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Question DetailsAsked on 3/1/2017

Our contractor raised the price of his quote by 25k after we put down a non-refundable 4k. Can we get our 4k back?

We had a contractor sit down with us and build out the specs for a garage. He completed a preliminary bid sheet with the exact specs and estimated the cost to be 45k. After we got a variance approved by the city to build a larger garage than code permits, we contacted the contractor to say the job was a go. He then said he had to send us the final contract. In the final contract, he raised the price to 71k (minus the 4k we already put down, bringing the job to 67k. The specs have not changed from his 45k quote. We even took out a personal loan for 45k to cover the costs. If he cannot justify the difference in the original quote and the contract price, do I have grounds to get my 4k back? The initial agreement said it was non-refundable, but there has to be some good-faith law protecting the customer, right? You can't just under-bid a job, get it, and then raise the cost by 30%, can you?

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Voted Best Answer

Yes you can underbid to get the job and then raise the price - lots of contractors make their living that way - along with bait and switch, etc. Not legal or ethical, but it is all too common amongst the shady side of any business. And BTW - the difference in prices is 58%, not 30%.

You certainly should get your deposit back - because he has not abided by the agreed upon price, so the deposit for that contract also does not apply. His trying to increase the price (assuming no significant change of scope or dimensions) constitutes a breach of contract - so you might actually be able to file a claim with his bonding company to get the job done for the original estimate. But - two problems with that - if it was an estimate rather than a bid price, they will not abide by it, and it sounds like a "preliminary eatimate" at that, so no joy there. Also, you evidently did not have a signed contract for the $45K- another red flag to getting the bonding company to cover it - but they might well cover the $4K refund amount to get out from under this.

In fact, that was the problem - paying a deposit BEFORE the contract was signed was a no-no. However- in actuality, since you actually paid money based on the estimate, that in itself might constitute a contract for the $45K - but would almost certainly need an attorney to push your case to make that stick. And getting a loan before having a signed contract in hand - another no-no because you did not have a firm price in hand, but also gives you a secondary basis for claim against him (assuming the loan is closed or you paid fees related to it). And while I am at it, you should have had a signed contract in hand, contingent on the variance approval, in-hand before getting that too.

However, you might have him trapped there - if you tried (and you would only have one try, so better have an attorney experienced in construction contract disputes talking for you) to force him to abide by the estimate based on your having paying the deposit so you felt there was a contrat but he says no, that was an estimate - there was no contract - then you have him, because that also means the deposit is not tied to a no-refund clause and he has to refund it.

The attorney could also easily argue that there was not a meeeting of the minds - in other words, you paid a deposit and thought there was a contract for $45K, but he (claims) his intent was $71K - therefore there was no contractual agreement on compensation, and without that there is no legal contract, so the contract should be voided and the deposit fully refunded.

You might get an argument on that if he already paid an architect to design the garage or bought materials or such, but that is another matter - fair compensation for his expenses, receipt of unused materials, and lien releases.

BTW - this situation calls for a quick stop-work order so he does not go ahead and start ordering materials and lining up subs and such - attorney should do that so you do not lose any of your rights or set yourself up to unwitting acceptance of the contract.

Because of the $ amount, too big for small claims court - so personally I think the attorney will try a claim with the bonding company for the $4K refund though that leaves you out any loan fees and interest to date, and the attorney's cost - though an aggressive attorney might hit the bonding company up for those too.

Then if that did not pan out, lawsuit unless your state has a quite high small claims court limit - probably combined with simultaneous complaint to the state licensing board and local business licensing agency to threaten his licenses - that sort of pressure can sometimes produce a quick result.

Also - some state (California foremost) limit how much a depsoit on a home imporvement job can be - check into that, because if he violated the law he could be put under even more pressure to pay the refund plus your costs in pursuing this.

And of course after all is said and done, and subject to your attorney's approval of what you say, it would be nice to give an appropraite but truthful Review on AL to warn others of this guy.

Answered 3 years ago by LCD

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