I own a construction company in MN and am wondering what amount of a deposit can be withheld from a client if they decide to cancel their project?
1 reply
Apr 2, 2020
Whether or not a deposit can be withheld will depend on the terms of the agreement and the circumstances of the termination. But, if the contract states that the contractor can keep the deposit upon termination, then withholding the deposit would generally be allowed.
If the contract is silent about whether or not the deposit can be withheld, then it'd be a little more up in the air. But, generally, a contractor should at least be able to withhold amounts to cover any costs the contractor has incurred for the job. And, withholding more than that may be acceptable, too. After all, that's the point of the deposit - to act as security ensuring the project will be undertaken.
For ultimate clarity, though, it'd be wise to consult with a Minnesota construction attorney so that they can review the terms of the agreement as well as the circumstances surrounding the project termination. Those two factors will be pivotal in determining whether a deposit may be withheld - and to what extent.