Know Your Legal Rights is a bi-monthly column distributed by the State Bar of Wisconsin. It is sponsored by the State Bar of Wisconsin’s Lawyer Referral Service (LRS), which connects Wisconsin residents with lawyers throughout the state. To find an attorney in your area, visit wislaw.org.
By Atty. Kevin Trost
You hire a contractor, pay a deposit, and then the calls stop. Weeks pass. The work never starts – or stops midway – and you’re left wondering whether you’ve been scammed or just unlucky. Unfortunately, this scenario is common in home improvement projects, but Wisconsin law gives homeowners tools to respond.
Start With the Contract
Wisconsin law requires written contracts for most home improvement projects. A valid contract should clearly state the scope of work, total price, payment schedule, estimated start and completion dates, and the terms of any warranty on the work. If a contractor takes a deposit and fails to perform as promised, that may amount to a breach of contract, even if fraud was never intended.
Keep copies of the contract, canceled checks, receipts, emails, texts, and voicemails. Documentation matters if you need to take further action.
Limits on Deposits
Wisconsin law does not set a strict dollar cap on deposits, but large upfront payments – especially before any materials are delivered – can be a red flag.
Many consumer advocates recommend avoiding deposits that exceed one-third of the project cost unless materials must be specially ordered.
Consumers should be even more wary if a contractor demands full payment before work begins. Not only is such a large payment a red flag, but demanding full payment may violate consumer protection rules.
Home Improvement Protections
Home improvement contractors in Wisconsin are regulated by the Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP). Contractors who misrepresent services, abandon projects, or fail to honor contracts may be violating state regulations.
Homeowners can file a complaint with DATCP, which may investigate patterns of misconduct and, in some cases, pursue enforcement actions. While DATCP cannot recover money for every consumer, complaints help identify repeat offenders.
When Small Claims Court Makes Sense
If a contractor has taken your deposit and stopped communicating, small claims court may be an option. In Wisconsin, individuals can sue for money damages up to $10,000. The process is designed to be accessible without hiring an attorney, though legal advice can still be helpful.
Bring all documentation and be prepared to show:
- A contract or agreement existed
- You paid money
- The contractor failed to perform
Judgments can order repayment, but collecting can take additional steps if the contractor does not voluntarily pay the judgment.
Is It Fraud?
Not every abandoned project is criminal fraud, but taking money with no intent to perform can cross that line. Warning signs may include fake credentials, repeated excuses, disconnected phone numbers, or multiple complaints from other homeowners. Local law enforcement may be appropriate in extreme cases, particularly if a pattern emerges.
The Bottom Line
When a contractor disappears after taking a deposit, act quickly. Document everything, stop further payments, and explore your options – from filing a consumer complaint to pursuing small claims court. Knowing your rights can help turn a frustrating situation into a recoverable one – and may help prevent others from facing the same problem.
Red Flags to Watch For Before You Hire
Homeowners can reduce the risk of problems by watching for warning signs before paying a deposit. Be cautious if a contractor:
- Asks for full payment upfront or a very large cash deposit.
- Refuses to provide a written contract or detailed estimate.
- Will not share a business address, license information, or references.
- Pressures you to “act now” to secure a deal.
- Has a pattern of online complaints or unresolved consumer reports.
Before hiring, consider checking complaints with the Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP) and confirming whether the contractor is properly registered. Taking a few extra steps upfront can help prevent costly dispute.
Kevin Trost is the founding attorney of Trost, LLC, and his legal practice includes resolving real estate disputes throughout Wisconsin. He is a member of the State Bar of Wisconsin’s Lawyer Referral Service, which connects Wisconsin residents with lawyers throughout the state. To find an attorney near you, visit wislaw.org.
Know Your Legal Rights is sponsored by the State Bar of Wisconsin’s Lawyer Referral Service, which helps connect the public with appropriate legal counsel. Learn more at wislaw.org.
This column provides general legal information, not legal advice. Laws may change. Consult an attorney about your specific situation.
