Business & Growth · Contracts
Home Builder Contracts: Types, Clauses, and State Rules
What the AIA contract forms cover, the payment and lien clauses your state requires, and the right to cancel that most homeowners do not know they have.
What is a home builder contract?
A home builder contract sets scope, price, schedule, and payment terms for a build or remodel, in writing. Many states require one past a dollar threshold, and the form decides how price, delay, and unfinished-work disputes get resolved.
What are the three main types of home builder contracts?
The American Institute of Architects publishes the industry’s standard forms, and most custom builder contracts borrow their structure. The three that cover almost every home project differ in how the builder gets paid.
| Contract type | Standard form | How payment works | Fits best when. |
|---|---|---|---|
| Stipulated sum (fixed price) | AIA A101 | One agreed lump sum | Scope is locked before work starts. |
| Cost-plus with a maximum | AIA A102 | Cost of the work plus a fee, capped | Large projects where scope may shift. |
| Residential or small project | AIA A105 | Stand-alone, own conditions, usually a stipulated sum | A home or a shorter remodel. |
AIA describes A101 as for a “stipulated sum,” A102 for “a guaranteed maximum price,” and A105 for a project “modest in size and brief in duration”. A101 also “adopts by reference” AIA Document A201, the general conditions document. A105 builds its own shorter conditions in. A custom contract should cover the same ground.
Turn the agreed scope into an itemized estimate, free →
What down payment and payment schedule are legal?
Down payment rules vary by state. California caps it at $1,000 or 10 percent, whichever is less, printed in bold in the contract. New York sets no cap, but pre-completion deposits go to escrow within five business days unless the builder posts a bond. The schedule must also “bear a reasonable relationship” to work delivered. Our California contractor license guide covers that state’s licensing side.
| Rule | California | New York. |
|---|---|---|
| Written contract required above | $500 | $500. |
| Down payment cap | $1,000 or 10 percent, whichever is less | No cap; escrow or bond. |
| Right to cancel | Notice required in contract | Midnight, 3rd business day after signing. |
What is a mechanics lien warning?
A mechanics lien lets an unpaid subcontractor or supplier claim the property, even after the owner pays the contractor in full. California requires a warning starting “MECHANICS LIEN WARNING:” covering preliminary notices and joint-check protection. Collecting for work not done is against the law there, though a down payment is allowed. No lien warning where one is required is a sign the paperwork is wrong for the state.
Can I cancel a home builder contract after signing?
Two rights can apply. New York’s law gives an unconditional right to cancel, “until midnight of the third business day after the contract was signed”. The FTC’s Cooling-Off Rule adds a similar right for signings in your home, such as a kitchen table, on jobs of $25 or more. Saturdays count. Sundays and holidays do not.
How to check a home builder contract before you sign
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Match the contract type to the job
A locked design fits a stipulated sum. Scope that may still change fits cost-plus with a maximum, so overruns have a ceiling.
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Check the payment schedule against the work
Payments should tie to phases finished, not the calendar. California and New York both write that into statute.
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Look for the lien warning and cancellation notice
Confirm both appear in plain language in the document, not just promised verbally.
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Confirm the deposit fits your state’s rule
California caps it at $1,000 or 10 percent. Other states set their own number or an escrow rule; check your state licensing board first.
SimplyWise Cost Estimator for home builder contracts
SimplyWise Cost Estimator turns a job-site photo into an itemized estimate in about 6 seconds, with editable material, labor, and fee lines. Price the scope and send a professional, branded quote the client signs to approve. Then carry those line items into whichever contract form you use. It is $29.99/mo or $239.99/yr, about $20/mo on annual, with a 7-day free trial.
Keep reading
Sources
AIA
- AIA, A-Series Owner/Contractor Agreements, 2026-09-25.
California
- CSLB, Home Improvement Contracts, 2026-09-25.
- Cal. Bus. & Prof. Code Section 7159, 2026-09-25.
New York
- NY General Business Law Section 771, 2026-09-25.
- NY AG, Home Improvement Fact Sheet, 2026-09-25.
Federal and SimplyWise
- FTC, Cooling-Off Rule, 2026-09-25.
- SimplyWise Cost Estimator, App Store, 4.8 rating, 2026-09-25.
Frequently asked questions about home builder contracts
Contract types
What’s the difference between a fixed-price and a cost-plus home builder contract?
Fixed price, AIA’s A101 form, sets one agreed total for a defined scope. Cost-plus, AIA’s A102 form, pays the cost of the work plus a fee, usually capped at a maximum so overruns have a ceiling. Fixed price fits a locked design; cost-plus fits scope that may still move.
Do I need a written contract for a home build?
In many states, yes, past a dollar threshold. California and New York both require one over $500. Check your state licensing board’s page for its exact threshold.
Money and deposits
How much can a home builder charge as a down payment?
It depends on the state. California caps it at $1,000 or 10 percent of the price, whichever is less. New York has no cap, but deposits go to escrow within five business days or are bonded. There is no single national rule.
What is a mechanics lien warning?
A required contract notice explaining that unpaid subcontractors or suppliers can lien the property even after the owner pays in full. California requires the warning to begin “MECHANICS LIEN WARNING” and describe preliminary notices and joint-check protection.
Cancellation rights
Can I cancel a home builder contract after I sign it?
Sometimes, on two tracks. New York’s law lets homeowners cancel until midnight of the third business day after signing. The FTC’s federal Cooling-Off Rule adds a similar right for signings in your home, like a kitchen table, on jobs of $25 or more ($130 at temporary locations).
Estimating the job
Can I measure the job with my phone camera instead of a tape measure?
Tape or wheel an addition and enter the dimensions. SimplyWise Cost Estimator then turns a job-site photo into an itemized estimate in about 6 seconds. On a Pro iPhone, the room scan uses LiDAR for interior measurements. Every line item stays editable before it goes into the contract’s scope.
Price the job before you write the contract.
Snap a photo and get an itemized estimate with editable lines, then send a branded quote the client signs to approve. Free to try, then $29.99/mo or $239.99/yr after a 7-day trial.