Getting deposit back from builder after canceling

You can probably tell where this is going, and I’m hoping someone in a similar situation has some suggestions on how to deal with this.

So following on from this we’ve had a change in circumstances which mean we’re not going to do the building work we set in motion.

We signed a contract with the builder in late November 2021 and paid around a 5% deposit, for a slot to start work in late March/April 2022. The builder at that point said they’d not even be thinking about the build until after Christmas. In January it turned out we didn’t want to go ahead with the building work, and got in touch with the builder to tell them to stop. The builder was understandably a bit miffed, saying they’d turned away other work (10 jobs according to them), but they’d get in touch in a couple of weeks to let us know what was going on.

Two and a half weeks later, we got in touch again to discuss the deposit, and they say they’re not going to return it. Reasons cited were that they tended to order materials like bricks in bulk (there is no bespoke stuff for this build) from their supplier for preferential pricing, and that they’d had to let go of a couple of their contractors due to our work no longer going ahead.

I’ve had a look at the contract, which is a template one from the Foundation of Master Builders and it is pretty basic. From my interpretation, your right of cancellation with no reason is 14 days from signing the contract. This has lapsed, so it does not apply. It also mentions they can subtract the loss of value for any goods delivered to us. Which they weren’t. There is no mention of the deposit being non-refundable.

From a common sense perspective, we let the builder know immediately and well in advance of the start date of the cancellation so they’d not be blind-sided. There was an outside chance we may have been able to carry on with the build, but with lead times and the demand for their work, we didn’t want to cancel at the last minute. We also didn’t expect them to refund our deposit in full, but would have been happy to pay for any work they’d done so far, which I frankly think they’ve not.

Legally, it seems that requesting their supplier (one of the large merchants think Jewsons etc) to hold inventory for them isn’t enough cause to withold the deposit. Neither is having to let go of subcontractors as that’s partly why you employ contractors. They’ve not delivered anything of value to us yet, so at most, the only thing they could point at having done for us is perhaps planning a schedule for work and putting an order in for some materials. Contractually, it looks like they are obliged to notify us of any materials ordered which they have not done.

I don’t know how far in advance orders need to be made, or what the cancellation policy is from their supplier. There’s also a chance they could reuse the materials on a different job.

It looks like theo only option now, is to file a claim through small claims court for the return of the deposit. I’ve already gotten in touch with a solicitor and the idea is we draft a letter of intent, and then go through the legal process if this doesn’t work. The builder is a local one, and used to live in my neighbourhood, so they’re not someone who can do a runner easily. They also look like they have the means to pay back the money if the claim succeeded.

Congrats if you’ve made it this far!

TL;DR: Paid a deposit to builder to build a gin palace in November and signed a contract. Work was supposed to happen in March/April. Cancelled the build works in early January. Builder is efusing to return any of the deposit which is an amount enough to buy a very nice bike. Can we expect to see any of our money back?

There is no mention of the deposit being non-refundable.

Is there is any mention of it being refundable (other than for cancellation with 14 days of signing)?

In my experience there at a no point messing about with anything other than speaking to a solicitor. Once they’ve looked at the contract then if they think your case is decent, I would imagine a letter before action. That may or may not do the job. If not then next stop is court.

From what you’ve said, and only from what you’ve said it sounds like they are trying it on.

In short “no”. If you are able to get it back then that should be included in your application to appear on The Apprentice.

Your deposit was to hold your place and any initial expenses. You decided you are not doing the work. The builder has still organised their self around this schedule, pre ordered material. This is all still work that has been done, there may not be anything physical but work has been done on your job. Storage of martials cost money if it is to be used on another job as you suggest. So, from a common sense perspective, I would not expect a full refund but perhaps 50% if I was lucky, and would approach them about that basis.

I’ve no idea who came up with the idea of “refundable deposits”, surely the whole point is you’re making a commitment and they aren’t refundable? I think you’ll find that’s the default position legally, I.e. it doesn’t have to say it’s non-refundable, because that’s what a deposit is! The builder will have incurred costs, even if just time, and will have turned away other work for you (even if he’s exaggerating this!)

