We should preface this post with the fact that the overwhelming majority of contractors, go above and beyond to ensure their customers are satisfied with the project they’ve been hired to complete. However, there are simply times when some contractors either overextend themselves, or straight don’t show up to the job site and a job goes unfinished. Like many professions, the actions of a few can impact the reputation of the many.
If you’re shelling out money on a home project, nothing is more frustrating than your contractor quitting in the middle of the job or delaying work for weeks. Some delays are justified, such as injury, weather, or inventory holds. But if your contractor doesn’t have a solid explanation for the delays, or you can’t reach them at all, there are still avenues you can consider.
Always ask if they’re bonded and insured before hiring
Before hiring a home improvement or remodeling contractor, ask if they’re bonded and insured (with general liability and workers’ compensation.) This simple step can save you a lot of money and heartache if something goes wrong during your project. Suppose a bonded contractor leaves a project unfinished, violating your contract. In that case, you may file a claim against their surety bond for any financial loss you may incur, including the additional cost of materials and/or hiring a new contractor. If an insured contractor damages your home or if someone is injured in an accident on your property due to their negligence, the contractor’s insurance will likely cover any resulting claims. – ZipBonds, a platform that provides access to bond options from leading national and regional surety carriers
Always ask for references
Sometimes a contractor will quit in the middle of a job because they begin running out of money. Or, they might back out because they’re overbooked. Remember, a low quote might mean you’ll pay more in the long run. Be sure your contract specifies how many contractors, including the owner, will be on the job site. Otherwise, they may jump from job to job, eventually abandoning your project altogether. Most importantly, never pay a contractor before they’re finished. Progress payments are acceptable, but only pay 10% or $1,000, whichever is less. Always ask for references, websites, and reviews, and follow your instincts. Lastly, always get more than one estimate, three at the very least. – John Melendez Paint Co., painting contractor in San Jose, CA
Visit their profile on the Contractors State License Board website
If a paid contractor quits in the middle of a job, I suggest making a claim against the contractor’s bond, because the contractor might not be collectible. You can find information about the bond on their profile on the Contractors State License Board (CSLB). However, the contractor likely hasn’t finished other jobs and isn’t paying subs, so you might not be the only party pursuing the bond. – Thomas E. Ladegaard, Owner of Law Office Of Thomas E. Ladegaard in Carlsbad, CA
Making a claim on a contractor’s license bond can be as easy as contacting the surety company that issued the bond and opening a claim. The surety has 15 days to respond to a claim and 40 days to accept or deny a claim. You can find the contractor’s license status and bond information on the Contractors State License Boardwebsite. You can also file a complaint with the Contractors State License Board and/or file a small claims case (or civil suit if the disputed amount is large enough). – Matt Coats, Producer at Coats Surety Insurance Servicesin Laguna Hills, CA
Notify the contractor of the work they failed to finish
If a contractor quits in the middle of a job, the first thing you want to do is notify the contractor in writing of the scope of work they failed to finish. Ask for a completion date and give a deadline for the contractor to respond to you. Under no circumstances should you give the contractor additional funds under the promise they will finish. Contact an attorney to begin legal proceedings if the contractor fails to respond to your written communication or still doesn’t complete the work by the new deadline. Usually, homeowners can file for breach of contract and violations of the consumer protection acts, leading to treble damages, potential fraud, and other causes of action. – Lucrecia P. Johnson, Managing Attorney at LPJ Legal PLLC in Washington, DC
This is a little more complicated than it seems because if there are any deficiencies in the work, a homeowner must given written notice and an opportunity for the contractor to cure the deficiencies before file an action against a contractor. Often when there is non-performance there is also deficient performance. If there is a written contract or scope of work, it is usually required that the homeowner provide written notice and a reasonable opportunity to complete the work. Homebuilders and contractors are not required to be licensed in Texas, for example. Further, The Texas Residential Construction Liability Act requires pre-suit notice of claims and further limits a contractor’s liability for damages for construction defects. Termination of the contractor without proper notice and an opportunity to cure could subject an owner to liability for the balance of the contract fee or prevent the owner from suing for deficient work or return of unearned fees. I highly recommend that a homeowner facing an unfinished house project contact an experienced construction law attorney for guidance on how to properly terminate the contractor. – Kurt Carpenter, Lawyer, at the Law Office of Kurt W. Carpenter in The Woodlands, TX
Verify the status of their bond and the company their bond is secured through
A consumer’s best avenue for pursuing compensation from a contractor who quits in the middle of a job is to file a suit against their bond. If a contractor never shows up or leaves a half-completed job, consumers can contact their bond company and make a claim. Most states allow the public to verify the status of a contractor’s bond and the company their bond is secured through. Some states list this information on their L&I (labor and industries) website for anyone to check. This 30 seconds of diligence can protect you in a dispute against a contractor.
