Work has started but not yet completed, due to the pandemic there are a lot of expenses that we have to cover and we just can't afford to finish the contract due to lack of funds.
1 reply
Jul 16, 2020
If you're out of funds and can't continue, there might not be much choice other than to terminate the contract. When there isn't a termination for convenience clause present, that could make things a bit harder and you may end up breaching the contract with an impermissible termination. Still, even if there are no good options, you could limit your exposure by stopping things before costs get too far out of hand.
Hiding from the issue won't make it go away. Instead, stopping work and discussing the situation with the contractor may be a better idea. Getting squared away with them before more work is done (and more costs are incurred) could be extremely useful for avoiding issues like mechanics lien claims. You may end up being liable for some costs for breaching the contract, but the longer that work goes on, the more costs that will be incurred. Obviously, exploring ways to fund the project could be useful too - like obtaining a construction loan or a second mortgage. Though, obviously, that won't make sense in every situation.
Before making a decision on how to proceed, it'd be wise to consult with a California construction lawyer so they can evaluate your contract and circumstances, then advise on what next steps make the most sense for you. For help finding the right lawyer, this directory will be useful: Find a California Construction Lawyer. And, if you can't afford a lawyer, the CA courts have some programs that might make things easier: Free and Low-Cost Legal Help.