Florida Contractor Deposit Law: Demand Letters and Penalties

Florida’s contractor deposit law lives in Section 489.126 of the Florida Statutes. It does not cap how much a contractor can ask for up front, but once your initial payment exceeds 10 percent of the total contract price on a residential repair, renovation, or construction project, the clock starts: the contractor has 30 days to apply for all required permits and 90 days after those permits are issued to begin the actual work. Missing those deadlines without a legitimate reason is a crime, and the penalty scales with the amount of money the contractor took.¹

The statute defines “contractor” broadly. Anyone who performs or promises to perform the work falls under it, licensed or not. An unlicensed operator who collects a deposit and vanishes faces the same criminal exposure as a state-licensed builder who does the same thing.¹

When the Deadlines Can Be Extended

Two things can push the 30-day and 90-day deadlines back. The first is “just cause,” which the statute leaves open-ended but covers situations like a natural disaster or a permit backlog at the local building department. The second is a written agreement between you and the contractor to a longer timeline for permits, for work to start, or both.¹

A verbal extension does not count. If a contractor calls to say the permit office is slow and asks for another month, that conversation gives you nothing to point to later. Put any extension in the contract or a signed addendum.

The Demand Letter You Have to Send

This is the step most homeowners miss, and skipping it weakens the case. Before a court will infer that a contractor had no just cause for a missed deadline, the statute requires you to send a formal written demand by certified mail, return receipt requested, to the address listed in your contract. If the contract has no address, or there was no written contract, mail it to the address on file with the Department of Business and Professional Regulation (DBPR) or the local licensing board.¹

The letter should demand one of three things: that the contractor apply for the permits, start the work, or refund your money. The contractor then has 30 days from receiving the letter to do one of those things. If they do not, a court can infer the delay was without just cause. Without that letter on record, the contractor can argue they had a legitimate reason, and you have a much harder time proving otherwise.¹

Criminal Penalties by Dollar Amount

Violating Section 489.126 is a criminal offense, and the charge depends on how much the contractor received:

Less than $1,000: first-degree misdemeanor.
$1,000 to less than $20,000: third-degree felony.
$20,000 to less than $200,000: second-degree felony.
$200,000 or more: first-degree felony.

These penalties apply both to the deposit-and-deadline violation and to the abandonment scenario discussed below.¹

If Work Starts and Then Stops

The statute does not stop protecting you once ground is broken. A contractor who has been paid more than the value of the work completed so far cannot walk away for 90 consecutive days, or whatever longer period your contract specifies. If you have handed over $30,000, only $10,000 of work is in the ground, and the crew disappears for three months, that gap is where legal exposure sits. In this scenario, the dollar figure that determines the criminal charge is the amount the contractor received in excess of the work actually completed, not the total contract price.¹

Section 489.129 adds a separate disciplinary layer for licensed contractors. “Financial mismanagement or misconduct” that causes you harm is grounds for license discipline, including situations where the contractor collected your money to pay suppliers or subcontractors, failed to pay them, and liens were recorded against your property as a result.²

Getting Your Deposit Back

Criminal and disciplinary processes punish the contractor. Recovering your money is a separate effort, and there are three main routes.

Small Claims Court

For disputes involving $8,000 or less, Florida’s small claims court is the practical option. You do not need a lawyer, the filing fees are lower, and cases move faster than regular civil court. If your lost deposit is at or under that threshold, this is usually where to go. For higher amounts, you would file in county or circuit court, where the process is more formal and legal representation matters more.

DBPR Complaint

If the contractor is licensed, you can file a complaint with the Florida Department of Business and Professional Regulation. The DBPR can reprimand the contractor, impose fines of up to $10,000 per violation, require financial restitution, mandate continuing education, or suspend or revoke the license.²

Before filing, gather your signed contract, payment records, photographs, and any written correspondence. Complaints go through the DBPR’s online portal.³ The department handles administrative enforcement, not civil disputes. It will not represent you or directly recover your money. A DBPR complaint goes after the license; getting the deposit back is still a separate legal action.

Once the department opens a case, it can proceed on its own authority. Withdrawing your complaint or settling privately with the contractor does not necessarily shut the investigation down.⁴

The Homeowners’ Construction Recovery Fund

Florida maintains a recovery fund for homeowners who lose money because of a licensed contractor’s violations. Every residential construction contract valued above $2,500 must include a written notice telling you the fund exists and how to contact the Construction Industry Licensing Board for details.⁵

The fund is slow and conditional. To be eligible, you need a final court judgment, an arbitration award, or a restitution order from the licensing board. You also have to show the contractor has no assets to satisfy that judgment and that any available bonds or insurance have been exhausted. Claims must be filed within one year of the final judgment or administrative action.⁶

When a contractor takes your money, closes the business, and has nothing left to collect against, the fund may be the only route to partial reimbursement. Check your contract for the required notice. A missing notice does not disqualify you from filing, but it is a signal worth noting.

A Note on What This Law Does Not Cover

Section 489.126 governs deposits, permit deadlines, and abandonment of work. It does not govern disputes over defective workmanship. If your issue is that the work was done but done poorly, Florida requires a separate pre-suit notice-and-cure process under Chapter 558 before you can file a lawsuit, and the lien-waiver rules under Chapter 713 govern how you protect yourself from subcontractor liens along the way. Those are different problems with different rules; the deposit statute is not the right tool for them.

1
Florida Senate. Florida Code Title XXXII, Chapter 489, Section 489-126 – Moneys Received by Contractors
2
The Florida Legislature. Florida Statutes Section 489.129 – Disciplinary Proceedings
3
MyFloridaLicense.com. File a Complaint Against a Licensee
4
Department of Business and Professional Regulation. Construction-Related Complaint Package
5
The Florida Legislature. Florida Statutes Section 489.1425 – Recovery Fund Notice
6
The Florida Legislature. Florida Statutes Section 489.141 – Conditions for Recovery; Eligibility