Contract termsHome Improvement Consumer Protection ActChecked October 11, 2026
Pennsylvania caps a time-and-materials home improvement bill at 10% above the written estimate unless both sides sign a change order
On a $20,000 time-and-materials estimate, Pennsylvania law caps the bill at $22,000 unless you and the contractor sign a written change order.
- Written initial estimate
- $20,000
- Allowed at 10%
- $2,000
- Total potential cost
- $22,000
The most the bill can reach without a change order signed by both of you
Worked example · Running total billed
Week 5 would carry the bill $2,150 past the $22,000 ceiling
Billed in earlier weeks Billed that week Above the ceiling
A time-and-materials contract is one where you pay the contractor’s actual labor at an hourly rate and the actual cost of materials, plus a fee, instead of a fixed price. Pennsylvania’s Home Improvement Consumer Protection Act allows these contracts with a ceiling built in.
Before any work starts, the contractor has to give you a written initial cost estimate, and the contract has to say that the cost may not run more than 10% above it without a written change order signed by both of you. On a $20,000 estimate, that ceiling is $22,000. The Attorney General’s office, which enforces the act, says the time-and-materials terms were added by an amendment on October 22, 2014.
The contract has to state four things, and one is the ceiling in dollars
The act describes time and materials as an arrangement where the owner pays for the actual cost of labor at a specified hourly rate and the actual costs of materials and equipment, plus an agreed percentage of those costs or a fixed amount to cover the contractor’s fee and overhead. Overhead is the cost of running the business, such as insurance and the office, that does not belong to one job.
Section 7(a)(8) of the act, codified at 73 P.S. § 517.7, lets a home improvement contract include a time-and-materials provision in place of a total sales price. When it does, the contractor must give you an initial cost estimate in writing before any work begins, and the contract must state four things.
Section 7(a)(8)(ii) · Required statements
On a $20,000 estimate, the third statement reads $22,000
- 1Dollar value of the initial cost estimate$20,000
- 2That the cost may not exceed the estimate by more than 10%No more than $2,000 above the estimate
- 3Total potential cost in actual dollars$22,000
- 4That the cost will not rise above the estimate plus 10% without a written change order signed by bothNo billing above $22,000 without a signed change order
The third item has to appear as a dollar figure. A contract that says only “estimate plus 10%” leaves out what the act calls the total potential cost expressed in actual dollars.
A time-and-materials contract also has to meet every other requirement in section 7, including the contractor’s registration number, the approximate start and completion dates, a description of the work and materials, and the notice of your right to cancel within three business days. Our guide to what Pennsylvania law requires when you hire a contractor covers that list.
After four weeks the bill stood $150 under the $22,000 ceiling
This example uses round numbers and is not drawn from any real job. A homeowner hires a contractor to gut and rebuild a small bathroom on time and materials. The contractor’s written initial estimate is $20,000. The contract sets labor at $75 an hour and a fee of 15% on top of labor and materials. Both of those rates are assumptions for the example; the act leaves the rate and the fee to the two parties to agree on.
Under the act, the contract states the $20,000 estimate, the 10% limit, a total potential cost of $22,000, and the statement that the cost will not go above $22,000 without a written change order signed by both.
Worked example · Weekly bills
Weeks 1 to 4 billed $21,850, and the subfloor repair in week 5 adds $2,300
| Week | Labor | Materials | Fee at 15% | Billed that week | Billed to date |
|---|---|---|---|---|---|
| Week 1 | $3,000 | $2,000 | $750 | $5,750 | $5,750 |
| Week 2 | $3,000 | $3,000 | $900 | $6,900 | $12,650 |
| Week 3 | $2,400 | $2,600 | $750 | $5,750 | $18,400 |
| Week 4 | $1,800 | $1,200 | $450 | $3,450 | $21,850 |
| Ceiling without a signed change order: $22,000 | |||||
| Week 5 | $1,200 | $800 | $300 | $2,300 | $24,150 |
After four weeks the running total is $21,850, which leaves $150 under the ceiling. When the old tile and floor come up, the crew finds a rotted section of subfloor, the layer of plywood or boards under the finished floor. Repairing it would take 16 more hours of labor and $800 of materials. With the fee, that adds $2,300 and brings the total to $24,150, which is $2,150 above $22,000.
