Written for plumbers, electricians, water heater and heat pump installers, drain and sewer shops, and small multi-trade firms serving homeowners and property managers, with Texas, California, Florida and New York in detail.
The short version
- Check your state's deposit rule first.Several states control deposits: some cap the down payment, some require escrow or a bond, and some set deadlines to start work.
- Give the cancellation notice on home sales.Home sales usually carry a right to cancel. Even where a repair you were called for is exempt, extras sold on that visit are not.
- Keep the emergency waiver for real emergencies.It must be separate, signed and handwritten. Put every change order in writing too.
When you sell a job in the customer's home, federal and state cancellation rules apply, and several states also control deposits and contract wording. Check them before you take money, not after.
The federal Cooling-Off Rule
Home sales of $25 or more, or $130 or more at temporary locations, carry 3 business days to cancel, with written notice and a cancellation form. The rule does not cover a bona fide emergency where the buyer called you and gave you a separate signed, handwritten waiver, or a repair or maintenance visit the buyer asked for on their personal property, except extras you sell on that visit. That repair exclusion names personal property, so do not rely on it for work on the house itself. As of Oct 2026.
16 C.F.R. part 429, sec. 429.0
The waiver is for real emergencies only, and no exclusion covers the upsell. A water heater sold on a repair call still carries the 3 business days.
State by state
California
The contract needs your license number, the required notices and a payment schedule linked to progress. The down payment may not exceed $1,000 or 10% of the price, whichever is less. Service and repair contracts of $750 or less follow their own section. A home solicitation contract is one of $25 or more made anywhere other than your business premises, such as the customer's kitchen table. Its buyers get 3 business days to cancel, or 5 if they are 65 or older, with an emergency waiver available. As of Oct 2026.
Cal. Bus. and Prof. Code secs. 7159, 7159.5 and 7159.10; Cal. Civ. Code secs. 1689.5, 1689.6 and 1689.13
| Down payment allowed: the lesser of $1,000 and 10% of $15,000 | $1,000 |
| Refund owed to the homeowner | $4,000 |
| Down payment taken | $5,000 |
Refund the excess, reissue a payment schedule linked to progress, and retrain the team. Taking too much is a misdemeanor and a ground for CSLB discipline.
Texas
Home solicitation sales over $25 carry 3 business days to cancel. Residential original contractors give the lien disclosure. A homeowner claiming a defect must give 60 days' notice, and you have the right to inspect and make a written offer. As of Oct 2026.
Tex. Bus. and Com. Code ch. 601; Tex. Prop. Code sec. 53.255 and ch. 27
Florida
Home solicitation sales carry 3 business days to cancel. Taking an initial payment over 10% for covered residential work means applying for the necessary permits within 30 days after payment and starting within 90 days after they issue, unless there is just cause or a written agreement for longer. It is not a deposit cap. Contracts over $2,500 include the Homeowners' Construction Recovery Fund notice. As of Oct 2026.
Fla. Stat. secs. 501.021 to 501.055, 489.126(2) and 489.1425
New York
Home improvement contracts over $500 must be in writing with the 3-day cancellation notice, and deposits go into escrow or are bonded. In New York City, the DCWP license number goes on the contract. As of Oct 2026.
N.Y. Gen. Bus. Law secs. 770 to 776
If you also sub to general contractors
Pay-if-paid depends on the state
A clause paying you only if the owner pays the GC is unenforceable in California and New York, where it can only time payment; enforceable in Florida only if it states the risk shift clearly; and allowed in Texas within the limits of the statute. Strike it or price the risk. As of Oct 2026.
Wm. R. Clarke Corp. v. Safeco Ins. Co. (1997) 15 Cal.4th 882; West-Fair Elec. Contrs. v. Aetna Cas. and Sur. Co. (1995) 87 N.Y.2d 148; DEC Elec., Inc. v. Raphael Constr. Corp., 558 So. 2d 427 (Fla. 1990); Tex. Bus. and Com. Code ch. 56
- Broad form indemnity for the GC's or owner's own negligence: many states limit it, so cap it to your own negligence.
- No damages for delay: seek time and cost for delays you did not cause.
- Unconditional lien waivers before the check clears: use conditional statutory forms.
- Home warranty company rate cards: check the fixed rates, payment terms and chargebacks for repeat calls against your cost per billable hour.
Put change orders in writing, and talk to a state-licensed construction attorney before you sue a homeowner or answer a defect notice.
Asked in Greymill
California's cap: $1,000 or 10% of the price, whichever is less (As of Oct 2026)
10% of $15,000: $1,500
Your cap: $1,000
Refund if you take $5,000: $4,000
Taking too much is a misdemeanor and grounds for discipline by the CSLB, the state contractors board.
