Deposit: keep it modest. Some states cap it - California: 10% of the price or $1,000, whichever is less (with narrow exceptions). Arizona has no single statewide percentage cap that we are aware of, so negotiate it and write it down.
Progress payments: tie each payment to a finished, checkable milestone (e.g., 'framing inspection passed'), not to a calendar date.
Stay behind the work: never pay for much more than has been completed and delivered.
Final payment: hold a meaningful amount until the final inspection, punch list and lien waivers are done.
Pay by check or card, not cash. Get receipts.
Example milestone schedule (bathroom remodel)
Deposit at signing (small, per your state's rules)
After demo and rough-in inspection passes
After waterproofing and tile
Final after final inspection, punch list and lien waivers
Example only. Your contract controls; larger jobs have more milestones.
Mechanics' liens, in plain words
If a subcontractor or supplier who worked on your house doesn't get paid, many states let them record a lien against your property - even if you already paid your contractor. That is why lien waivers matter.
Arizona: preliminary 20-day notices and waivers
Subcontractors and suppliers generally must send the owner a Preliminary Twenty Day Notice to preserve their lien rights (A.R.S. 33-992.01). It says 'this is not a lien' - it tells you who might file one if unpaid.
Keep every notice. They are your list of who to collect waivers from.
Arizona law sets statutory lien waiver forms (A.R.S. 33-1008): conditional and unconditional, for progress and final payments.
Conditional waiver - collect it before you pay; it takes effect when the payment clears.
Unconditional waiver - collect it after the payment has cleared.
Another option: joint checks made out to both the contractor and the subcontractor or supplier.
External sites open in a new tab; Corky's MHS™ is not affiliated with them. Statutes and agency pages change - check the current version.
Please note
Educational information only - not legal, engineering or code advice. Rules vary by state, county and city, and change over time. Check with your local building department and licensing board, and read your own contract.
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