Worked example · Week 5 against the ceiling
The $2,300 repair lands $2,150 above the ceiling, and a signed change order would set it at $24,300
Past $22,000, the bill needs a change order signed by both of you
Under the act, the contractor cannot raise the cost past $22,000 on its own.
The two of you need a written change order, signed by both, before the bill goes higher. A separate section of the act, on prohibited acts, also bars a contractor from departing from the plans or specifications in any material way without a written change order, dated and signed by both, that states the price change for each departure.
A change order for the subfloor would describe the repair, price it at $2,300, and state the new ceiling you agree on. If the new ceiling is the old one plus the repair, that comes to $24,300.
On a $100,000 estimate the ceiling is $110,000
The ceiling scales with the estimate. The table shows the 10% allowance and the total potential cost at five estimate sizes.
Section 7(a)(8)(ii)(C) · Total potential cost
The allowance is a tenth of the estimate at every size, from $500 on $5,000 to $10,000 on $100,000
| Initial cost estimate | Allowed at 10% | Total potential cost | Bar: estimate and allowance on one scale |
|---|---|---|---|
| $5,000 | $500 | $5,500 | |
| $10,000 | $1,000 | $11,000 | |
| $20,000 | $2,000 | $22,000 | |
| $50,000 | $5,000 | $55,000 | |
| $100,000 | $10,000 | $110,000 |
What to check before you sign
Look for all four statements in the contract, with the total potential cost written as a dollar amount. Check that the initial estimate is on paper and dated before the first day of work, since the act requires it before any performance begins.
Find the hourly rate and the fee in writing. The act’s definition assumes a specified hourly rate and an agreed percentage or fixed amount for the fee. If a contract lists neither, ask the contractor to add them before you sign, because you will be checking every bill against those two numbers.
Ask for a running total. The act does not set a schedule for time-and-materials statements. A contract can still require a weekly statement of hours, receipts for materials and the total billed so far, and that statement shows you when the job is close to the ceiling, as week 4 did in the example. With it, you and the contractor can sign a change order before the total reaches $22,000.
Keep each signed change order with the contract. Our guide to change orders and payment schedules explains what to put in one and how to tie payments to inspections. Our guide to what remodeling costs and how to read a contractor’s quote covers how labor and materials show up on a fixed-price quote, for comparison.
The act covers home improvement jobs over $500
This is general information about the act, not legal advice for a particular contract. If a contractor bills past the ceiling without a signed change order, or you disagree about what the change order covered, ask a lawyer or the Attorney General’s Bureau of Consumer Protection. The office’s FAQ gives 1-888-520-6680 as the bureau’s toll-free number for checking whether a contractor is registered, and every home improvement contract has to list it.
The act covers a home improvement at a private residence when the work agreed on totals more than $500. Its definition of a private residence includes a single-family house, a building with no more than two units, and a single condominium or co-op unit. A person who owns three or more homes in Pennsylvania counts as an owner under the act only for a primary residence and homes used for personal recreation, so a landlord with several properties may fall outside it on the rentals. The act also leaves out the construction of a new home and emergency work done under section 7 of the Unfair Trade Practices and Consumer Protection Law.
The deposit cap on contracts over $5,000, one-third of the contract price plus any designated special-order materials, is written in terms of the contract price. The act does not say which figure counts as the price for a time-and-materials provision. In its answer on these contracts, the Attorney General’s FAQ describes the initial cost estimate plus 10% as the contract price. Ask the bureau or a lawyer before you agree to a large deposit on a time-and-materials job.
The text quoted here is the act as posted by the General Assembly on October 11, 2026. Five bills that would amend the act were listed on the General Assembly’s page for it that day. None had passed either chamber.