Legal Question in Construction Law in California

After signing a contract & a 50% down payment to a contractor, HOA disallowed a patio roof to be build. Can we get money back?

After seeing another condo owner install a patio roof years ago, we decided to do the same for $1500. However, HOA declined our request only after we have already paid a licensed contractor a down payment of $750. We have asked for our money back but contractor says specific material has been purchased and they cannot return the deposit without first subtracting the material cost as stated in the contract. We never gave them the go ahead to purchase material until we received an answer from HOA but they did so regardless. Do they have the legal responsibility to return our down payment (it was far above the 10% limit) or are they able to keep it due to a contract and purchased material? Thank you for the help in advanc


Asked on 4/30/14, 4:45 pm

1 Answer from Attorneys

Bryan Whipple Bryan R. R. Whipple, Attorney at Law

First, does the contract contain any provision requiring the contractor to obtain a "go ahead to purchase material" or, by not containing such a provision, was the contractor engaging in reasonable preparatory measures when he committed to the material? I'd guess more likely the latter, but if it does indeed contain a "wait for the go-ahead" provision in one form or another, the contractor is stuck with the bought-too-soon material. In the absence of such a provision, it is less clear what the result would be in small-claims court, because you have a clash of two legal principles: the one the contractor is counting on, i.e., that he has a right to charge you for costs incurred in preparation for your job such as purchasing or fabricating special materials that can't be returned or otherwise used; and the one that supports your position, i.e., that the contractor cannot lawfully take a deposit exceeding 10%. I'm leaning toward guessing that a small-claims judge would rule in your favor, in that the statutory limit on deposits is a primary and more significant rule that the contract-law principle that costs incurred in preparing to carry out a contract should be reimbursable if the contract is canceled.

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Answered on 4/30/14, 5:59 pm


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