Problems with a home improvement contractor in New York: contracts, deposits and your 3-day right to cancel

What the law says, briefly

Article 36-A of the General Business Law (§§ 770–776) covers home improvement contracts between an owner — a homeowner, co-op shareholder, residential tenant or custom-home buyer — and a home improvement contractor, when the price exceeds $500 (§ 770(2), (6)). A contractor is a business that does home improvement for a fee and whose contracts total more than $1,500 over 12 months (§ 770(5)).

The contract must be in writing, signed by all parties, legible and in plain English, and you must get a copy signed by the contractor before any work is done (§ 771(1)–(2)). It must include the contractor's name, address, phone and license number if any; approximate start and completion dates and any contingencies; a description of the work and materials, including make and model; the agreed price; a notice about mechanic's liens; a notice that payments received before completion must be deposited under Lien Law § 71-a(4) or covered by a bond, contract of indemnity or letter of credit; a schedule of any progress payments, which must bear a reasonable relationship to the work done; and a notice of your right to cancel (§ 771(1)(a)–(h)). Before work starts, it must also disclose the contractor's property or casualty insurance and the insurer's contact details (§ 771(1)(i)).

You may cancel until midnight of the third business day after you sign, by written notice that shows you don't want to be bound; a mailed notice counts when it is properly mailed (§ 771(1)(h)). If a contractor gets you to sign through false or fraudulent written statements, you can sue for a $500 penalty plus reasonable attorney's fees, on top of your damages (§ 772).

What to check in your lease, contract or papers

• Is it in writing, signed by both of you, and did you receive a copy signed by the contractor before work began (§ 771(1)–(2))?
• Contractor's name, address, phone and license number (§ 771(1)(a)). Contractors must be licensed in New York City, Nassau, Suffolk, Westchester, Putnam and Rockland counties and the City of Buffalo, according to the Attorney General — check the local license lookup.
• Start and completion dates, contingencies, and whether a completion date is "of the essence" (§ 771(1)(b)).
• Description of work and materials, with make and model, and the total price (§ 771(1)(c)).
• The mechanic's lien notice, the deposit notice, and the 3-day cancellation notice (§ 771(1)(d), (e), (h)).
• The progress payment schedule, with dollar amounts tied to stages of the work (§ 771(1)(f)).
• Any financing arrangements: fees the contractor receives in connection with financing must be disclosed and agreed in writing (§ 771-a).

What to document

• Photos and video of the work area before, during and after the job, with dates.
• Every payment: amount, date, method, and what it was for.
• Every message with the contractor, including texts.
• Where your deposit is being held — the Attorney General says contractors must tell you within five days where the funds are held or show they are bonded.
• Permits, inspections, and any problems or delays.

What to do, step by step

1. 1

   Check the license and the contract before you pay

   Use your city or county license lookup if you live where licensing is required, and compare the contract with the list above.

2. 2

   Cancel within 3 business days if you change your mind

   Send a written, dated notice saying you cancel. Mail counts as given when deposited in a mailbox, properly addressed and stamped (§ 771(1)(h)). Keep a copy and proof of mailing.

3. 3

   Pay by stages, not up front

   Stick to the progress schedule. The Attorney General advises never paying the full price up front and never giving a cash deposit before you sign a contract.

4. 4

   Raise problems in writing right away

   Describe the defect or delay, refer to the contract terms and dates, and ask for a fix by a specific date.

5. 5

   Escalate

   Send a demand letter, complain to the Attorney General or your local consumer affairs office, and consider small claims court.

What not to do

• Don't sign a contract with blanks or without reading it, and don't sign anything that waives your right to cancel unless it is a genuine emergency you started (§ 771(1)(h)).
• Don't pay the whole price before the work is done.
• Don't simply stop paying without documenting why: an unpaid contractor, subcontractor or supplier may file a mechanic's lien against your property. The contract notice explains that paying the agreed price before a lien is filed may invalidate such a lien (§ 771(1)(d)).
• Don't let an unlicensed contractor start work where a license is required.

When to send a demand letter

Send one when the contractor stops showing up, misses the agreed dates, does defective work, or won't return a deposit for work never started. List the contract terms, what was paid, what was and wasn't done, and what you want — completion, repair or a refund — by a firm date. Mention any requirement the contract didn't meet under § 771.

When to go to court

If the letter doesn't work, small claims court handles claims up to $10,000 in New York City, $5,000 in city and district courts and $3,000 in town and village courts. For larger amounts, consider a lawyer. Contract violations can also be reported: the Attorney General and municipal consumer affairs offices can seek injunctions, restitution and civil penalties of up to $2,500 per contract for substantial violations such as failing to protect deposits or to give a proper written contract (§§ 773–774).

What evidence to keep

• The signed contract and any change orders
• Proof of every payment
• Before-and-after photos and video
• All written communication
• Estimates from other contractors to fix or finish the work

Frequently asked questions

Official sources

This page was written from the sources below. “Checked” is the date the source was last opened and read.

• N.Y. General Business Law (opens in a new tab)
  New York State Senate — Open Legislation (official text of the Consolidated Laws) · §§ 770–775 (esp. § 770, § 771(1)–(2), § 771-a, § 772, § 773, § 774) · Checked: October 30, 2026
  Definitions, required contract terms, 3-day cancellation, deposits, fraud penalty, enforcement
• Contractors and home maintenance — NY Attorney General (opens in a new tab)
  Office of the New York State Attorney General · Checked: October 30, 2026
  Licensing jurisdictions, escrow notice, tips on deposits and payments
• File a complaint: Consumer issues — NY Attorney General (opens in a new tab)
  Office of the New York State Attorney General · Checked: October 30, 2026
  Complaints about contractors
• Small Claims — New York State Unified Court System (opens in a new tab)
  New York State Unified Court System — CourtHelp · Checked: October 30, 2026
  Small claims limits by court

Related questions

• The contractor says the deposit was spent on materials. Is that allowed? · Contractor took your deposit and didn't do the work in New York: your rights
• We never signed a written contract. Can I still get my money back? · Contractor took your deposit and didn't do the work in New York: your rights
• I invited the salesperson to my home. Can I still cancel? · Door-to-door sales in New York: your 3-day right to cancel and get your money back
• Do Saturdays count toward the 3 days? · Door-to-door sales in New York: your 3-day right to cancel and get your money back
• Do I have to send a demand letter before going to small claims court? · How to write a demand letter in New York: what to include, tone, deadline and delivery
• How long should I give them to pay? · How to write a demand letter in New York: what to include, tone, deadline and delivery

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