Which parts of a home-building contract can cost you money later?

Published September 28, 2026

Summary

Read closely for three things that can change what you pay after signing: how changes are handled, the contingency built into the price, and what happens if subcontractors or suppliers go unpaid. In California, an unpaid subcontractor or supplier can put a mechanics lien on your house even if you've already paid the builder in full. Lien releases, collected with each payment, are how owners there protect themselves.

Paying twice for the same work

The CSLB describes a mechanics lien as a "hold" on your property filed by an unpaid contractor, subcontractor, laborer or material supplier and recorded with the county recorder. If it isn't paid, it can lead to foreclosure and a forced sale. Legally, the payment falls on the homeowner, even one who has already paid the direct contractor.

Two things limit that risk. Subcontractors and suppliers who might file a lien have to send you a Preliminary Notice, delivered before work begins or supplies arrive and up to 20 days after; if they don't, they lose the right to file. Laborers and the direct contractor don't have to send one.

The other is a paper trail of releases. Before each payment you get a signed conditional release from anyone who could file a lien, and afterward the contractor gives you unconditional releases signed by each claimant who was paid. You can legally hold back the next payment until the unconditional releases for the previous one arrive. The forms have to substantially follow California Civil Code sections 8132, 8134, 8136 and 8138:

Form	When it comes into play
Conditional Waiver and Release Upon Progress Payment	Before a progress payment; effective only once the claimant is actually paid
Unconditional Waiver and Release Upon Progress Payment	After the progress payment is made
Conditional Waiver and Release Upon Final Payment	Before the final payment
Unconditional Waiver and Release Upon Final Payment	After the final payment is made

What California expects to see in writing

For home improvement work over $500 in combined labor and materials, California requires a written contract. The CSLB says it should spell out the work, the price, when payments are due, who gets the building permits and when the job will be finished, along with the contractor's address and license number and notices about cancellation rights, mechanics liens and allowable delays. You can cancel within three days of signing.

The down payment on a home improvement job can't be more than 10% of the contract price or $1,000, whichever is less. A contractor with a Blanket Performance and Payment Bond on file with the CSLB can ask for the full amount up front, and only about two dozen companies have been approved for that bond. The CSLB pages describe home improvement contracts; they don't say whether the same cap applies to building a new house.

Changes after you sign

Any change should go on a written change order that includes the price change, and once signed it becomes part of the contract. The American Institute of Architects' G701 change order form works the same way: the owner, architect and contractor sign it, and a signed G701 means they've agreed on every term of the change, including any change to the contract sum (or guaranteed maximum price) and the contract time.

The contract price in Census Bureau statistics is the starting number for the same reason. Census counts the price on the original contract with the general contractor, which generally doesn't reflect later change orders.

The contingency line

AIA defines a contingency as an amount or percentage held in the contract for unpredictable changes: errors and omissions in the construction documents, changes in scope, and unknown conditions. According to AIA, a design contingency usually runs 5% to 10% of overall construction cost, and a design-build contractor's own contingency commonly falls in the same 5% to 10% range depending on risk and complexity.