# Deposit Back?!



## WisePainter (Sep 16, 2008)

The only time I add a "No Refund" policy is on faux finish contracts, I get 50% up front and they kiss that money _bye bye_ the minute it hits my hand...



As of yet I have not needed a no refund policy on interior or exterior contracts, I suppose if it ever comes up I will start adding it.


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## J F (Dec 3, 2005)

Now if it comes down to court for $1,500, yeah you then have to weigh what your costs (both financially and mentally) are going to be. It just sucks that anyone who want to back out of a legal doc. for no apparent hardship on their part can figure that into their hiring of contractors...

"...I'll make it so much of a pita, that I can screw the contractor over for $$..."


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## J F (Dec 3, 2005)

Supposedly, that's what good contracts and documentation are supposed to negate.


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## Mike Finley (Apr 28, 2004)

J F said:


> 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.
> 
> ...


Because his contract is full of holes? 

Sure we all feel for the guy, this is the last time of year anybody wants to lose a job, let alone the deposit.

What feels good doesn't enter into it when push comes to shove, only what is written. 

This is what contracts are for, they aren't for the 99% of the days of your life that everything is roses, their for the 1% when this happens.


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## greg24k (May 19, 2007)

Mike Finley said:


> 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.
> 
> ...


*Not trying to convince anyone, simply looking if anyone else had similar situations. This is my second case being in business for over 20 years, and other then this it has been 100% customer satisfaction.:thumbup:*


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## bwalley (Jan 7, 2009)

greg24k said:


> *Not trying to convince anyone, simply looking if anyone else had similar situations. This is my second case being in business for over 20 years, and other then this it has been 100% customer satisfaction.:thumbup:*


I am a Contractor and I wouldn't want to go in front of a judge or a jury on a case like this, my money is on the HO recovering they may als be able to get attorney's fee's and their costs as well.

If you have been in business for over 20 years and have 100% customer satisfaction, why screw over this client?


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## greg24k (May 19, 2007)

bwalley said:


> I am a Contractor and I wouldn't want to go in front of a judge or a jury on a case like this, my money is on the HO recovering they may als be able to get attorney's fee's and their costs as well.
> 
> If you have been in business for over 20 years and have 100% customer satisfaction, why screw over this client?


Because I feel I am being screwed by this client. I have leg work in this for over a month and now he tells me I changed my mind about the whole thing. Why have contracts?


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## Heritage (Mar 20, 2007)

bwalley said:


> I am a Contractor and I wouldn't want to go in front of a judge or a jury on a case like this, my money is on the HO recovering they may als be able to get attorney's fee's and their costs as well.
> 
> If you have been in business for over 20 years and have 100% customer satisfaction, why screw over this client?


In Ontario, I believe the consumer has 14 days to cancel the job in writing and receive compensation of a deposit, minus expenses incurred by the contractor (time, deposit on materials, purchase of materials, etc.). After the 14 days, they either have to proceed with the work or lose the deposit entirely.

I've never had to deal with this personally, because I segregate my work in 2 phases.

But I think if you were in Ontario, after 14 days the consumer has no recourse to recover the deposit and must therefore proceed or lose.

If the Gov't thinks that that's fair, then I don't see why we should argue. If the law is clearly on the contractor's side on this, then he is not screwing anybody over.


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## rbsremodeling (Nov 12, 2007)

I am really surprise guys are leaning towards giving back the deposit. We have a 3 day right of recession. After that the deposit it toast


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## bwalley (Jan 7, 2009)

greg24k said:


> Because I feel I am being screwed by this client. I have leg work in this for over a month and now he tells me I changed my mind about the whole thing. Why have contracts?


How much legwork can you have on a jb you haven't started?

You spent time selling the job and sent her to a few places to look at some fixtures, she now wants to cancel and you are out some time, charging her a reasonable fee for your time would not be unreasonable, keeping the whole deposit is unreasonable IMO.

Why have contracts? when you go to court and lose, you will find out what the weak spots in your contract are, also your contract may say you can keep the deposit, state law may not allow it, state law or Judge's opinion will trump your contract.

You may learn what un just enrichment is.


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## bwalley (Jan 7, 2009)

rbsremodeling said:


> I am really surprise guys are leaning towards giving back the deposit. We have a 3 day right of recession. After that the deposit it toast


I really don't like recession's and would never put that in my contract.


