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Do I need to return a deposit if the client cancels a renovation contract and work hasn’t started?

New YorkCoronavirusPayment Disputes

I’m from HOME-REDI, A Contractor Builder in Long Island NY. If a client cancels an executed renovation contractor with down payment paid but work has not been started as of yet and the client now wants to cancel the contract either due to loss of job or a pandemic, is the Contractor entitled to his profit without doing any work? Thanks

10 replies

May 5, 2020
This depends on state law and your contract, so be careful. If there’s a termination for convenience clause in your contract, that means someone can cancel without being considered in breach. However, In the event of a termination for convenience, it can say a lot of things. It can say you’re entitled to the profit and overhead for the full job. It can also say you’re entitled to profit and overhead for the amount of work completed to date.  The contract should also say whether you are entitled to keep the deposit in the event of a cancellation.  If the contract does not have any of that language, the owner may be held liable for breach of contract.  You would need to see how your courts have handled similar cases. Hopefully you will update your contract with COVID-19 related clauses.
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Mar 25, 2021
I'm a contractor and I had a similar case happened too me recently, my contract clearly says no refund on cancellation, see people dont understand that when a customer signs the contract they're booking us for the agreed date, by cancelling to close to the agreed beginning date we wont be able to book anything else at sutch a short notice will cause lost for me and me crew being out of work till we book something else and that's not even compensating the time we invest in paperwork materials and other serious stuff that are not in paper, but I will make an exception if they cancel with 2 weeks or more notice with a small fee for the time I invested, but anything closer I'm gonna have to charge 50% or more on the deposit given... hopefully this can help someone in the future
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Dec 16, 2021
That is the very definition of "opportunity cost"! And since your contract is explicit with regards to cancellation I'd be tempted to hold my ground or demonstrate to the client the cost of a missed opportunity and charge at least for that. With that said there is also opportunity to turn your predicament into what I call a "marketing opportunity". Find a nice middle ground and settle. Word gets out of your being reasonable guy here may provide a great future opportunity! It's not always such a straightforward issue. :)
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Dec 16, 2021
oops! a bit of Clarification: My comment above is directed to Oscar Martinez :)
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Feb 16, 2022
We are about to go through the same situation. Our customer wants out of the agreement because they aren’t happy with what they agreed on lol. We have two weeks of labor invested, as well as material purchases, design fees, etc. We offered to give them back what we have invested, but they are asking for more because they do not agree with our expenses.
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Oct 13, 2022
Yes, you should return the deposit if the client cancels a renovation contract and work hasn’t started. The deposit is not an advance payment for work that has been performed or is pending delivery. Go to this https://party.biz/forums/topic/132281/which-is-the-best-web-development-company-in-chennai site for the best experience. It is a security deposit to compensate for the risks involved in entering into a renovation contract with a client.
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Oct 24, 2022
edubirdie review
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Oct 31, 2022
What if work has started
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Nov 20, 2022
How do I find our local law in Mo
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Apr 20, 2023

We did 4 months of work, did the architectiral plans. had 7 revisions and then he cancel us becasue he refused to pay the full deposit. The project was written for 2.145m and 25% deposit for a new consruction but he akways went around and around to pay full deposit or sign the writen contract but we mert multiple times. a lots of work was done and he only have paid 158,400 which 60k only was for the architects plans. Now, he canel becasue we refuse to take more money from him without signing the contract and make paymenet for his deposit he wanted to go little by little but work to be done. we invested more than 100 hours and he only wants to pay 9,000 which is 15% of the architectural plans price. we got back to him with all the work was done in apper, meetings and etc not constuction yet becasue you needs many oermits to be done so we asked 3% which is like 65850 to cover our time invested, missed opportunities and so much work it was done to get his 3d plans. but obvioulsy he is refusfing and whats to sue 

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