The cancel window: home solicitation buyers in California get 3 business days to cancel, or 5 if they are 65 or older (As of Oct 2026). Signed at home and aged 70, this customer gets 5. The clock starts only once they have signed a contract with the written cancellation notice.
Instead: take up to $1,000, then bill on a payment schedule linked to progress. The contract also needs your license number and the required notices.
Ready for the progress payment schedule? I can draft it for this repipe.
Ask it about your own business
Paste this into Greymill with your own figures, and Contracts & Disputes works it through for your business.
I run a plumbing, heating or electrical business in [state], in the US. Here is my home improvement contract [paste] and how we take deposits [describe]. Check it against my state's cancellation, down payment and required-notice rules, tell me what is missing, and redraft the emergency waiver and change order wording.
More for plumbing, heating and electrical in the US
- My flat-rate book came from a competitor: is it paying after drive time and callbacks?Flat-rate prices only work if the hourly rate inside them is built from the hours your techs actually sell, not the hours you pay.Read the lesson
- Service pays at the truck, warranty companies and GCs pay late: can I afford another truck?Service work pays on the spot, but installs, home warranty companies, property managers and commercial pay apps do not, so plan cash by the week and test any new loan against what is left.Read the lesson
- Do I charge sales tax on this repair? Why the same job is taxable in one state and not the nextWhether a plumbing or electrical job carries sales tax turns on the state and on whether it repairs or improves real property, and a wrong guess can build up for years.Read the lesson
- Who can pull the permit, and what happens if a helper runs the gas line?The license holder of record carries the work, so who does the job, who pulls the permit and who supervises decide whether you keep the license and can enforce the contract.Read the lesson
- I pay techs flat rate and helpers on 1099s: am I building up back pay?Flat-rate and commission pay, drive time, on-call and 1099 helpers are where shops in this trade build up back pay without noticing.Read the lesson
- Selling the replacement at the kitchen table: options, financing and what I can claimPresent replacements as clear priced options with honest financing, and know the rules on dealer fees, fear selling and reviews before you start.Read the lesson
- A customer says my work flooded their house months later: what do I do?When a leak or failure is blamed on your work, report it, keep the evidence and watch the deadline on any defect notice, or you can lose the right to fix it first.Read the lesson
Open the interactive lesson · Every plumbing, heating and electrical lesson · What Greymill knows about the trade
Sources
The primary sources behind this lesson, checked Oct 2026.
- 16 C.F.R. 429.0, 429.1 (Home improvement contracts, cancellation and collections)
- 16 C.F.R. 429.0(a), exclusions (3) and (5) (Home improvement contracts, cancellation and collections)
- secs. 7159, 7159.5, 7159.10 (Home improvement contracts, cancellation and collections)
- Civ. Code secs. 1689.6, 1689.13 (Home improvement contracts, cancellation and collections)
- Bus. and Com. Code ch. 601; Prop. Code sec. 53.255, ch. 27 (Home improvement contracts, cancellation and collections)
- 2026 Fla. Stat. sec 489.126(2) (Home improvement contracts, cancellation and collections)
- Texas Occ. Code ch. 1304; TDLR provider registration and financial security (Hard cases: money, CONTRACTS and people)
- secs. 17600 to 17606 (Hard cases: money, CONTRACTS and people)
- 12 C.F.R. 1026.4 (Hard cases: money, CONTRACTS and people)
- Lab. Code secs. 226.2, 510 (Hard cases: money, CONTRACTS and people)
- Wm. R. Clarke Corp. v. Safeco Ins. Co. (1997) 15 Cal.4th 882 (Contracts, pay-if-paid, prompt payment, retainage and bonds)
- West-Fair Elec. Contrs. v. Aetna (1995) 87 N.Y.2d 148 (Contracts, pay-if-paid, prompt payment, retainage and bonds)
- DEC Elec. v. Raphael Constr., 558 So. 2d 427 (Fla. 1990) (Contracts, pay-if-paid, prompt payment, retainage and bonds)
- Bus. and Com. Code ch. 56 (Contracts, pay-if-paid, prompt payment, retainage and bonds)
- Prop. Code secs. 28.002, 28.004 (Contracts, pay-if-paid, prompt payment, retainage and bonds)
- Civ. Code secs. 8800, 8812 to 8814; Bus. and Prof. Code sec. 7108.5 (Contracts, pay-if-paid, prompt payment, retainage and bonds)
- Tex. Ins. Code ch. 151; Cal. Civ. Code sec. 2782 (Contract red flags)
- Tex. Prop. Code secs. 53.281 to 53.287; Cal. Civ. Code secs. 8132 to 8138 (Deliverables in house style)