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## greg24k (May 19, 2007)

Heritage said:


> In Ontario, I believe the consumer has 14 days to cancel the job in writing and receive compensation of a deposit, minus expenses incurred by the contractor (time, deposit on materials, purchase of materials, etc.). After the 14 days, they either have to proceed with the work or lose the deposit entirely.
> 
> I've never had to deal with this personally, because I segregate my work in 2 phases.
> 
> ...


In NJ the law is 3 days. All my contracts have a foot note stating the following.
*Under the new Consumer Act law, this contract can be canceled by a consumer within 3 days after signing of this contract. Home-owner must provide the contractor with a written notice sent by REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED; or* *PERSONALLY DELIVER A SIGNED AND DATED WRITTEN NOTICE OF CANCELLATION TO: <company name and address>. ** Within 3 days of receiving the written notice of cancellation, home-owner will be refunded any money paid under the contract.*


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## rbsremodeling (Nov 12, 2007)

bwalley said:


> I really don't like recession's and would never put that in my contract.



Its law here. It has to be included in your contractor


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## greg24k (May 19, 2007)

rbsremodeling said:


> Its law here. It has to be included in your contractor


Same here, I think most states started to adopt this law.


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## bwalley (Jan 7, 2009)

greg24k said:


> In NJ the law is 3 days. All my contracts have a foot note stating the following.
> *Under the new Consumer Act law, this contract can be canceled by a consumer within 3 days after signing of this contract. Home-owner must provide the contractor with a written notice sent by REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED; or* *PERSONALLY DELIVER A SIGNED AND DATED WRITTEN NOTICE OF CANCELLATION TO: <company name and address>. **Within 3 days of receiving the written notice of cancellation, home-owner will be refunded any money paid under the contract.*


I am aware of those clauses and in Florida they don't apply if the client contacted you, unless it was from an advertisement.

My point is, you are out some time, you should be able to charge for it, you may think you can legally keep the deposit, but a Judge or Jury may not and most courts will rule in favor of a HO' over a contractor, especially in a case like this where the job has not been started.

Judges and juries don't always follow the law and in civil cases, they have a lower burden of proof.

Seems to me it would be better to keep a reasonable portion of the deposit and refund the difference, cancel the contract and hope she later decides to get the job done, or at least doesn't bad mouth you for keeping her deposit.

If a person drops a $100 bill out of their pocket and they don't know it, you could pick it up and keep it, but is it the right thing to do?


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## rbsremodeling (Nov 12, 2007)

I had a developer try to screw me a few years back 100k deposit. 

He took me to court, the judge allowed me to keep 60 of the 100. 

I had plans done, material list and 3 months of prep time in scheduling subs and spec'ing materials. I was willing to settle for 35k, he said no took me to court and got 60K.


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## bwalley (Jan 7, 2009)

rbsremodeling said:


> I had a developer try to screw me a few years back 100k deposit.
> 
> He took me to court, the judge allowed me to keep 60 of the 100.
> 
> I had plans done, material list and 3 months of prep time in scheduling subs and spec'ing materials. I was willing to settle for 35k, he said no took me to court and got 60K.


That is a completely different situation.


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## Meetre (Nov 2, 2007)

rbsremodeling said:


> Its law here. It has to be included in your contractor


 
In Idaho, if you don't have them sign the state supplied 3-day right to cancel, your contract is not enforceable. You loose lien rights, and may not get paid. If you go to a judge with out one, you loose right then and there.


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## rbsremodeling (Nov 12, 2007)

bwalley said:


> That is a completely different situation.


Not really. We did not start any work on the building. Same situation. Contractor makes 150 dollars an hour 10 hours spent making calls or whatever the 1500 is toast


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## bwalley (Jan 7, 2009)

rbsremodeling said:


> Its law here. It has to be included in your contractor


I don't like *Recession's.*

They are called *Contract's *we are called *Contractor's*.

Right of rescission is another issue and depending how the lead was developed, they may or may not be required in the contract, if the job is started within the 3 day period they do not have the right to cancel.


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## greg24k (May 19, 2007)

bwalley said:


> I am aware of those clauses and in Florida they don't apply if the client contacted you, unless it was from an advertisement.
> 
> My point is, you are out some time, you should be able to charge for it, you may think you can legally keep the deposit, but a Judge or Jury may not and most courts will rule in favor of a HO' over a contractor, especially in a case like this where the job has not been started.
> 
> ...


