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Question DetailsAsked on 5/15/2016

Must a contractor return a deposit if no work has been started ?

He came by for a free estimate, then asked to come back with the details for my husband when I said I'd need to discuss it with him first. He came back two days later with a propsal. I was very excited and ready to work with them as they had done work for my daughter, so I signed the proposal and gave a 250 deposit. Afterseeinf they had cashed the check the next morning, I became nervous but was going away that day, my father was diagn with cancer and I totally forgot to address the issue.I got back 10 days later and trued to cancel the job, explaining g I may be leaving town due to a family enegency. They said no, they will give back 100 but keep the rest for their time. I said that was a free estimate, they did not agree. I was not scheduled, no start date no payment schedule nothing just the details of what they would do but not including dumping fees or extras. Should they return my deposit? Oh I went to small claims court for the 250 and now they have countersued for 3000?

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1) check the fine print on the proposal - usually on the back, about return of deposit. If it says anything about that, what it says likely (if legal) controls since you signed it.


2) if you had cancelled within the mandatory federal 3 day waiting period of the signing (if occurred at your house) you could have backed out for nothing, but as you say you had more important things on your mind.


3) I am not clear on the small claims court thing - if you got the $250 (or any other amount) awarded that should have barred any further action by him (other than appealing). If he countersued in the same small claims case for $3000, he would have to document the reason for the cost and probably much more difficult, justify why a $250 payment all of a sudden became $3000. And unless the fine print on the proposal document says he can recover attorney's costs in a suit against you, he could not add the attoreny's fees to the $250 to get to $3000 (which is where I am guessing the difference came from).


4) do you have documentation on the "free estimate" thing - if so, should have been a slam dunk for you in court unless he could prove he had actually started work and expended $/labor on the job before you cancelled - making up materials list and purchasing materials, lining up subs, planning and scheduling, etc.


5) Depending on state law, if the signed proposal did not have all the essential elements of a contract - who (parties to the contract identified), what (scope of work), where (where work is to be done), how much (compensation total and payment terms), when (performance time - the period during which the work is to be done), dated with signatures, etc it might not be a legal contract so that might be an out. Ditto if it does not have all the elements that might be required of construction/home improvement contracts in your state.


6) Unfortunately, you are now in a situation where instead of being out $150 for your change of mind after signing the proposal ($250 - $100 they offered to refund), you are looking at maybe $3000 ? A tough situation because not enough $ to justify a full-blown legal defense but a lot of $ to potentially lose if you represent yourself (which you definitely should not do if sued in regular civil rather than Small Claims court action). I think you should have taken the $100 and called it a regretable situation but your father was more important at the time and taking up your thoughts.


What I would do, if they agree (may not do so if legal cost has been incurred), is explain about your father's situation and how you should never have started doing anything about the project at that time, and see if they will agree to keep the deposit as a deposit on the work, and agree to schedule at some stipulated (in writing) time period in the future (say within next 6 or 12 months) when you have an acceptable time window for the project.


If the court action stays in the picture, for $3000 at risk (and he could increase that potentially - what the suit is filed for is not necessarily the maximum he could claim or get) even if in small claims court, would probably be well worth spending an hour or two with an attorney with the documentation you have so he can coach you on some legal precepts and on how to present your case to your advantage, and where you might be able to shoot holes in his claim or invalidate the contract.

Answered 2 years ago by LCD




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