If a contractor’s work results in property damage or bodily injury, consumers can pursue financial compensation for damages through the contractor’s General Liability Insurance. Many states also allow consumers to verify this as well online. However, if you can’t verify this info online, ask your contractor to provide you with a copy of their bond and a certificate of insurance before the commencement of a job.
Spend a few minutes confirming the contractor you choose to work with is reputable, properly bonded and insured. Don’t just take their word for it or rely on their business card for this information. It can save you thousands in the event of a dispute. – Conrad G Milsap API, AINS, Owner at Lilac Insurance Group in Spokane, WA
Don’t let the contractor get “ahead of you”
The first thing to do is prepare for a contractor to quit in the middle of a job and never let a contractor get “ahead of you.” While many contractors are honest and hardworking, some will request a large amount upfront and then disappear without doing much or any work. In your agreement, set forth a schedule for progress payments according to the percentage completion of the job. Something like paying every 10% or every 25% completed. And from this amount, you withhold 5% or 10% as “retainage” that you will hold until full job completion. As a result, if the contractor ever disappears, you are not harmed, and you can hire someone else to complete the job. The contractor has a financial incentive to complete the job on time for the full payment.
As for the cost of materials, you should either require receipts with the exact amount spent on the materials or have materials delivered directly to the site.
If you paid the contractor upfront and/or let them get ahead of you on the job, you may have to resort to legal remedies such as a lawsuit. Always have a good solid contract drafted by a qualified real estate attorney and ensure that you get a personal guarantee from as many people as possible – the contractor and anyone else you can. If a corporation or LLC signed, you can sue that entity, but the entity can be emptied, and the assets moved around, resulting in a much harder time for you. – Ryan Reiffert, Attorney at the Law Offices of Ryan Reiffert in San Antonio, TX
Verify the contractor has a solid track record
In these situations, the homeowner must ensure that the contractor has been in business for over five years and has a solid track record with references. You have to make sure the contractor has Workers Compensation insurance for their workers. When they don’t have worker’s compensation, their employees could sue the homeowner for work-related injuries or unpaid wages. In the contract, the homeowner must specify everything that needs to be done. More importantly, there should be a deterrent provision that says any delay in fulfilling the project would result in a penalty, such as $1500 per day against the contractor. Lastly, it is best to pay the contractor installments to match the services rendered. That way, if the contractor is not performing per schedule, the homeowner can stop payment. You don’t want to pay and then have to chase the contractor for owed services. Ultimately, if the contractor fails to perform, they can be reported. But to lose a license, the terms of the contract and the schedule of payment against services must be well articulated to remove doubt for the tribunal to take action. Sometimes, contractors will allege the homeowner made changes or modifications to the contract, and that’s why there were delays. So, the contract must state that all changes to the contract must be in writing, and no verbal modification will be accepted. – Al Mohajerian, Attorney at Mohajerian Law Corp in Los Angeles, CA
Work with a general contractor or project manager
My best piece of advice is to hire a general contractor or project manager to help you navigate a somewhat tricky experience and avoid a poorly executed or incomplete project. The general contractor will introduce you to other industry professionals (electricians, plumbers, tilers, etc.) that are talented and trustworthy. We will oversee the executed projects and offer accountability for a job well done. Your general contractor will make sure everything is up to code, eliminating any speed bumps if you decide to sell your home in the future. Do everything the right way so your investment holds value year after year. – Jeff Lipshires, President at J2Construct, Inc. In Middletown, RI
Don’t work with a contractor who is willing to cut corners
If a contractor tells you it will be quicker and cheaper if we skip the permits and inspections, my advice is to avoid this contractor. A contractor who begins your relationship with an offer to violate the law is much more likely to cut corners, ruin your project, and cause you to have to hire an attorney to bring them to justice.
Spending a few hundred dollars to have an attorney review your construction contract on the front end of a project can save you tens of thousands of dollars in litigation costs. Consulting an attorney after an issue comes up tends to prove the axiom, “there is nothing more expensive than trying to save money.”
Legitimate contractors provide detailed, easy-to-understand contracts, lien waivers with each payment, proof of insurance, and they pull permits. – Phil Winegar, Managing Partner at Winegar Law in Colorado Springs, CO