I don’t get why people expect all or some of a deposit back. Otherwise what the hell is the point of the deposit. It’s a commitment from the buyer to the supplier. If the supplier bails, fair enough, deposit returned. If the buyer bails, deposit gone. Simples surely?

Tough sh!t I reckon, a deposit is typically non refundable unless it states its refundable.

Next time understand what the real purpose of a deposit is.

It sounds like you’re being pretty unfair to the builder by going legal in an attempt to get it back. The deposit is a commitment (a statement of confidence if you like ) from you to enable the builder to start the process of doing your job, if you pull out they keep the deposit. For them to start doing your job they will have had to turn down other work, order materials , put in place hiring of subbies – potentially paying then up front to lock them into a date etc.

To be fair, i’d be happy that it was only a 5% deposit, reality is there are so many variables in this, you need to work out if it’s worth fighting, that would be my first step, then work out the best way forward from that.

In the current market of supply chain issues it’s highly likely they’ve secured materials for a build that’s due to start in a few weeks. Especially if it’s a good sized job which is what it sounds like it is.

And the bricks, timber and other materials for your project probably won’t be able to be used on another job for ages – a brick isn’t just ‘a brick’. So where will he store those? The back of his van?

I’ve no idea who came up with the idea of “refundable deposits”, surely the whole point is you’re making a commitment and they aren’t refundable?

Ad-men for people like DFS! Then followed by pages of legal guff highlighting why you can’t have it back.

You’ll be lucky to get half back, if any.

This may turn into a careful what you wish for moment if they end up tallying up costs to show why they’re not returning it and they come out above your deposit amount.

Honestly walk away. I don’t think you will come out of this better off and the only people who will make money are solicitors.

As above really, your deposit saved a space in his calendar and lead times for materials are silly at the moment so they’ll have ordered in advance.

Other things like pricing your job takes time, and is costing him money if they get nothing from the job.

Be nice, and you might get something back if he manages to fill your space with another job and can use/cancel materials.

In the current market of supply chain issues it’s highly likely they’ve secured materials for a build that’s due to start in a few weeks.

Although I’ve not come across a building supplier that doesn’t accept returns (i.e. Jewson gives 30 days).
That said…. the sub-contractor bit is total rubbish and a “deposit” is probably non-returnable – certainly not 100% of it.

Joiner I had doing some work was late because previous people were cancelling a big job and upset that they weren’t getting deposit back. He went round to explain that they were about to be more upset when the windows arrived in a week’s time because the window co expect payment as per the customer’s stipulation in the contract.

If I changed my mind for any reason, I’d expect to lose my deposit.

What would be the point of any deposit if that wasn’t the case?

Why are you expecting to get it back? Why should you? (Apart from the fact that you’d like it back, because money.)

The builder was understandably a bit miffed, saying they’d turned away other work (10 jobs according to them), but they’d get in touch in a couple of weeks to let us know what was going on.

I think that as a self-employed person I’m going to be pretty frank and quantify and put in perspective the phrase ‘a bit miffed’ from the builders side.

I’ve had people do this. “Can we book you in for a few weeks at *insert date here*”. Then I get further phone calls from different clients saying are you available *insert date here*?. No I’m afraid I’m not. I’m already booked for those few weeks.

Then, at the 11th hour (and if you’re organised then yours qualifies as the 11th hour) you phone them to check up that its all going ahead and get “actually, no, theres a couple of jobs which we were expecting that haven’t come in yet, so we don’t need you after all”

I’m sure that he felt the same as I did, having turned away other work on the strength of it and now looking at having to find weeks worth of work. And I hadn’t even spent work on materials

So let me tell you that ‘a bit miffed’ is actually ABSOLUTELY ****ING LIVID!!!” and that when you said the job wasn’t going ahead he’ll have been calling you every **** under the sun, believe me.

