Deposit Back?!

greg24k

Signed a bathroom remodeling job. Got a $1,500 deposit. Contract price included builder grade fixtures and vanities with an option for a customer to upgrade. Sent homeowner to three different places to select vanities, etc, places carry anything from builder grade to high-end cabinetry, nothing they liked. Now a month later they tell me they will wait with the remodeling and they want back the deposit. I told them that they breached contract and deposit is not refundable and that I will let it go and not take them to court for breach of contract and loss of profit. I know I am in the right; I had the same thing happen to me a few years back. I had a contract and homeowner found someone to do it for less. I took the homeowner to court and won a judgment for all loses.
Has anyone been in a situation like this or any comments on the issue?

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Celtic

How does your contract address default?

What happened a "few years back" may have been under totally different circumstances and under law, ie, HICA ~ was it in effect "a few years back"?

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greg24k

According to a consumer protection rights in NJ, if contract is terminated within 3 days and notification made in writing, the deposit should be returned. Other then that it is a breach of contract.

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Celtic

Does your contract contain the 3-day language?

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bwalley

What is your actual loss?

It doesn't sound like you started on the job, so you are out some of your time and you lost a job, but you would need to be able to prove a loss.

It seems to me if they took you to small claims court they would be able to get the majority of not all of their money back.

I could see possibly keeping part of the deposit to cover some of your time and any Actual loss, but keeping the entire deposit doesn't sound like the right thing to do.

Rx8

if all you did was some minor planning and sent them to a few places to look at things and they couldn't choose and you also didn't start the job, morally it doesn't sound like you should keep the money.

enforcer

look what greg went through..he wasted alot of time working on this by going to supply shops and everything else with this customer. he should definitely keep something if not all. customers get the impression that contractors are also slaves. i would keep 500 and return a g-note.

bwalley

Re read the post, I put in bold where he said he sent them to supply houses.

greg24k

Yes it does and they signed it

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greg24k

I went to all this places on my own and discussed the project with sales representative who handles my accounts. I also made appointments with my customers to meet them there, but they insisted they wanted to go there on their own (which was strange). On one occasion, they end up in HD Expo and they told me they like to buy a package there, they found something for $5k the whole bathroom package with out making any payments for a year. Second time, they found something on the internet, a vanity that might not work in theirs bathroom layout since none of the plumbing was being moved. It seems like they were stretching this out while shopping around to find a better price for someone to do the whole job, if they purchase everything on their own.

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J F

What about not being able to fill that schedule void?...and I don't care if he has nothing else on the books, that is still a loss....hell, especially if he has nothing else on the books.

Even if you have plenty of other projects to follow, it's very likely that they have been scheduled for their own time slots, so I would think a lot of times you can't just move another project's start date up because someone canceled on you after signing a contract.

We all sign contracts for a reason...

greg24k

I think the right thing to do is to honor the terms of the contract which you read and signed. What if the tables were turned, will you be allowed to breach a contract?

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greg24k

JF I agree with you 100% after all we run a business and that is why by law we have contracts and if we have to abide by them, so is the homeowners.

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Heritage

I outline my fees upon receiving a deposit, whenever they want the deposit back, I deduct my time. I outline x amount for estimating, scheduling, etc. X amount for design, permits, etc.

In this case, I don't know what your hourly fees are but it sounds like giving them back 1k sounds right.

They are PITA clients, but fair is fair.

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Toronto General Contractor-Renovation Blog-Contractor on Facebook-Renovation on twitter-Contractor Youtube

Celtic

Did you have a start date indicated in the contract?


FWIW,
I am asking you these questions in an agonizingly slow fashion on purpose....each of your answers will trigger an appropriate question from me.

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Chris Johnson

Sent them documentation on your conversation...

Dear Homeowner;

As per our contract you and we signed and state law, you have verbally cancelled our contract. Your initial deposit will not be refunded and will be applied as liquidation to cover all work to date including, but not limited to...(add here, design, scheduling, etc.).

Please reply in writing on or before Feb XX, 09 indicating this is your intention, if not, we will be arriving as scheduled on Feb XX, 09 to commence the bathroom project.

Love,

Your Contractor


...or something along those lines.

You do nothing and go to court they will claim you are a no show contractor and want there money back...an win

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Chris

Mike Finley

School of hard knocks.

#1 not spec'ing out the actual products leads to this sh*t, but everybody does it. I just want to be an installer. So there is ambiguity there and you created an opening for problems which did surface. Had you spec'd the products this wouldn't have happened.

#2 You didn't control the products. If you had controlled the materials by providing them this wouldn't have happened. I know, let me guess, you're a no mark up guy too.

#3 You didn't spell out what the deposit is for. Is it just a down payment? Does it pay for placement on your schedule? Does it cover your time associated with planning the project? Now you have to fight to convince somebody what the deposit is for.

#4 You don't have verbage saying deposits are non -refundable after 3 days. Why not? 7 words and you wouldn't be where you are at now.

#5 You don't have verbage to collect more than the deposit after termination of the project. Why not? What if you have 100 hours into the project planning pre start how would you recoup that?

Builder grade fixtures and cabinets - that's as ambigous as I want you to show up for work on Monday. What time? Where? which Monday?

The less ambigous you are in everything you do the less communication problems will turn into nightmares. Learn to be specific in everything you put in writing. Had you been specific your customer would never even have considered doing what they are doing.

What you do from here is up to you, write this one off, settle for something, fight for the deposit or fight for the deposit plus more.. but whatever you do from here make the 5 changes I outlined and forget about ever having to post this scenario again.

This is the dirty results that the people who fight so hard trying to convince us all about how mark up is bad and I'm not a bank, and I just install stuff run into.

greg24k

I did that Yesterday Chris, sent both reg and certified mail. You took the words out of my mouth.

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Chris Johnson

Now relax...

They will either threaten you with small claims court, you have a precendence and will win.

or

They will realize you are taking $ 1500.00 from them and say screw it, Okay, come do the work...realize it won't be fun at that point and you may want to give the deposit back and cancel your contract

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Chris

J F

Alright guys, for those advocating returning all/part of the deposit....if it states in the SIGNED contract that it's a non-refundable deposit, shouldn't that be the end of the story?

I am going to take for granted that his contract is legally enforceable, until we all see otherwise.

I can understand if someone's wife/husband dies, they lose a job, etc...and then, yes, my conscience would dictate some different circumstances, but as far as I've read so far in this thread, it seems like just a pita customer who may be trying to go for a lower bidder at this juncture...so why should their bad behavior/breach of contract hurt the contractor?

Like I stated, this is assuming that his contract is legally enforceable in his state.