Legal Disclaimer: This article provides general information for educational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change frequently. For advice specific to your situation, consult a licensed attorney in your area.
Construction projects are complex, expensive, and frequently lead to disputes. Whether your contractor abandoned the job, the work is defective, or costs spiraled out of control, understanding your rights helps you protect your home and investment. The FTC provides guidance on hiring contractors and avoiding common scams.
License Matters: Working with an unlicensed contractor significantly limits their legal options and may increase your recovery. Many states have contractor recovery funds for victims of unlicensed work.
Common Construction Problems
Work Quality Issues
- Defective workmanship
- Work not to code
- Substandard materials used
- Work doesn't match specifications
- Hidden defects discovered later
Project Failures
- Job abandoned incomplete
- Contractor disappears
- Excessive delays
- Never started after payment
- Project in perpetual "almost done"
Financial Problems
- Cost overruns beyond estimate
- Hidden charges and fees
- Change order disputes
- Payment exceeds work value
- Liens from unpaid subcontractors
Contract Essentials
Must-Have Terms
- Detailed scope of work
- Fixed price or detailed cost-plus terms
- Payment schedule tied to milestones
- Timeline with completion date
- Materials specified
- Change order process
- Warranty provisions
Payment Protection
- Never pay more than 10% upfront
- Tie payments to completed work
- Retain 10% until final completion
- Pay by check for paper trail
- Get lien waivers with each payment
Red Flags
- Demands full payment upfront
- Won't provide written contract
- No license or insurance
- Pressure to decide immediately
- Cash-only requests
Mechanic's Liens: Even if you pay your contractor, unpaid subcontractors and suppliers can put liens on your property. Always get lien waivers from subs and suppliers.
When Work Is Defective
Document Everything
- Photos and videos of defects
- Get independent inspection
- Written expert opinion
- Code violation documentation
- Compare to specifications
Give Notice
- Written notice of defects
- Opportunity to cure (often required)
- Specific description of problems
- Deadline for response
- Keep copy of all correspondence
Right to Cure Laws
- Many states require notice before suit
- Contractor gets chance to fix
- Specific procedures must be followed
- Failure to follow may limit recovery
Abandoned Projects
When Contractor Walks Away
- Document current state (photos/video)
- Send written notice demanding return
- Set deadline for response
- Get completion estimates from others
- Send formal demand letter
Calculating Damages
- Amount paid minus value received
- Cost to complete with new contractor
- Cost to fix defective work
- Additional living expenses if displaced
- Lost rental income if applicable
Finding the Contractor
- Check license board records
- Business registration address
- Bond and insurance information
- Previous job references
Contractor Bonds: Licensed contractors often must have surety bonds. If contractor won't pay, you may be able to make a claim against their bond.
Change Orders and Cost Overruns
Valid Change Orders
- Should be in writing
- Describe additional work
- State price for addition
- Signed by both parties
- May affect timeline
Disputing Overruns
- Review original contract terms
- Check if changes were authorized
- Compare to original scope
- Verify work was actually done
- Get independent cost evaluation
Protecting Yourself
- Require written change orders
- Approve before work starts
- Set not-to-exceed limits
- Track all changes
Mechanic's Liens
Understanding Liens
- Contractors, subs, suppliers can file
- Attaches to your property
- Must be paid to sell/refinance
- Can lead to foreclosure
Preventing Liens
- Get lien waivers with each payment
- Verify subs and suppliers are paid
- Use joint checks payable to contractor and sub
- Check preliminary notices received
Fighting Invalid Liens
- Check if properly filed
- Verify lien claimant's rights
- Challenge if you already paid contractor
- File motion to release lien
- May require bond to clear title
Taking Action
Contractor Licensing Board
- File complaint for license violations
- May order restitution
- Can suspend/revoke license
- Creates public record
- Some states have recovery funds
State Contractor Recovery Fund
- Available in many states
- Compensates for contractor misconduct
- May require judgment first
- Limits apply
Legal Options
- Demand letter
- Mediation/arbitration (if in contract)
- Small claims (within limits)
- Civil lawsuit for larger amounts
- Claim against bond
Statute of Limitations: Construction defect claims have time limits, often starting from completion or discovery. Don't wait too long to take action.
New Construction Issues
Builder Warranties
- Express warranty from builder
- Implied warranties (vary by state)
- Structural coverage (often longer)
- Systems and appliances (shorter)
Common Defects
- Foundation problems
- Water intrusion
- HVAC issues
- Electrical problems
- Plumbing defects
- Cosmetic issues
Making Warranty Claims
- Document defects promptly
- Submit written claim
- Allow inspection
- Get repair timeline
- Follow up if not completed
Resolve Your Construction Dispute
Generate a demand letter for contractor disputes and construction defects.
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