And then when you asked for your deposit back he’ll have had to have been physically restrained by his wife from coming round and squaring up to you for absolutely taking the ****ing piss.

I’d cut your losses if I were you, take it on the chin and accept the fact that you signed a contract which you are now no longer honouring, and maybe in future have a bit more thought and consideration to the very real implications your decisions have on others

Sorry to be blunt, but I reckon the above is a pretty accurate and honest reflection of the present situation from his perspective.

Whatever your reasons for not proceeding, you are asking somebody else to take a substantial financial hit and then go through the ball-ache of reorganising their schedule/materials orders because you’re no longer honouring a contract that you signed

You’ve broken a contract. The builder is entitled to recover their costs to-date and their loss of profit on the contract.

I’d let it drop, you may find they counter-claim more than the 5% they’re asking for at the moment.

Talk to Citizen’s advice if you don’t want to pay for a solicitor.

What size deposit are we talking (5% of how much)?

And why isnt the building work going ahead?

Not that you have to say, im just being nosey.

I agree with the others saying walk away and leave it at that – a deposit is not intended to be refundable by definition and you’ve exceeded the 14 day exemption to this. It is extremely unlikely that the builder hasn’t incurred costs in terms of making and receiving materials in advance of your work especially in the current situation which is fairly desperate in the material supply game.

You’re lucky it was only 5%, more and more companies are requiring up to 50 percent in advance payment now to even secure any kind of delivery date at all.

It’s shit, but it’s the way things are now.

curiousyellow
Free Member

You are in the wrong here fella, let the deposit go.

And why isnt the building work going ahead?

I think this is the key…

If it’s due to serious illness or job-loss you may be able to appeal to their better nature.

If it’s just because you don’t fancy it anymore or have done your sums wrong, then tough.

Do remember if you lose the small claim (and you might) the builders costs can go against you. Can you afford this?

I think it’d be more reasonable to try to have a civil discussion about costs incurred and try for a compromise in acknowledgement that they are likely to be able to use any materials purchased, but that there have been costs to them in terms of planning, procurement and time spent arguing with you.

But basically I wouldn’t expect to get a deposit back if I’d just changed my mind.

@mefty the contract makes no specific mention related to the deposit. Interestingly, when approached, they referred to the contract.

@TheBrick I understand your point about materials storage. Contractually, the builder is obliged to notify us of any materials ordered for our work. We have had no notification of any costs. I’d be happy to try and offer a compromise but I’m not confident of reaching one. In any case, the legal route offers a mediation service.

@argee yes, I’m definitely not interested in any prolonged legal issue. However, we worked hard to earn that money. If they’ve done work for us for that amount of money, then I’d like to understand what it is.

@the-muffin-man they said they’re not going to even think about the job until after Christmas and we’ve had no contact from them since signing the contract last year. I’m assuming if there was money due, they would be invoicing us for it (which according to the contract they are).

@db I’m definitely not interested in fattening anyone else’s bank balance. However, seeing that the contract is what the builder is referencing and it makes no mention of the deposit I would like to know where I stand.

@binners thanks. That certainly puts things in perspective. It’s not a decision we came to lightly, I assure you.

Looking at the contract from a purely legal standpoint (and I am not a lawyer) keeping the entire deposit without performing any work, without evidence of materials being ordered for it feels like a disproportionate penalty.

Looking at the contract from a purely legal standpoint (and I am not a lawyer) keeping the entire deposit without performing any work, without evidence of materials being ordered for it feels like a disproportionate penalty.

Not performing any work? Mate the guy will have been planning your extension, doing pricing, sorting out staff, placing orders etc etc. And now as well as cancelling all that, they’ve got to go out and fill in a few weeks gap in their schedule that you’ve now left them with.

5% is more than reasonable.

