Does my Texas contractor have to keep my money in a separate account?
Researched by the LokalMatch editorial team1 answer
We are paying in stages on a 40,000 dollar remodel and I have no idea where the money actually sits between my transfer and the lumber yard.
Answers (1)
LokalMatch EditorialLokalMatch editorial
Above 5,000 dollars, yes. If your homestead improvement exceeds that figure, Texas law requires the contractor to deposit your payments into a construction account at a financial institution.
The point of the rule is the gap where money disappears — paid by you, never reaching the supplier, and turning up months later as a lien on your house. A dedicated account makes that gap visible.
So ask for written verification that the construction account exists, and keep monitoring the deposits and the disbursements to subcontractors, laborers and vendors. The Attorney General's own advice is to make access to the account record a requirement written into your construction contract, which is a clause you have to put in before you sign rather than after a payment goes missing.
None of this substitutes for the ordinary discipline of not paying in full until the work is complete and you have inspected it, and not signing a certificate of completion until the site is cleaned up and you are actually satisfied.
Answers come from pros and are reviewed by LokalMatch before they’re published. They’re general information — for regulated or safety-critical work, have a licensed professional assess your situation.
Sources
Where the facts on this page come from.
How to Avoid Home Improvement Scams — Office of the Attorney General of Texas (accessed September 24, 2026)