It is never personal, its business, I am in business to make money and I play by the rules and I expect the same from my clients.


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## Celtic (May 23, 2007)

The law for NJ - where the OP is from - requires the 3-day notice on contracts.



> On or after December 31, 2005, a home improvement contract may be
> cancelled by a consumer for any reason at any time before midnight of the third business
> day after the consumer receives a copy of it. In order to cancel a contract the consumer
> shall notify the contractor of the cancellation in writing, by registered or certified mail,
> ...


http://www.nj.gov/oag/ca/laws/ContractorsRegistrationLaw.pdf

To me, it appears that " so far " the OP has complied with NJ's law.


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## bwalley (Jan 7, 2009)

greg24k said:


> It is never personal, its business, I am in business to make money and I play by the rules and I expect the same from my clients.


I am in the business to make money as well, but I realize what can and does happen in a court, the law may be 100% on your side and you still can lose.

$1500 is not worth the hassle to me, but obviously it is to you, hopefully for your sake the HO drops it and you can keep the deposit without any issues.


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## rbsremodeling (Nov 12, 2007)

This is a good topic of conversation. I am glad it came up to see what others think.

Very surprised at some of the opinions especially BWalley's. 

What would happen if it was 5 out of 10 contracts booked, the owners decided to cancel their contracts instead of one? 

What if you hired additional people to staff the jobs?


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## bwalley (Jan 7, 2009)

rbsremodeling said:


> This is a good topic of conversation. I am glad it came up to see what others think.
> 
> Very surprised at some of the opinions especially BWalley's.
> 
> ...


This is 1 case of a cancellation, it is a relatively small amount of money, I look at each case differently.

Had I signed a contract, taken a deposit, started doing drawings, pulled a permit, bought materials, getting bids from subs etc., scheduled the job and did not take on another job because of this one, I would not be so inclined to give the deposit back.

From what he said, he signed a contract and sent them to a few places to look at material, a month later they cancel, now they want the deposit back.

Doesn't sound like he has a whole lot into the job other than his time (which he should be compensated for) and the expectation of doing the job and making a profit.

He may well be 100% legally able to keep the deposit, I wouldn't want to risk a judge ruling against me in a case like this.


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## greg24k (May 19, 2007)

bwalley said:


> I am in the business to make money as well, but I realize what can and does happen in a court, the law may be 100% on your side and you still can lose.
> 
> $1500 is not worth the hassle to me, but obviously it is to you, hopefully for your sake the HO drops it and you can keep the deposit without any issues.


I agree with you Bwalley, it is not worth the hassle. It is not even about this hassle, it is a principle. Few people said here HO always wins, jury takes HO side, true... in many cases the do, but the circumstances in many cases the HO deserves the award. I have been to many estimates where "fly by night contractors" screwed some HO up real bad and this guys should not only pay back, they should :hang: for the job they did. I will give you one example, was doing a code violation repair in the basement. The plumber vented the bathroom ubove the drop ceiling and left it like this. He not only should pay back, he should be shot.
My case there is no wrong done on my part. Just like anybody else in here a man has to earn a living and provide for his family, we all got problems and stories, does my morgage company or leasing company want to hear it? I doubt it.


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## Celtic (May 23, 2007)

Greg...does your contract have the DCA's 1-888 number on it?

http://www.njconsumeraffairs.com/adoption/dcado84.htm


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## greg24k (May 19, 2007)

rbsremodeling said:


> This is a good topic of conversation. I am glad it came up to see what others think.
> 
> Very surprised at some of the opinions especially BWalley's.
> 
> ...


You 100% right RBS, something like this happens and you start voiding contracts, and having your schedule all messed up, one will go with out income for a month or two and end up washing windshields on the street corner real quick.


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## greg24k (May 19, 2007)

Celtic said:


> Greg...does your contract have the DCA's 1-888 number on it?
> 
> http://www.njconsumeraffairs.com/adoption/dcado84.htm


 
Yes Celtic, its displayed on all my contracts, proposals, business cards and my truck.


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## Celtic (May 23, 2007)

greg24k said:


> Yes Celtic, its displayed on all my contracts, proposals, business cards and my truck.


You have the DCA's tele # on your truck :blink:


How you proceed with undecided HO is up to you.
How much time do you figure you have invested in this job?


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## greg24k (May 19, 2007)

Celtic said:


> You have the DCA's tele # on your truck :blink:
> 
> 
> How you proceed with undecided HO is up to you.
> How much time do you figure you have invested in this job?


