Most home renovations in South Florida are priced one of three ways: a fixed price for a defined scope, cost-plus (the actual cost of the work plus a contractor fee), or time and materials. For most homeowners a fixed price backed by a detailed written scope and realistic allowances is the safest choice. Cost-plus makes sense when the scope genuinely cannot be defined yet, and time and materials belongs on small or exploratory work.
What protects you is the document underneath the contract type: inclusions, exclusions, how changes are priced and when money changes hands. Here is how each model works and what Florida law adds.
What is the difference between fixed-price, cost-plus and time-and-materials?
| Contract type | How you pay | Who carries cost risk | Best suited to |
|---|---|---|---|
| Fixed price (lump sum) | One agreed price for a defined scope | Mostly the contractor, within the scope | Kitchens, bathrooms, condo remodels and gut renovations with complete drawings and selections |
| Cost-plus | Actual costs plus a percentage or fixed fee | Mostly the owner | Projects that must start before design is finished, or where conditions are truly unknown |
| Cost-plus with a guaranteed maximum price | Actual costs plus fee, capped at an agreed ceiling | Shared | Larger custom work where both sides want transparency and a cap |
| Time and materials | Hourly or daily labor rates plus materials | The owner | Repairs, investigation, small punch lists |
Fixed-price contracts: when they protect you and when they don’t
A fixed price means the contractor commits to a number and absorbs the cost if their own estimate was wrong. If the tile setter takes four days longer than planned, that is the contractor’s problem.
The protection only reaches as far as the scope. A fixed price on a one-page proposal that says “remodel kitchen” is close to meaningless, because every disagreement later becomes a question of what was included. A fixed price on a scope that lists demolition limits, cabinet lines, countertop material and edge, electrical points, plumbing locations, tile areas and finish levels is a real commitment.
Two things weaken a fixed price. The first is unrealistic allowances, covered below. The second is hidden conditions. In a 1960s house it is common to open a wall and find cast-iron drain lines or older wiring that has to be dealt with. A fair contract says in advance how that will be handled: a stated unit price, a not-to-exceed amount, or a written change order before work continues.
Cost-plus contracts: transparency at the price of certainty
Under cost-plus you pay what the work actually costs, documented with invoices and payroll, plus the contractor’s fee. Industry guides put that fee anywhere from about 5 to 25 percent of project cost, with 10 to 20 percent the most commonly cited range for residential general contractors. The fee may be a percentage or a fixed amount agreed at the start.
The appeal is openness. You see every invoice, nothing is padded against risk, and work can begin before every selection is made.
The weakness is structural. With a percentage fee, the contractor earns more when the job costs more. The incentive points the wrong way, and you will not know the final cost until the end. If you choose cost-plus, ask for three things: a fixed fee rather than a percentage, a guaranteed maximum price once drawings are far enough along, and the right to review invoices before each payment.
Time and materials: for small or exploratory work
Time and materials bills labor at an hourly or daily rate, with materials charged on top, usually with overhead and profit built into those rates. It suits leak investigations and small repairs. On a full renovation it leaves you with no cost ceiling.
Allowances: where fixed prices quietly become variable
An allowance is a placeholder for something not yet chosen: tile at a stated amount per square foot, plumbing fixtures at a set total, an appliance package. If your final choice costs more, you pay the difference. Allowances are normal; the problem is allowances set low to make a proposal look cheaper.
Check each allowance against what you actually want to buy. If you have been looking at large-format porcelain and the tile allowance would barely cover a basic ceramic, the real price of the project is higher than the number on the page. Also confirm whether an allowance covers material only or material plus installation, and whether overages carry the contractor’s markup. Our article on renovation budget mistakes covers this in more detail.
Change orders: how scope changes should be priced
Every renovation has changes. A change order is the written record of that decision: what changes, what it costs, how it affects the schedule, and your signature before the work happens.
Good contracts set the rules in advance. They state the markup on change orders, how credits are calculated when something is removed, and that no extra work is billable without a signed change order. The common dispute is a verbal “go ahead” during a site walk followed by an invoice nobody expected. Insist on paper, even for small items, and keep a running total so the final bill holds no surprises.
How should payments be scheduled on a Florida renovation?
Tie payments to completed, verifiable milestones rather than calendar dates: permit issued, demolition complete, rough-in inspections passed, cabinets installed, countertops installed, final inspection passed. You should never be far ahead of the work.
