agreements feature a “right of cancellation,” usually within three business days, as required by the U.S. Federal Trade Commission.

Timelines for contractor refunds vary by state and even job type. That’s why checking your local rules is step one.

So, How Long Does a Contractor Have to Refund Money?

As mentioned, the actual answer to how long a contractor has to refund money mostly comes down to what’s in your written contract and your state law. Most commonly, contracts and state laws set a refund window of three business days if you exercise your right to cancel, but longer periods may apply, or shorter, if your project is unique.

According to the U.S. Electronic Code of Federal Regulations, if you sign a home improvement contract, you generally have three business days (called the “right of rescission”) to cancel without penalty and get your deposit back.

• If you cancel within this period, the contractor must refund you—no exceptions.
• If you cancel after work has started or after this window, your refund depends on how much work was done, what the contract stipulates, and your state’s consumer protection laws.

If your contract doesn’t mention the three-day return of deposit clause, federal and some state laws may still protect you. Always check for these terms before signing!

If you feel lost, hiring a real estate attorney could help, especially for larger disputes. And if there’s evidence of fraud, licensing boards or state consumer agencies may get involved.

When Are You Entitled to a Refund from a Contractor?

You can seek a refund (or partial refund) from a contractor if they:

• Fail to meet the job’s requirements or quality standards.
• Omit important items that you paid for.
• Require you (the homeowner) to procure resources that were their responsibility.
• Fall short in labor and you must hire other help at your own cost.
• Deliver less work than specified when the contract is based on a measurable schedule.

In short, if there’s an agreed-upon standard in writing, and the contractor fails to do the work, you may be owed some of your money back.

Read more: How to Fire a Contractor

When Can’t You Get a Refund?

It’s not always black and white. Contractors might legally keep part of your payment if they’ve invested in materials or completed a substantial portion of the work.

You can’t usually claim a refund if:

• The project was finished properly, even if it was completed faster (thanks to good weather or innovative working methods).
• Resources or techniques used changed, but the outcome met your expectations and the terms.

Non-refundable deposit fees or costs for already-completed portions of the work are often carved into your agreement. Always check the small print for these clauses.

When Can You Negotiate a Cost Reduction?

Sometimes you don’t need a full refund, just a reduction in cost. You might qualify if:

• You reduce the scope of the project after the contract is signed (e.g., due to lost planning permissions).
• You ask for simpler remodeling specs than originally agreed.
• You switch to cheaper products or provide your own materials.

If a contractor has already spent money on items you later change, they’re usually entitled to claim those costs.

How Can You Actually Get Your Money Back?

Dealing with a stubborn, unresponsive, or difficult contractor? These tactics can help:

• Open communication: Start with a conversation—sometimes a friendly approach is all it takes.
• Contractor license bonds: Ask contractors if they have these; it’s extra protection for your wallet and peace of mind.
• Small claims court: For disputes up to $10,000 (limit varies), this is often the quickest and least expensive option. Gather your evidence—contracts, receipts, photos, and emails.
• File a lawsuit: (If a lot of money is at stake, you might have to escalate. But beware: it takes time and money.)
• Hire a real estate attorney: They’re experts at spotting contract loopholes—but charge up to $120 an hour.
• Complain to your state’s licensing board: A complaint is taken seriously, especially if it could cost the contractor their license.
• Leverage reviews and social media: Public feedback (when accompanied by proof) can motivate refunds. But don’t make false claims!

Read more: Where Can I Report a Bad Contractor?

What’s the Best Way to Avoid Refund Problems in the First Place?

• Do your homework: Always hire a reputable contractor, check the contractor’s references, reviews, and license status with the state licensing board.
• Get everything in writing: Clear contracts prevent he-said-she-said disputes. Spell out payment terms, refund policies, and conditions for cancellation.
• Never pay all at once: Break payments into milestones tied to job progress and inspections.

Your credit score can also benefit from paying by credit card in some cases, since card companies may help if you need a chargeback due to contractor problems.

Final Thoughts: Getting Your Money Back from a Contractor

How long does a contractor have to refund money? The answer isn’t always simple, but informed homeowners get better results. From knowing your rights to checking with your local licensing boards and understanding where your contract stands, you’ve got the tools to protect yourself and your money.

So, stay proactive, keep everything in writing, and don’t hesitate to ask for help if you need it. Because, whether it’s your first home renovation or your tenth, peace of mind is worth every penny.

Written by Ramona Sinha. November 6, 2022

Ramona is the Senior Content Writer for Kukun. This experienced blogger uses simple and succinct words to decipher the complex phenomenon called life. She has written articles covering a broad range of topics, such as real estate, lending and mortgage, finance, business, taxation, home designs, home improvement projects, decor concepts, and more. An avid traveler, she’s a digital nomad at heart and an animal lover from the depth of her soul.