About 10-12 hours over a one month period.


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## Five Star (Jan 15, 2009)

This is a sensitive topic i see,i have had people after signing a contract try to renegotiate showing me cheaper proposals written on napkins.

i would keep the deposit and if they persue it to the next level counter them for the balance due!:2guns:


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## Celtic (May 23, 2007)

greg24k said:


> About 10-12 hours over a one month period.


IMHO, you are entitled to be compensated.

Should you decide to pursue this and the HO responds in a similar fashion, your first stop will be mediation.


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## Celtic (May 23, 2007)

Five Star said:


> .... if they persue it to the next level counter them for the balance due!:2guns:



Good luck with that....considering a single nail was never even purchased.


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## Max Nomad (Aug 29, 2008)

greg24k said:


> 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?


For starters, hopefully you had that addressed in your contract. Your state probably addresses that in their Code. For example, in the Code of Virginia here's what the law states under "Cancellation of sale":



> § 59.1-21.3. Cancellation of sale.
> (1) *Except as provided in subsection (5), in addition to any right otherwise to revoke an offer, the buyer has the right to cancel a home solicitation sale until midnight of the third business day after the day on which the buyer signs an agreement or offer to purchase which complies with § 59.1-21.4. *
> (2) Cancellation occurs when the buyer gives written notice of cancellation to the seller at the address stated in the agreement or offer to purchase.
> (3) Notice of cancellation, if given by mail, is given when it is deposited in a mailbox properly addressed and postage prepaid.
> ...


One thing you might consider is that after a customer has paid a deposit you set a concrete start date that's to happen relatively soon. it also couldn't hurt to make sure the start date didn't go a month or so out unless they were well aware that they were locked in. I know, I know, in some cases it doesn't matter, but if someone is prone to try to cheat you out of money, the best way to insure that it happens is to give them unobstructed TIME.


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## jaros bros. (Jan 20, 2009)

I think the word of mouth from HO getting out would be enough for me to return the deposit. I don't know where you live and your community, but even if you have the right to keep the deposit, I don't have any question how people will see your decision to keep the deposit. Sometimes gaining a little will cost you a lot and sometimes losing a little will gain you a lot. Let's face it, $1500 is not a lot of money.


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## Leo G (May 12, 2005)

bwalley said:


> How much legwork can you have on a job you haven't started?


Lets see...He went over there for the original meeting, came back, wrote up a proposal, looked up pricing, materials, models #'s. Sent out the contract. That could be as little as 4 hours or as much as 40 hours depending on the size of the job. On this one I would suspect that a full 8 hours was used to do this work. Plus now he'll have a hole in his schedule and lost profits.


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## Max Nomad (Aug 29, 2008)

jaros bros. said:


> I think the word of mouth from HO getting out would be enough for me to return the deposit. I don't know where you live and your community, but even if you have the right to keep the deposit, I don't have any question how people will see your decision to keep the deposit. Sometimes gaining a little will cost you a lot and sometimes losing a little will gain you a lot. Let's face it, $1500 is not a lot of money.


You've made a very valid point about the word of mouth factor; it's easy for any of us to talk sh*t and say that we'd keep it all and go on about our business but the reality is that most of us would give some or all of it back. 

The thing is, aside from securing materials for the job, the payment of a deposit is also to show further sign of legal commitment to the project. When the customer pays it and the money hits that contractor's bank account it is as legally-binding as the signatures on that contract. *It's not the contractor's fault if a customer gets struck by a runaway case of greed or stupidity.* If the case went to arbitration it would be the customer who would have to deal with the burden of proof to show where the contractor didn't act in good faith.

One of the caveats that we've included in our contract is that if the cancellation doesn't happen within that 72-hour window of time, we reserve the right to keep 20% of the deposit -- and that doesn't include the re-stocking fees charged by the individual vendors either. So far, so good.


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## Celtic (May 23, 2007)

Leo G said:


> Lets see...He went over there for the original meeting, came back, wrote up a proposal, looked up pricing, materials, models #'s. Sent out the contract. That could be as little as 4 hours or as much as 40 hours depending on the size of the job. On this one I would suspect that a full 8 hours was used to do this work.



This part of the "free estimate" :whistling


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## Leo G (May 12, 2005)

It's only a free estimate if you don't sign on the dotted line. Once you sign it becomes part of the job.


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