How to Create a Kitchen Remodel Payment Schedule
A well-structured payment schedule protects you from contractor abandonment while being fair to legitimate contractors who need cash flow for materials. Here's how to structure payments so you maintain leverage throughout your project.
Quick Summary
Max deposit
10-15%
Standard milestones
4-5 payments
Final holdback
10-15%
Why Payment Structure Matters
Your payment schedule is your primary protection against poor work and contractor abandonment. Once money leaves your account, your leverage disappears. Here's what's at stake:
Bad Payment Structure
- 50% deposit before any work
- Payment based on time, not completion
- No documentation requirements
- Full payment before final inspection
Result: High risk of loss if contractor abandons project or does poor work.
Good Payment Structure
- 10-15% deposit maximum
- Payment tied to completed milestones
- Lien releases required before payment
- 10-15% held until final completion
Result: Contractor motivated to complete work; you maintain leverage.
Industry reality: According to contractor licensing boards, payment disputes are the #1 complaint against contractors. Most could have been prevented with a proper milestone-based payment structure documented in the contract.
Standard Kitchen Remodel Payment Schedule
This schedule balances contractor cash flow needs with homeowner protection. Adjust percentages based on your project scope and local customs.
Payment 1: Deposit
10%When: Upon signing the contract
Purpose: Secures your spot on the contractor's schedule and covers initial project planning, permit applications, and scheduling of subcontractors.
Before paying: Verify contractor license, insurance, and references. Have a signed contract with detailed scope, timeline, and payment terms.
Payment 2: Materials & Demo
30%When: After demolition is complete and materials are ordered/delivered
Purpose: Covers demolition labor, disposal costs, and material deposits. Contractors often need to pay for cabinets and countertops upfront.
Before paying: Verify demolition is complete, see material order confirmations, and get a conditional lien release for work completed.
Payment 3: Rough-In Complete
25%When: After electrical, plumbing, and any structural work passes inspection
Purpose: Covers rough-in labor for plumbing, electrical, and HVAC. This is the "behind the walls" work that must be inspected before being covered up.
Before paying: Confirm all rough-in inspections have passed. Get copies of inspection sign-offs. Obtain lien releases from subcontractors.
Payment 4: Cabinets & Counters Installed
25%When: After cabinets and countertops are fully installed
Purpose: Covers cabinet installation, countertop fabrication and installation, and related finish work.
Before paying: Inspect cabinet installation quality (level, plumb, secure). Verify countertops match specs. Check for any damage. Get lien releases.
Payment 5: Final Payment
10%When: After 100% completion and final walkthrough
Purpose: Covers remaining finish work, appliance installation, backsplash, trim, and all punch list items.
Before paying: Complete final walkthrough with contractor. All punch list items addressed. Final inspection passed. All lien releases received. Warranty documentation provided.
Understanding Lien Releases
A mechanic's lien allows contractors and subcontractors to place a claim against your property if they're not paid. Lien releases protect you from this scenario.
The nightmare scenario: You pay your general contractor in full. They don't pay their subcontractors. The plumber files a mechanic's lien on your home. You now owe the plumber money even though you already paid your GC. This happens more often than you'd think.
Conditional Lien Release
Signed when payment is made but before it clears. The release becomes effective once the check clears.
Use for: Progress payments during the project
Unconditional Lien Release
Confirms payment has been received and waives lien rights immediately. More risky for the contractor.
Use for: Final payment and project closeout
Who Should Provide Lien Releases?
- General contractor (for all payments)
- Electrician (after electrical work is paid)
- Plumber (after plumbing work is paid)
- Cabinet supplier/installer
- Countertop fabricator/installer
- Any other subcontractors or material suppliers
Additional Ways to Protect Yourself
Beyond proper payment structure, these practices add layers of protection to your kitchen remodel.
Pay by check, not cash
Checks create a paper trail proving payment. Cash leaves no record. If a dispute arises, canceled checks are your proof. Some homeowners even use checks with "Payment for [milestone]" in the memo line.
Never pay ahead of work
If a contractor asks for payment before completing a milestone, that's a red flag. Legitimate contractors can finance their operations. They should never need your money to start work or buy materials (beyond the initial deposit).
Document with photos before each payment
Before releasing each payment, take photos of the completed work. This documents the condition at each milestone. If quality issues arise later, you have evidence of what was inspected and accepted.
Put the schedule in your contract
Your payment schedule should be written into the contract with specific completion criteria for each milestone. Vague milestones like "rough-in complete" should specify what that includes and require inspection approval.
Consider joint check agreements
For large subcontractor payments, you can issue checks made out to both the GC and the sub. This ensures the subcontractor gets paid and can't file a lien. It adds complexity but maximum protection.
Payment Red Flags to Watch For
These warning signs suggest a contractor may not be financially stable or may be planning to take advantage of you.
Demanding more than 33% upfront
Legitimate contractors don't need half your money before starting. Large upfront demands often indicate cash flow problems or intent to take money and disappear. Some states legally limit contractor deposits.
Requesting cash only
Cash-only requests suggest the contractor is avoiding taxes or creating no paper trail. If they're cutting corners on taxes, they may cut corners on your project too. Insist on checks.
Pressuring for payment before milestone completion
"We need the next payment to order materials" mid-milestone is a warning sign. Professional contractors order materials and manage cash flow without needing advances from current customers.
Refusing to provide lien releases
If a contractor won't provide lien releases, they may not be paying their subs. This puts you at risk. Make lien releases a non-negotiable condition of each payment.
Offering big discounts for upfront payment
"Pay in full now and save 10%" is often a scam. You lose all leverage, and the discount isn't worth the risk of contractor abandonment or poor work with no recourse.
Frequently Asked Questions
How much deposit should I pay for a kitchen remodel?
A reasonable deposit for a kitchen remodel is 10-15% of the total project cost. Some states limit contractor deposits by law. Never pay more than 33% upfront, regardless of what the contractor requests. High deposit requests are a red flag and increase your risk if the contractor abandons the project.
What is a lien release and why do I need one?
A lien release (or lien waiver) is a document where the contractor and subcontractors confirm they've been paid and waive their right to file a mechanic's lien against your property. Without lien releases, a subcontractor who wasn't paid by your general contractor could place a lien on your home—even if you paid the GC in full.
When should I make final payment on a kitchen remodel?
Make final payment only after: all work is 100% complete, punch list items are addressed, final inspection passes, you receive all lien releases, warranty documentation is provided, and you've lived with the kitchen for at least a few days to identify any issues. Hold 10-15% until these conditions are met.
What if my contractor asks for payment before work is done?
Requests for payment before milestone completion are a red flag. Legitimate contractors can finance their operations and materials. If a contractor needs your money before doing the work, they may be using your funds for other projects or facing financial difficulties. Stick to your agreed milestone schedule.
Ready for the Next Step?
With your budget, contingency, financing, and payment schedule in place, you're ready to start getting bids from contractors. The next step walks you through evaluating and comparing contractor bids.