Deposits · Abandonment · Homeowner Leverage
The contractor took your deposit and stopped answering.
New York treats that money as protected funds, not the contractor's.
A contractor who takes a home improvement deposit in New York does not simply hold your money; the law requires advance payments to be safeguarded for your project, and walking off with them can carry civil and even criminal consequences. Add the licensing rules many contractors quietly violate, and homeowners hold far more leverage than the silence on the phone suggests.
Provided through DemandLetterNY.com, a service of Hochman Law PC.
Your deposit is legally protected money.
LIEN LAW § 71-a(4) · GBL ART. 36-A
Under New York Lien Law § 71-a(4), a home improvement contractor who takes payment before substantially completing the job must deposit the funds into an escrow account within five business days or instead post a bond or letter of credit, and the money remains the owner's property, held in trust, until it is properly applied to your project. General Business Law § 771 even requires the contract itself to tell you this. A contractor who spends your deposit on anything other than your job is not just breaching a contract; under Lien Law § 79-a, applying trust funds to non-trust purposes can constitute larceny. That sentence, in an attorney's demand letter, tends to end the silence.
The license question changes everything.
In New York City, home improvement contractors must hold a DCWP (Department of Consumer and Worker Protection) license, and Westchester, Nassau, Suffolk, and other counties run their own licensing schemes. New York courts strictly enforce this: an unlicensed contractor generally cannot sue a homeowner to collect payment for home improvement work at all, even for work actually performed. Check the license first; in NYC, DCWP's public license lookup takes two minutes. If your contractor is unlicensed, they hold almost no legal leverage over you, while you retain every claim against them.
Move in this order.
- Paper the abandonment. Send a dated written message: the job is stopped, here is what was paid, demand a schedule or a refund by a date certain. Photograph the site as it sits.
- Verify the license (DCWP lookup in NYC; county consumer affairs elsewhere) and pull the contract, payments, and every text.
- Attorney demand letter. A letter reciting the trust-fund status of your deposit, the licensing exposure, and a refund deadline reframes the dispute from "annoyed customer" to "documented statutory claims." Flat fee via DemandLetterNY.
- Complaints with teeth. In NYC, a DCWP complaint can put the contractor's license at risk, and DCWP administers a Home Improvement Contractor trust fund that can compensate defrauded homeowners of licensed contractors in some cases. The Attorney General's consumer bureau takes contractor complaints statewide.
- Court. Most deposit claims fit small claims court ($10,000 cap in NYC; $3,000 in town and village courts). Larger abandonment claims support a civil action for breach, the deposit, cover costs, and, where the facts fit, GBL § 349 deceptive-practices remedies.
Damages beyond the deposit.
Abandonment claims are not limited to a refund. New York can entitle a homeowner to the reasonable cost of completing the job over the contract price, damages for defective work that must be redone, and, for deceptive conduct aimed at consumers, GBL § 349 remedies. The broader landscape, including contract-content rules contractors routinely break, is here: home improvement contract disputes in New York.
Watch your own clock.
Contractors who take deposits and vanish often do it serially, then dissolve the LLC. Speed matters: a letter this month beats a judgment against an empty shell next year. If a crew member was injured on your project or the dispute involves defective work causing damage, mention it in the case review; different practice areas of the firm handle those.
A flat-fee demand letter drafted and signed by a New York attorney often resolves it without a lawsuit. Start online at DemandLetterNY.com, a service of Hochman Law PC, or learn more about flat-fee demand letters.
Questions people ask us.
The contractor says my deposit is non-refundable. True?
Advance payments for home improvement work are required by Lien Law § 71-a(4) to be escrowed or bonded and remain the owner's property until properly applied to the project. A contractor who abandoned the job cannot simply keep the deposit as forfeited; that position invites trust-fund and deceptive-practices claims.
How do I find out if my contractor is licensed?
In NYC, use DCWP's public license lookup online. Outside the city, check the county consumer affairs office (Westchester, Nassau, and Suffolk all license home improvement contractors). Unlicensed contractors generally cannot sue homeowners for payment.
Can I go to the police about a stolen deposit?
Diversion of home improvement trust funds can be prosecuted as larceny, and some DAs take these cases, especially serial ones. In practice the civil route (demand letter, DCWP or AG complaint, small claims) is usually the faster path to your money, and nothing stops you from doing both.
The contractor did some work, badly, then quit. What am I owed?
Potentially the unearned portion of what you paid plus the extra cost of having another contractor complete or redo the work over the original price. Document the site condition now, before anyone touches it.
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Your deposit was never theirs to keep.
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