Contractor Took a Deposit and Did Not Finish: Options for BC Homeowners

A renovation that stalls halfway, with a deposit paid and the contractor no longer answering, leaves you with an unfinished home and a decision to make about money already spent. The steps you take in the first few weeks can protect your refund claim or make it harder.

This article covers your rights under BC's consumer protection law, why the Builders Lien Act matters before you pay anyone to finish the job, and where a claim against the contractor would be heard.

First, pin down what was agreed and what was paid

Before deciding what to do, gather the paper trail: the quote or written contract, any change orders, invoices, receipts and e-transfer records, texts and emails, and photos of the work as it stands. Write down the timeline: when the deposit was paid, when work started, when it stopped and what the contractor said.

Then put your position in writing. A short, calm email or letter that sets out what was agreed, what is outstanding, and a reasonable date to return and finish (or to refund) is useful whatever happens next. It also helps show later that the contractor, not you, walked away from the job.

Your consumer protection rights

If you hired the contractor for your own home, the Business Practices and Consumer Protection Act may help. A contract for goods or services where the supply or full payment happens later is a "future performance contract", and most renovation deals where you pay a deposit up front fit that description (very small contracts below a prescribed amount are excluded).

For these contracts, Part 4 of the Act requires the contract to include specific information, including the supplier's name, a detailed description of the work, the supply date and, where applicable, the completion date, an itemized price, the payment terms and the total price. The supplier must give you a copy within 15 days after the contract is made. Two rights are especially useful when a contractor takes a deposit and stalls:

• Missing information. If the contract does not include the required information, or the supplier did not make the required disclosure before you signed, you may cancel within one year after you received a copy of the contract.
• Work not started on time. If the work is not delivered within 30 days of the supply date in the contract, you may cancel at any time before it is delivered. The Act treats services as begun if the supplier tried to start on reasonable notice and you refused or no one was available.

A notice of cancellation can be given by any method that lets you prove the date, such as email or registered mail, and generally should state the reason. After a valid cancellation, the supplier must refund all money received within 15 days, and if it does not, you can recover the refund as a debt. Whether these rights apply turns on the exact contract and timeline, so have it checked before you rely on them.

Watch the builders lien rules before you pay anyone else

Many homeowners do not realize that a contractor who did not pay its own subcontractors or suppliers can leave the house exposed to liens. Under the Builders Lien Act, contractors, subcontractors and workers who provide work or material for an improvement have a lien on the owner's interest in the land for the unpaid price. Our guide to builders liens in BC covers the basics.

Three rules matter most when a job is abandoned:

• The 10% holdback. Section 4 requires the owner to retain a holdback of 10% of the greater of the value of the work provided and the amount paid. A separate holdback trust account is required under section 5 only where the work and material are worth $100,000 or more.
• Do not spend the holdback on finishing. Section 6 says that when a contractor defaults, the required holdback must not be used to complete the work or pay damages until the possibility of liens arising under that contractor is exhausted. Paying it to a new contractor too early does not reduce your exposure.
• The timing. Where no certificate of completion has been issued, when the clock starts depends on how the job was set up. If you hired a head contractor to do substantially all of the work, claims of lien may be filed up to 45 days after the head contract is completed, abandoned or terminated (section 20(2)). If there is no head contractor, for example where you hired separate trades yourself, the 45 days run from when the improvement as a whole is completed or abandoned. Firing one trade while the renovation carries on with others does not necessarily start the clock. The holdback period under section 8 follows the same distinction, but runs for 55 days. A lien that is not filed in time is extinguished.

Under section 34, the total that lien claimants under the contractor can recover is generally capped at the greater of what you still owe the contractor and the required holdback. That cap is one reason keeping the holdback, and careful records of payments, protects you.

Choosing where to bring a claim

If the contractor will not finish or refund, the claim is usually for breach of contract: the cost to complete or correct the work beyond what you would have paid under the original deal, or the return of money paid for work not done. Our article on breach of contract in BC explains the remedies.

The amount decides the forum. The Civil Resolution Tribunal deals with most small claims up to $5,000. The Provincial Court's small claims jurisdiction extends to claims of $35,000 or less. Larger claims go to the Supreme Court, where a separate regulation lets any party to an action about residential construction require the other parties to attend mediation.

You also need to keep the two-year limitation period in view, and remember that a contractor may counterclaim for unpaid amounts or file its own lien. If you are unsure which forum fits, see CRT, small claims or Supreme Court.

Practical steps this week

• Document before anyone else starts. Photograph and record the site before a new contractor begins, and keep any materials left on site until you have advice.
• Get an independent assessment. A written estimate from another contractor of the cost to finish or fix the work is key evidence.
• Hold back what you owe. Do not release more money until you have advice. Keep the 10% holdback in place until the 55-day holdback period that applies to your job has expired, and check first that no claim of lien has been filed and no proceeding has been started to enforce a lien against the holdback (section 8(4)). The end of the 45-day filing window is not enough.
• Check the title. A title search shows whether a lien has been filed against your property.
• Diarize the dates. The lien-filing and holdback dates (which depend on whether you hired a head contractor), any BPCPA cancellation deadline, and the two-year limitation period.

Contractor walked off the job? Protect your refund and your title

Our litigation lawyers can review your contract and payments, advise on cancellation, holdback and lien timing, and pursue or defend a claim in the right forum.

Call 604-259-2844 or send us a message to arrange a consultation at our Vancouver office.