Florida law also regulates deposits. Under section 489.126, a contractor who takes more than 10 percent of the contract price up front on residential work must apply for the necessary permits within 30 days and start work within 90 days after the permits are issued, unless there is just cause or you agreed in writing to a longer period. A large deposit followed by weeks of silence is a warning sign, and the statute gives you a written-demand procedure if it happens.
What Florida law requires in a residential construction contract
Several Florida requirements apply to residential work regardless of which pricing model you pick. As of 2026:
- Construction lien disclosure. For a direct contract over $2,500 on a home with one to four units, section 713.015 requires a lien warning on the first page of the contract or a separate page, in bold capital letters of at least 12-point type, signed and dated by the owner. It explains that unpaid subcontractors and suppliers can place a lien on your property even if you have paid the contractor in full.
- Florida Homeowners’ Construction Recovery Fund notice. Section 489.1425 requires residential contracts over $2,500 to include a statement about this state fund. For contracts signed on or after July 1, 2024, the fund can pay up to $100,000 per claim against general, building and residential contractors. It only covers losses caused by a licensed contractor’s violations, which is one more reason to verify a contractor’s state license on myfloridalicense.com before you sign.
- Notice of Commencement. For improvements over $2,500, the owner records a Notice of Commencement with the county clerk before work begins, and a copy must be posted on the job site before the first inspection. It expires one year after recording unless a later date is stated, and it is void if work does not start within 90 days. Payments made after it expires can be treated as improper, which can mean paying twice.
- Notices to Owner and lien deadlines. Subcontractors and suppliers who want lien rights must serve you a Notice to Owner within 45 days of starting to furnish labor or materials. A lien must be recorded within 90 days of that party’s last work on the project.
- Final payment affidavit. Before final payment, the contractor must give you an affidavit stating that everyone who served notice has been paid, or listing who has not. You should hold the final payment until you have it.
In practice: keep every Notice to Owner you receive, and ask for a lien release from each of those parties with each payment. It is the simplest protection Florida’s lien law gives you. For the wider vetting process, see our contractor hiring checklist.
Which contract type should you choose?
- Bathroom, kitchen or condo remodel with drawings and selections done: fixed price with a line-item scope.
- Whole-home or luxury renovation where design is still evolving: cost-plus with a fixed fee, moving to a guaranteed maximum price once the drawings are complete.
- Older house with unknown conditions: fixed price for defined work, with unit prices agreed in advance for likely hidden items.
- Small repairs or investigation: time and materials with a not-to-exceed cap.
On our own home renovation and kitchen remodeling work, we price from a written scope that names inclusions, exclusions and allowances, and we put changes in writing before the work is done. Any real number, under any contract type, starts with a site visit.
Frequently asked questions
Is a fixed-price contract better than cost-plus for a home renovation?
For most kitchens, bathrooms and condo remodels, yes, because the contractor carries the risk of their own estimate and you know your number before work starts. Cost-plus is better when design is unfinished or conditions are genuinely unknown, but it leaves the final cost open. If you go cost-plus, negotiate a fixed fee and a guaranteed maximum price.
What is a normal contractor fee on a cost-plus contract?
Published industry guides put general contractor fees on residential work at roughly 10 to 20 percent of construction cost, with a wider 5 to 25 percent range across project types. The percentage alone tells you little. Ask what the fee covers, such as supervision, insurance and office overhead, and what is billed separately as a cost.
How much deposit can a contractor take in Florida?
Florida does not set a maximum deposit, but section 489.126 attaches obligations to deposits over 10 percent on residential work. The contractor must apply for permits within 30 days and begin work within 90 days of permit issuance, unless there is just cause or you agreed in writing to a longer period. Pay against milestones after that.
Do I need a Notice of Commencement for a renovation in Florida?
For most permitted residential improvements over $2,500, yes. The owner records it with the county clerk before work begins, and a copy must be posted on site before the first inspection. It normally expires one year after recording. Make sure no payments are made after it expires, and record a new one if the job runs long.
What is an allowance in a renovation contract?
An allowance is a budget set aside for items you have not chosen yet, such as tile, fixtures or appliances. If your selection costs more, you pay the difference; if less, you should receive a credit. Check that allowances match what you actually intend to buy, and whether they include installation and markup.
Can a subcontractor put a lien on my house if I paid my contractor?
Yes. In Florida, a subcontractor or supplier who served a timely Notice to Owner can lien your property even if you paid the general contractor in full. Protect yourself by collecting lien releases from everyone who sent you a Notice to Owner before each payment, and by withholding final payment until you receive the contractor’s final payment affidavit.
