Legal Question in Construction Law in California
How to be released from contract
A contract was signed in Dec '05 to construct a sunroom. At the time they had a B rating with BBB and were licensed. They took a 30% payment to begin. Now in mid-August they have only done a small amount of work with much wrangling and conjoling after trying a bait and switch maneauver on sunroom product which we refused to accept. (Sunroom order is now with correct manufacturer but unfilled.) Upon a recent check their license has been suspended for Worker's Comp non-compliance and their BBB rating is now an F. How do we quit this contract (especially now since they are without a license!), and obtain the monies still owed us which they hold on work still not performed? We are ready to find another contractor and move on, but need to leave this contract in the most effective way. Where to from here?
2 Answers from Attorneys
Re: How to be released from contract
The California Supreme Court recently decided a case that directly addresses your question.
In MW Erectors, Inc. v. Neiderhauser Ornamental and Metal Works Company, Inc., 05 C.D.OS. 6163 (July 14, 2005), the Court held that contractors unlicensed at any time during a project cannot sue for payment, unless they satisfy a narrow statutory safeharbor for contractors substantially complying with licensing laws. An unlicensed contractor�s forfeiture is required even if equity � principles of fundamental fairness � compels payment to the unlicensed contractor.
Beyond that, if you wish to seek the money paid for services not rendered, you may have to seek legal action.
Re: How to be released from contract
You can easily get out of the contract with your facts. Getting your money back will not be so easy. You should plan on having to pay the new contractor normally, and having to sue the first. Hopefully, they had a bond, but it is seldom enough to satisfy your type of debt. If they are going out of business, most of your money will probably go with them. Talk to an attorney before making any decisions. Feel free to contact me if interested.
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