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Remodeling scams, and how to protect yourself

The BidWell teamLast checked against Texas law on Nov 2, 2026 · 9 min read

This explains Texas law in plain terms. It is not legal advice. For a specific contract or dispute, talk to a Texas attorney.

Most contractors are honest people doing hard work. A few aren't, and they tend to use the same handful of moves. Once you know them, they're easy to spot.

Here are the common ones, what the Texas Attorney General and the FTC say about each, and the Texas paperwork that protects you from the quieter risk: a lien from a sub your contractor didn't pay.

The big deposit, then nothing

The classic. Someone takes a large payment up front and then never shows, or starts and disappears.

The Texas Attorney General says it plainly: scammers in door-to-door rip-offs are known for asking for payment in full in advance, then leaving without finishing, sometimes without starting (Texas Attorney General).

What protects you:

  • Don't pay the full amount up front. The FTC says the same (FTC).
  • Tie payments to work you can see. "25% when tile is set," not "25% next Friday."
  • Expect a deposit for special-order materials, but ask what it pays for.

There's more in how much to pay up front, and when.

Cash only, or a discount for cash

Cash leaves no record. If something goes wrong, you can't show what you paid or when.

The FTC lists "accept only cash" as a sign of a scam. Pay by check, card or another method that leaves a trail, and get a receipt or invoice for every payment.

No written contract

"We don't need all that paperwork" is a bad sign. A contractor who won't write down the price, the work and the schedule is keeping their options open, not yours.

The disclosure Texas contractors give homeowners before signing says to get a written agreement covering the work, the time, the cost and how you pay, and warns that a spoken promise left out of it may not be enforceable (Property Code 53.255).

The Attorney General adds: don't sign a contract with blanks in it, and get copies of everything you sign when you sign it. See what a fair remodel contract looks like in Texas.

Pressure to decide today

"This price is only good today." "I can start tomorrow if you sign now." "I have leftover materials from a job down the street."

The FTC lists the same signs: showing up saying they're in the area, leftover materials, and pressure for an immediate decision.

The Attorney General says a contractor should leave the contract with you to read, and that a rush to sign is a reason to be suspicious.

A good contractor's price will still be there tomorrow.

Storm chasers

After hail, wind or a flood, crews show up from out of town. Some are legitimate. Some aren't. The Attorney General notes that home improvement scams often flourish after disasters, and that both real repair crews and con artists go door to door.

Texas has rules aimed at storm work:

  • Your deductible is yours to pay. It's illegal in Texas for a contractor to offer to waive, rebate or absorb your insurance deductible (Business and Commerce Code 27.02, as summarized by the Texas Department of Insurance). A contract of $1,000 or more involving an insurance settlement must include a notice that you have to pay the deductible.
  • Your contractor can't be your adjuster. Texas doesn't allow a contractor to act as a public adjuster on a claim for a property they're also working on (Insurance Code 4102.163, per TDI).
  • After a declared disaster, no payment before work starts. For disaster remediation contracts, a contractor may not require full or partial payment before beginning work, and partial payments can't run ahead of the work done (Business and Commerce Code 58.003). Disaster remediation means cleanup, demolition or rebuilding after a natural disaster declared by the governor or a county judge (58.001). The rule doesn't cover a contractor with a physical business address in your county, or a county next to it, for at least a year (58.002).

"Use my lender"

Some contractors offer to set up the financing too. That's not always a scam, but it's worth slowing down. The FTC lists a contractor suggesting you borrow from a lender they know as a warning sign.

The Attorney General warns that some contractors sell the financing contract to a third party at a steep discount, which can mean you're paying more than the work is worth. Shop the loan separately from the bid. Never sign a credit form you haven't read.

And never sign your property over. The Texas disclosure says a contractor may not require you to convey your property to them as a condition of the job. The FTC says never transfer your deed without talking to an attorney or someone you trust.

The quiet one: a lien from a sub your contractor didn't pay

This one doesn't feel like a scam, and it can happen with a contractor who means well but runs out of money.

You pay your contractor. Your contractor doesn't pay the tile supplier or the plumber.

Under Texas law, that sub or supplier may be able to put a lien on your property for the unpaid amount, even though you never hired them directly. The disclosure your contractor gives you says so in capital letters.

The money you pay a contractor for your project is held in trust for the subs and suppliers who worked on it (Property Code 162.001).

A contractor who intentionally or knowingly uses that money for something else before paying the subs and suppliers it's owed has misapplied it (162.031). Misapplying $500 or more is a Class A misdemeanor, and a third-degree felony with intent to defraud (162.032).

That's the law's answer. Here's the practical one.

The paperwork that protects you

Texas builds the protection into the job. You don't have to know the statutes by heart. You do have to ask for the papers.

The list of subs and suppliers. Before work starts, your contractor gives you a written list of the subs and suppliers they plan to use, updated within 15 days of a change (53.256).

Now you know who could have a claim. See the Texas subcontractor list.

A disbursement statement with each payment request. It names the subs and suppliers the contractor intends to pay from that money (53.258). A false one, made knowingly or recklessly, is a misdemeanor.

Lien waivers. A waiver shows the contractor gave up lien rights for a payment. Texas has four statutory forms (53.284).

On a bigger job, the disclosure suggests asking for a bills-paid affidavit as a condition of each payment, and for a release from any sub who sends you a notice. Our contractor guide explains Texas lien waivers.

The 10% reserve. Texas law has the owner hold back 10% of the contract price, or of the value of the work, during the job and for 30 days after it's complete (53.101).

The disclosure says if you don't, and a valid claim isn't paid, you may be personally liable up to the amount you should have held.

The bills-paid affidavit at the end. At final payment, the contractor swears everyone has been paid, or lists who hasn't (53.259).

A false one is a misdemeanor and the signer is personally liable for the loss. If someone's listed as unpaid, the disclosure tells you to hold that amount until you get a waiver or release from them. See the bills-paid affidavit.

If you get a notice from a sub. The disclosure tells you to withhold the claimed amount from your contractor until it's resolved, and to tell your lender if they're paying. Not every claim is valid. Talk to an attorney when you get one.

On a homestead job over $5,000, the contractor has to keep your payments in a construction account at a financial institution (162.006). The Attorney General suggests asking for written proof of the account.

A short checklist

  1. Check the contractor out before you talk price. See how to vet a contractor.
  2. Get it in writing: scope, price, schedule, payment schedule. No blanks.
  3. Don't sign the same day if you're being pushed.
  4. No cash. Get a receipt for every payment.
  5. Don't pay in full up front. Tie payments to finished work.
  6. Get the subs list before work starts.
  7. Hold the 10% reserve.
  8. Get a lien waiver with each payment and the bills-paid affidavit at the end.
  9. Don't sign a completion certificate until the work is done and the site is clean.

If something goes wrong

The FTC suggests trying to resolve it with the contractor first, following up phone calls with a certified letter, and keeping copies of everything.

If that doesn't work, you can file a consumer complaint with the Texas Attorney General. For a lien or a legal dispute, talk to a Texas attorney.

Questions homeowners ask

No. Some honest contractors knock on doors, especially after storms. But many scammers do too. Check them out like anyone else and never decide on the spot.

Sources

This explains Texas law in plain terms. It is not legal advice. For a specific contract or dispute, talk to a Texas attorney.