General contractors often take a deposit or down payment upfront before starting a home remodeling project. But, what if the job is not up to the mark or to your satisfaction? Can you ask for a refund? And, how long does a contractor have to refund money? 

The good news is that if a contractor does poor-quality work, or doesn’t complete the work on time, you can ask for a refund.

If you’re among the homeowners who are planning to hire a contractor for a home improvement project but are a little skeptical of whether or not the contractor will work to your satisfaction, you can relax a little. 

Both residential and commercial construction contractors have to adhere to specific licensing requirements in order to lawfully work in a state. Generally, they have to pass a test on best practices and skill sets in the field of construction, carry the required insurance coverage, and have good experience in the construction industry.

Of course, there can be instances when even after hiring a licensed contractor, things do not go as planned.

There’s always a chance that you may end up working with a bad contractor or may face challenges in getting the work performed in a certain way. More often than not, contractors take a steep deposit – almost a third of the total project cost. So, shouldn’t you be able to recoup your losses for shoddy remodeling work? 

Fortunately, there are a few steps you can take to get your money back – directly or indirectly – when a contractor does not fulfill his part of the agreement. 

How long does a contractor have to refund money?

Can a contractor put a lien on my house

You can ask your contractor who’s done a poor-quality job for a refund or partial refund as applicable. Always check the fine print for the written notice of cancellation on the contract agreement or the original proposal. It should have information about the return of deposit conditions. If it doesn’t have a three-day clause, you may be able to get a refund even after the work begins.

The U.S. Electronic Code of Federal Regulations gives homeowners the right of rescission. That is to say, homeowners get three business days to decide if they want to get the services from a home improvement contractor. If not, they can cancel the contract if it’s still within the three-day waiting period. They won’t be charged. 

That is to say, if you decide to get a refund of the deposit within three days after the date of signing a contract agreement, you can cancel – provided it’s within the mandatory federal waiting period after both parties sign the contract. 

If the contractor doesn’t agree, you may want to hire an attorney. Keep in mind that a breach of contract may escalate into a criminal offense if the state can prove that the defendant has fraudulent intent. A contract attorney charges up to $120 per hour. If your deposit is much more, fighting for your refund may be justified. 

When can you get your money back from a contractor?

You can claim your money back from a contractor if they: 

Do not meet the requirements of the job

The contractor is unable to maintain the required quality standards and specifications regarding the home renovation project. And, they have negotiated a lower rate with the client for accepting the newer specifications.

Omit an important item

The contractor left out an item and is willing to reimburse the cost to the client for the omission.

Lack certain resources

Instead of the contractor providing construction materials or resources, the homeowner has procured them.

Couldn’t manage extra labor

If there’s a labor deficiency and the contractor hasn’t been able to rectify the situation. And, the client has had to employ another contractor or subcontractor at their expense. 

They do not match the re-measurable schedule

Sometimes, the contract price is based on a re-measurable schedule of quantities. When the final measurements or quantities are less than the originally priced quantities, it may warrant a refund. 

When can’t you ask for your money back?

contractor database

The homeowner can’t ask the contractor for money back in certain situations.

  • If the contractor has completed the home improvement project in a shorter time than anticipated due to good weather conditions or fewer interruptions.
  • If the contractor has utilized innovative construction methods, resources, and productive techniques to complete the project quicker than the schedule.
  • The contractor required fewer resources but still completed the work to your satisfaction. 

When can you ask for a cost reduction?

In some cases, the homeowner can seek a reduction in the project cost.

Change of budget

The client reduces the scope of renovation from the one mentioned in the home improvement contract document – which may be due to the non-receipt of certain planning permissions.

Change in remodeling specifications

The client makes the specifications less complicated than those mentioned in the agreement.

Use of cheaper products

The client wants the contractor to use cheaper goods or services than the original items included in the contract.

Self-procurement of items

The homeowner provides an item that the contractor should have bought.

Keep in mind that if the contractor has already purchased items, which the homeowner wants to change, they would be entitled to claim the cost of the procured items or their subcontractors’ costs for the same.

How to get back money from bad contractors?

getting money back from contractor

Homeowners who end up with a difficult contractor may face challenges in recouping their losses. However, there are ways to get the deposit money back. If these methods do not help you get your money back, at least they will prevent the contractor from doing poor-quality work for another client in the future.

  • The first and best practice is to have an open conversation with the contractor and convince them. 
  • Get a contractor license bond beforehand to give you some peace of mind in the event that the contract is not completed as per the terms of the agreement.
  • Go to small claims court against your contractor or construction company for shoddy work, failure to meet contractual obligations, or other faults – with damages of less than $10,000. The amount you can claim depends on your state laws.
  • Hire an attorney. Experienced attorneys know how to find loopholes in a contract and how any unsatisfactory work violates a contract. However, keep in mind that hiring legal help is expensive and the process to file a lawsuit is time-consuming. 
  • File a complaint with your state. You may reach out to your state’s contractor licensing board to file a complaint. A potential loss of license may prompt the contractor to return the amount he or she owes to you.
  • Post reviews on social media, online review platforms, or community boards to get the contractor’s attention and potential reimbursement for your losses. Do keep in mind that your review should be accompanied by proof or else the contractor may sue you for false statements or libel.

Last thoughts

Homeowners who work with contractors to improve, remodel, or repair their property have a right to cancel the contract agreement within three business days of signing the contract without incurring any penalty or obligation. A homeowner’s right to cancel a contract after three days may depend on state laws or extraordinary situations.

Find out how long does a contractor have to refund money? was last modified: November 4th, 2022 by Ramona Sinha
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