Looking at an incomplete property development project a contractor abandoned takes away your peace of mind.
The excitement of seeing your property development (a new house, business premises, or renovation) complete will have you do what successful property owners do. Hire the best contractor. But what happens when your building stalls because the service provider abandoned it? Contractors leaving construction projects before completion isn’t foreign news. This action, however, causes disputes that are expensive and legally complex. In the US, for example, disputes in construction cost $43 million in 2024. And the resolution time for disputes was 14.4 months, resulting in stalling of project progress and funding, according to Arcadis’ construction dispute report shared by Autodesk, a design software company. How do you navigate such an issue? Can you sue a contractor for not completing their job? Before taking any legal action, knowing property owner rights and the critical role of construction lawyers in safeguarding projects is crucial. You’re likely aware that you can file for compensation, but what other rights do you have? In this post we’ll discuss the rights homeowners have in half-completed construction work.
Contract Termination Is Your Right
Ending a contract and hiring another builder to complete the project is practical. It’s probably the first thing you’ll consider even before reviewing your rights in construction conflicts. However, don’t be quick to end a contract if you haven’t communicated to your previous contractor. Try to talk to the service provider and find solutions for the dispute. Do they have an issue with your project planning, funding, or timeline? Can their issues be solved with a temporary project delay? If not, can you mutually agree to end the work agreement in return for partial refunds?
If nothing works, treat the situation as an infringement of contract by the contractor. And cancel the work relationship then document everything (records of voice calls, text messages, and emails). Save invoices, contemporaneous notes, and a formal notice of contract violation sent to the contractor. Documentation proves you tried to work things out with the other party. Don’t forget to take photos of the site before and during the work. Besides helping you build a strong case for litigation, which you’ll likely consider, photos will help your future builder quickly pick up from where the project stalled.
Seek Compensation For Damages
Think about structural and plumbing damages that arise often in incomplete buildings. Exposed plumbing and wiring, for example, will cause leaks, fire hazard, and overall property damage. What if the roof was poorly installed or the foundation has defects? You’ll encounter drainage problems, such as flooding. Your best option is to spend extra money on drainage and utilities services again to fix under drains, trench drains, and gutter downspout drains. Remember, you had already paid for these services but the contractor left them unattended or did a poor job.
What you should do is file a claim for breach of contract and damages to get compensated for the additional costs of hiring a new contractor. The best results, however, are achieved if you understand how damages in construction disputes are calculated. Delay-related costs caused by a contractor, for instance, are typically determined by a provision for liquidated damages in standard form contracts. Often, these damages are capped at 10% of the contract price. Since laws on construction damages vary from region to region, research the calculation formula in your state beforehand and seek advice from a construction attorney.
Withholding Further Payment
Would you continue making payments for services you’re not receiving? Of course not. However, withholding payment is subject to your contract’s terms. So, review your contract to be sure this action aligns with the payment clause. Common payment clauses, according to Long International, allow homeowners not to pay contractors if there are pending claims, work is defective, or other reasons, like unfinished building processes. Note, a contractor can file a payment claim, which results in financial issues on your part. Your first line of defense is to ensure the contract you and your builder signed outlined the payment terms: payment schedules, milestones they should reach to get paid, and methods of calculations.
File A Performance Bond Claim
Have you made payments to a builder who later breached the agreement (never completed the job)? Are they bonded or insured? In such a situation, you can claim against the contractor’s performance bond. What a construction bond does is protect development investors from financial losses or disruptions caused by a builder’s failure to complete work. When a contractor carries a construction or surety bond, which is necessary, they can compensate investors when a contract breach occurs.
Looking at an incomplete property development project a contractor abandoned takes away your peace of mind. After all, you have to source for additional funding for completion and hiring new builders. But you don’t have to suffer mentally and financially when you’re aware of your legal rights. Acting on your rights to file claims, withhold payment, cancel contracts, and tap into a surety bond can help hold a contractor liable, be compensated for damages, and bring your project to completion.
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