Brew anyone!? Could be a long one!…

@seosamh77 the only pricing supplied so far was as part of the initial quote. I’m not saying for one second that they’ve done absolutely nothing and I’ve worded my previous post badly. Given the advance notice (close to 3 months), I’d have hoped they could bring work forward to fill the schedule, or obtain new work given the demand. I realise they’re not obliged to do so.

@the-muffin-man I did laugh at that. Thanks!

It’s not a penalty though, is it. A deposit is a sign that you’re committed to undertaking the work. If you could just go “sorry, changed my mind, I’ll have my money back thanks” months later then there would be little point in asking for a deposit in the first place.

What costs the builder may or may not have incurred is an irrelevance. “Reasons cited” is an irrelevance, they don’t owe you an explanation. You are in breach of contract. Fin.

You might get lucky. The builder might be receptive to extenuating circumstances or even just to you asking nicely. But I highly doubt that going legal will make either party any richer. Sorry.

Why aren’t you going ahead with it?

I’d have hoped they could bring work forward to fill the schedule, or obtain new work given the demand. I realise they’re not obliged to do so.

Bringing work forward still leaves them with a gap to fill elsewhere.

Gov.uk website information on deposit refunds for goods and services –
https://www.gov.uk/government/publications/cancelling-goods-or-services-guide-for-consumers/cancelling-goods-or-services

Based on what you posted the builder doesn’t appear to have made attempts to defray the cost of any materials actually purchased; your cancellation gives him the potential to pull other jobs forward – has he done that; his claim about subbies doesn’t stack up but managing/retaining subbies is his problem, not yours.

You are within your rights to ask for evidence of advance purchase materials with evidence that he cannot return them or cancel any orders; there may be a cancellation or returns charge but it’s for the builder to prove that to you.

Have you contacted the federation of master builders to question how robust their contract template is?
Is a 14 day no fault cancellation clause reasonable – in stricty legal terms?
The template will have been written 100% in favour of the contractor and assumes a client will neither read nor challenge it.

Don’t walk away from this without having a good go at recovering your money.

Well, I sit corrected.

To be fair, i’d be happy that it was only a 5% deposit

So much this. Don’t be a dick and accept your loss.

Bringing work forward still leaves them with a gap to fill elsewhere.

Unless they are not very good at all, they will soon fill in any gaps with the market the way it is at the moment.

Gov.uk website information on deposit refunds for goods and services –
https://www.gov.uk/government/publications/cancelling-goods-or-services-guide-for-consumers/cancelling-goods-or-services

Non-refundable deposits should only be a small percentage of the total price.

5% seems like a small percentage to me.

Also see
https://www.which.co.uk/consumer-rights/advice/can-i-claim-back-a-non-refundable-deposit-aHwOj3S21AWP

Note the references to unfair contract terms.

@Cougar definitely asked nicely. I don’t feel comfortable discussing why it’s not going ahead unfortunately.

@seosamh77 good point. I’d have hoped one of the jobs they’d turned away would match the gap left, or soften the blow. It doesn’t seem like the worst time to have work fall through judging by the amount of construction going on around me right now.

Could I try and understand why the legal approach is being met with opposition? If I were in a position where work had commenced and I was unable to pay, then I’d not expect the builder to swallow the loss if they thought they could recover their money that way.

I’m not sure any legal argument would even get as far as the builder having to justify keeping the deposit with mateials orders etc.

Really you paid the deposit to secure the job to be done – it was secured.

Think of it another way, if you put a deposit down on a package holliday and then decide you don’t want to go…what would you expect the outcome to be?

5% seems like a small percentage to me.

Is taken completely out of context; read the guidance in full.

@frankconway thank you!

@Aidy it’s still money we’ve had to work hard for.

@johndoh I don’t understand the position here. If they can find work to fill the gap they’d not have lost any money. At that point, is it still acceptable to retain a deposit in that case?

matty – refer to the gov.uk website and read the Which guidance; these are published to help ensure clients/customers are not subject to unreasonable/unfair contracts and have a better understanding of their legal rights.

The OP has the legal right to pursue this – and should.