In 30 plus years of building and remodeling, when a homeowner gets "ripped off" by a Contractor, typically, they have made a "deposit"; they have paid money for future work. When was the last time you got paid at your job, before you actually did your job?
In most cases, there is no reason to make a deposit for work.
You have decided that you are going to have a project done, re-roof your house, a new kitchen, addition, deck, bath or landscape work. You agree to pay $15,000.00 plus sales tax for the work. The Contractor asks for a $5,000.00 deposit. You write the Contractor a check. The questions begins with; What expense has the Contractor incurred? What happens to your money if the Contractor does not show up?
The answers begin with; A small amount of time: You lost your money and good luck getting it back.
As a Customer, you should pay for what you have received.
If you do a $15,000 re-roof, the actual time people are working on that job is just a few days. If the roofer starts your project on Monday; he has a dumpster delivered for the debris, he sends a crew out to begin tearing off, he might have some sheathing and roofing paper delivered, he has the roofing material delivered, the workers install the sheathing and roofing, the dumpster is removed, final cleanup is done and the workers leave. It is now Thursday or Friday.
What money has the Contractor taken out of their pocket to this point. Pretty much, nothing. They have incurred financial liabilities.
Typically, the workers get paid on Friday, the dumpster company will bill the Contractor at the end of the month, the roofing supply company will bill the Contractor at the end of the month, and the payments for these services and supplies are typically due on or by the 15th of the following month.
In the re-roof example, it is fair to give the Contractor a few hundred dollars to "get in line" as well as to give them a guarantee that you have the ability to pay. It is fair that once the roofing material is actually stocked on the roof, that the Contractor get paid even 60% of the contract amount. It is fair when the job is completed to give full and final payment. With this kind of payment schedule, you can see that you really have paid for that which you have received. Also, final payment is made when the work is 100% complete and you are happy. Money is the leverage to make sure the work was completed to the terms of the original agreement.
If the Contractor does not have the financial wear-with-all to work this way, then maybe they won't be around after collecting that deposit.
On another project, you are going to do one that takes several months. It is acceptable to pay on a mutually acceptable schedule; when the drywall is nailed; when the cabinets are installed, X amount of money. Monthly billings work great when they are detailed and show actual expenses. The Customer is paying for what they have received.
Be careful of payment schedules where you end up paying weekly.
Be careful, Contractors have been known to heavily load the front end of payment schedules to get as much money earlier in the project than the actual costs incurred.
There are times when one must make deposits. When ordering cabinets, it is standard operating procedure, once the final design is approved that a 50 - 60% deposit must be made to actually place the order. When things are being custom made, specifically for your project, you are going to have to make that deposit for work.
Penny Construction typically bills monthly for labor performed, subcontracted work completed, and/or materials on the work site. Penny Construction does not get "deposits" from clients, except when required by a subcontractor or supplier.
It should be expected that by making a payment to the Contractor, that you are telling them that you are satisfied with what has happened to date. If not, you need to talk!
It should be expected that by NOT making payments per your agreement, that the Contractor will not perform to your expectations.