Legal Question in Construction Law in California
recover down payment
Our neighbor introduced her nephew to us as a contractor for home remodeling. He claimed he was big builder and only takes small project like ours for his Aunt. We trusted him quickly and signed a contract for remodeling the kitchen and adding second floor in March, 2006. From March to April, 2006, he has collected our down payment a few times in total of $83000 (we did not know down payment more than $1000 is against California Construction law). The down payment including permit fee, designing fee, foundation inspection and 25% of total cost ($20,000). He has never started any work till now. Nor we received any blueprint for architect designing. He applied the permit for the kitchen but never picked it up. He has never applied permit for the second floor.We recently found that the contractor' license number was suspended by CSLB in Dec 2006 for not paying his material provider. We went to his office and talked to him on Dec 13, 2006, and he agreed to refund us. But we have never received the money. We have filed CSLB for two weeks and waiting for response.
3 Answers from Attorneys
Re: recover down payment
If you don't get the money voluntarily, you obviously have no choice but to sue. Hopefully, he will have the ability to repay, but I wouldn't count on it. Maybe because he is a relative to the neighbor, you have a better chance than most.
Re: recover down payment
If he was unlicensed at the time that he did work, then by statute, you are entitled to have the money returned. He must refund it; there's no defense to such a claim. The CSLB will take many months to resolve the matter. If you can wait, then pursue that route. If you cannot, then file a civil suit, but that's no guarantee of payment either. He may be a deadbeat, skip, or simply have no intention of returning the money. He may file bankruptcy to try to get out of it. In addition, if you file a civil suit, the CSLB will likely close the administrative claim pending resolution of the civil suit.
We litigate collection cases statewide against contractors. If you need to speak further, please feel free to call or email.
Re: recover down payment
From your question, I gather that the contractor was licensed at the outset of the project. As such, you may be entitled to a complete refund for that work done after 12/06 (date of suspension).
As a practical matter, the CSLB complaint procedure may not be the most effective way to get your money back. The CSLB�s biggest hammer, beyond a $5K max civil fine, is the loss of license. With the suspension already in place, it may not matter much to this guy is his license is permanently suspended.
I would recommend immediate civil action, including a claim against his surety bond. If he is in financial trouble, there may already be claims against bond which would further reduce your chances of being made whole. With a civil lawsuit, you may be able to attach some assets at the outset of the case to better your chances of recovery.
For the kind of money that you have already expended, I recommend that you retain counsel. It clearly sounds that you are beyond the jurisdictional limit for small claims court, and the attachment procedures can be complicated.
[The statements and opinions provided above are an informational service to the general public. Since this reply is based upon an incomplete description of facts, this email should not used as a substitute for legal advice from a qualified and fully-informed attorney. Moreover, these communications are intended for use by the public. As such, this email does not constitute a confidential communication nor does it create an attorney-client relationship with Lynes & Associates or any of its members.]
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