The Basics of Contractor Abandonment
Contractor abandonment doesn’t look the same in each scenario, but in each one something is broken. Either the contractor has committed a breach of contract and there is an issue that needs to be resolved: legally, fairly, and in a way that benefits the homeowner.
A contractor abandonment of a job can be anything from quitting without a word to the homeowner to a contractor demanding more money for the job, or following through with a poor quality of work.
There are some telltale signs of contractor abandonment such as no communication regarding the job or the contractor showing up inconsistently, erratically, or not at all. The work may stop without any conversation, perhaps when the contractor realizes the scope of work is far greater or more expensive than expected. The homeowner calls, emails, or texts the contractor to no avail. There are a lot of unanswered questions that will likely lead to frustration.
Unfortunately, it is not uncommon for a contractor to walk off a job unexpectedly. It could be anything from the contractor deeming a job as "too risky" to the homeowner failing to address changes in scope of work as needed (i.e. requests for too many "extras", to repair some unanticipated quality issues , or to address a change in the timeline for completion).
Why would a contractor leave a job? There is an extensive list of reasons why a contractor leaves a job before completion, but sometimes the contractor’s motives are less than honorable. Sometimes they have work elsewhere, or there are rumors of miscommunications between the contractor and the homeowner or the project’s authorized agent (e.g., main contractor, builder, architect, etc.).
Another possibility is that the contractor, like any other independent contractor, is worried about their financial status. Perhaps they worry that there won’t be enough money to complete the project as planned, especially if they took on more work in the meantime.
There could also be a perception of unfair treatment, for example, having to work extra hours or completing extra work without receiving the agreed-upon compensation.
An unexpected request for more money is another good reason a contractor may abandon a job. A contractor may find that the scope of work costs more than anticipated, and ask for additional funds (and may subsequently balk if the funds are not provided). In this case, it is up to the homeowner to understand their rights, act fairly, and ensure that the vendor is acting in good faith.
What steps to take immediately
You should quickly step back and assess the situation carefully and with as much neutrality as possible. This is what your lawyer will be doing for you anyway, so it is usually better to turn to your lawyer quickly for guidance. Assuming the contractor is not still on the site and refusing to leave, or is not present at all, take a few moments to make some notes about the condition of the premises. You want as much detail as possible – get out your camera and take pictures from a number of angles and positions. Document any particular defect in the work, missing material, or any other thing that might cause you to think the job was abandoned. Also document anything in the work that you think may have caused the abandonment, such as why the contractor had to abandon the work or what may have caused the contractor to abandon the work. If you believe the contractor did not abide by the requirements of your contract or at law, document it. Also see to it that a warning sign is posted conspicuously upon the premises. If there are any loose materials onsite, for example, they should be carefully removed such that no loose materials could wind up harming a passerby. Once you believe you have completely secured the area, you can shoot off a letter to the contractor pursuant to your contract or, if necessary, to send a formal Notice of Abandonment letter by registered mail. In either case, you need to identify the work under construction, and also incorporate by reference the contract between the parties, including the relevant and specific provision or provisions of the contract giving rise to a right to notice or an opportunity to cure. If you do not send a Notice of Abandonment before taking action to replace the contractor, or notice prior to terminating the contract, you risk losing your rights to recover damages for the breach.
Abandonment and the law
The legal ramifications of a contractor abandoning a job can be of monumental proportions, with even the most benevolent and honest of contractors at risk of being sued. When a contractor agrees to do a job for a homeowner they are essentially agreeing to perform services, ensuring that they will meet or exceed the agreed-upon deadline (or at least the original timeline agreed upon at the outset of the contract). A contractor who fails to honor the contract terms, whether such failure be by way of not showing up to perform any of the work (as was the case with this job abandonment in Chicago), or abandoning the job before completion, is liable for breach of contract.
Some of the penalties associated with a breach of contract are as follows: The most commonly invoked remedy for breach of contract is expectation damages – damages that allow a party to recover what they reasonably expected to receive from the contract. However, if a homeowner has already covered the bond or placed a lien on the property, the contractor may not be required to furnish additional money. This can depend, as it could be considered an offset to the damages available to the homeowner.
Minimizing damages also comes into play when a plaintiff hopes to be compensated for labor already performed by the contractor. In these instances, a homeowner suing for breach of contract may only be compensated for work performed up until the time of abandonment, so if a homeowner waited 3 weeks for a contractor to show up for a start date, but the work is abandoned after a week of no-show, the homeowner cannot seek recovery for what he originally expected to have completed within that 3-week window.
It is also possible for a contractor to be reimbursed for work performed before abandonment (in some cases). However, if a contractor wants this to happen they should be ready to present a bill, as well as the supporting documentation that goes along with it. Other types of damages that a homeowner can recover include consequential damages (i.e. loss of money or property resulting from the injury of another party or their breach of contract). If the damages happened after the contract termination, any homeowner seeking recovery must be ready to prove that a link exists between their losses and the actions of the offending party.
Protect Yourself
Avoiding a contractor who has a history of abandoning jobs is the best way to protect yourself. In many cases, you can see a contractor’s entire job history, as most sites dedicated to hiring contractors allow you to see jobs that were completed. If there are gaps in the time line, that is an ominous sign. Check Yelp and the Better Business Bureau for complaints. Never, ever, pay a contractor (or a business) cash. Cash advances are the easiest for a contractor to abscond with, and a payment in cash is often the only proof you have of having paid him. Instead, arrange for progressively larger payments to be made as work progresses and is completed. Finally, draft your own contract with specific time frames for completion. Also, include contract penalties if the job is abandoned. If the contractor refuses to sign your contract, then he is most likely a fly-by-night who should be avoided.
Settling matters
According to the Home Improvement Consumer Protection Act, you are not allowed to hire a new contractor to finish the job unless you have made certain efforts to first recover money from the old contractor. If the contract is more than $500, you are required to write, at a minimum, a letter describing the breach, and demand a partial refund. You must also try to go to mediation. It is OK to also file for arbitration, but you can’t file a lawsuit until after you have tried both the mediation and the arbitration. The reason for this is because the law requires all parties to use these forms of alternative dispute resolution before going to court.
Doing this exercise may prove fruitless . In theory, a letter and demand for a refund would be great but if a contractor has "skipped" the job, won’t he take the letter and trash it, or worse, take a box cutter to the property? That said, this process will take time. By the time you find a replacement contractor and have him start, there will undoubtedly be some lapse of time between when the job was stopped and when the new contractor can start. As I mentioned above, the law requires that you give your original contractor a chance to remedy the situation before hiring a new contractor. That is all it requires, however. You may end up with some delay, but you are not required to wait for the other guy to get his act together.
Getting help
When all else fails, the best time to consult or hire an attorney may be when all attempts to remedy a dispute with a contractor have failed. You need an attorney who has experience in handling construction defect claims such as defects involving porous concrete, use of inferior construction materials, and poor workmanship. You should certainly consult with an attorney if the work encompassed any concrete or masonry aspects or if the cost or value of the project was substantial (over $5,000.00).
Generally, the contract between the parties should describe the dispute resolution procedures that must be followed; however, a written contract is not always used in these types of projects. If there is a written contract, those procedures should be followed first. When there is no contract, or where the dispute resolution procedure in the contract provided for mediation, but the parties cannot agree to a mediator, or the mediation fails or is not successful, then the next step is to consider an arbitration.
Arbitration may require a demand to be served on the party who is deemed to be in default or responsible for all or some of the deficiencies. It entails choosing the arbitrator(s) to decide the case once the witnesses have been heard and the evidence is presented. The arbitration may be decided based on the testimony from the witnesses, through presentations at the hearing, exhibits, and the like. The attorney will probably be required to submit a completely blacked-out claim for the actual damages sought in the case.
Alternative dispute resolution language was added to the N.J. Mechanics’ Lien Law effective August 28, 1995. That language provides that all parties to a lien can agree to submit to binding, mandatory arbitration. This language may possibly appear in proposed contracts. If the contract contains this, the parties can also seek to have the case decided in arbitration.
On other occasions, the arbitration may be based strictly on the contract. In addition, the parties must decide and put into a written contract the items which might be included in the arbitration.
Lessons learned
When contractors abandon a job, homeowners are left trying to figure out what happened while also stopping the financial losses that an abandoned job often causes. If a homeowner has faced an abandonment experience, there are certainly lessons to be learned to try to avoid the problem in the future or at least weather the storm with greater awareness of how to deal with it. After two recent unexpected abandonment experiences from a few roofing contractors, I’ve decided that writing of my experiences of the past few months is important for homeowners. Hopefully, it will help homeowners better understand and deal with the uncertainty when a contractor abandons a job.
1. Have a bad feeling about the contractor? Trust your instincts. I’ve learned to trust what my gut tells me because I’ve had that gut feeling on a few occasions that proved to be right. Early on in my present house renovation, right after calling on a contractor that came highly recommended, I had questions about the contractor’s organization, work ethic, and ability to stay focused on the project due to other projects he was juggling at the same time. My gut paid off.
2. Don’t get distracted by a seemingly good offer from a contractor. A few months ago I was contacted by a company called "All American Construction". The doorbell rang and upon opening the door a young man dressed in a navy blue polo shirt with the orange letters of "All American" and a gold badge that had his name and a title of "Estimator" came and said, "I’m Jim Browning with All American Construction. We’re a local company based in Ohio and do roofing, siding, and window work. We’ve been out doing inspections in the area recently due to storm damage and have identified some hail damage on your roof. It’s covered by your insurance policy or we can do a roofing project where you will be responsible for 10% of the project costs and we’ll give you a discount and take care of the deductible".
I knew from the get-go that the offer was too good to be true. For starters , I’ve lived in Dallas, Texas my entire life so I don’t have a vestige of a mid-west accent. Second, neither my roofing nor siding nor windows have hail damage of any kind. Third, when I looked up the company it appeared to be an overall "poor" rating and "avoid" as far as the company’s reputation. Despite these red flags. I still called on the company and had an appointment scheduled within a week to meet someone at my house. On the day of the appointment, I was meeting with a neighbor and walked the property line of my house that is adjacent to his property. I noticed that the young man, once again in the polo shirt that said "All American" with the name tag that read "Estimator", was on the roof of my house. He saw me standing on my property and yelled out "That is some hail damage." I was on the ground and went back into my house, shutting the door, and didn’t answer the man, but rather continued talking with my neighbor until he left, never gaining access to my home.
That was enough for me to decide to no longer consider having the company at my property, notwithstanding the apparent "good offer". I don’t condone hiring companies that are dishonest, deceptive and have employed shady tactics to lure me into signing a contract.
3. Stay in touch with a contractor frequently to avoid the loss of communication. After experiencing the first abandonment, I vowed to stay in touch with the second contractor so that this issue wouldn’t arise again. The contractor agreed to provide a weekly report and I agreed to call every Friday to check in. I was excited about this contract, we were all on the same page, it seemed, and my worry was put to rest that all would be well with this project. That was until Friday July 3, 2015 when I called and heard the following message, "You have reached 4SF, Inc. We are not in the office at this time. All calls will be returned during normal business hours. Please leave a message at the beep." That was the last I heard of that company.