Getting deposit back from builder after canceling

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

Not really, “a non refundable deposit” in that guidance is clearly different from a cancellation charge.

That’s not to say the OP has to roll over and accept that the deposit is non-refundable just that is not the same as a cancellation charge.

Really a lot of this will be down to the money involved, if the deposit is on a few grand of work it’s probably not worth the time to fight it from the builder’s point of view if the OP decides to go down the legal/shouty route.

If it’s on a few 10s or 100s of thousands it probably is but at that stage, it’s unlikely they’ll struggle to provide the evidence required to at least make this a visit to court, at which point the OP needs to consider this might well end up much more expensive expensive than 5%.

As I said above, careful what you wish for.

your money.

It’s not his money until he has proved or the builder hasn’t proved he incurred those costs. At the moent the OP has paid a depsoit and broken the contract.

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

I wasn’t saying it wasn’t. I was just quoting the gov website guidance.

curiousyellow

@johndoh I don’t understand the position here. If they can find work to fill the gap they’d not have lost any money.

If they find work to fill the gap(they more than likely will), are you willing to pay the difference if it’s not to the same value?

Just saying you seem to be making a lot of assumptions that this is cost neutral to the builder.

. 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?

That depends, if they pull forward a job from two months later than yours they fill your space, but they might not then fill the space in two months, it’s only really filled if there’s new work to plug the gap.

Those other jobs may also need things which can’t arrive in time and so on. They might need twice the amount of hours your job did, or half and so on.

In theory it’s all easy. In practice, who knows.

There is no provision for repayment so therefore you are essentially arguing it is a penalty or unreasonable amount, I think you will struggle to find anyone who would think a 5% deposit is unreasonable.

See, for me, I see that as a deposit to secure services, which you’ve done. That you decide not use those services then that’s your issue and not his.
He may feel generous and give you some back, but he equally may not.

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

As has the builder, quoting, designing, organising and materials.

Even if they can fill the slot, there’s still all the admin they had to do to price up the job, order materials, schedule sub-contractors. It’s not inconceivable that they’ll have cancellation charges to pay themselves.

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.

From what I can see, the OP would only be entitled to a refund of the deposit if the contract was unfair – I’m not seeing how it was unfair, the deposit is to cover risk for the builder in exctly an event like this, or if the builder cancelled, breaking the contract.

It’s the OP who appears to be breaking contract?

See, for me, I see that as a deposit to secure services, which you’ve done. That you decide not use those services then that’s your issue and not his.

This is my thinking, BUT if the contract doesn’t reflect that and you have no ethical qualms pursuing it, then you should.

What is right and what the contract says/allows can often be different.

One point of the deposit is so that once you’ve booked a place in their schedule you don’t muck around and cancel without suffering a penalty. That’s happening here.

OP – at what point in time would you consider it ok for them to keep your deposit if you cancelled?

or is the answer – its never ok to keep my deposit.

I don’t feel comfortable discussing why it’s not going ahead unfortunately.

With us or with the builder?

With us, fair enough. With the builder though, if there are extenuating services then you may need to decide when is more important to you, feeling uncomfortable or getting your money back. I would hope that any reasonable tradesman would appreciate the difference between “we don’t want you to do the work any more because I can’t be arsed” and “we can’t go ahead with the work because the money had to go on granny’s funeral costs.”

For my sins I’m an architect, one piece of advice I give any potential client I go to see whether I am employed by them or not is do not pay anything upfront. sorry you probably don’t want to be told that.
There is no reason to do so – all contractors have trade accounts – these are paid for 30+ days down the line from order.

You did right by using a contract at least – never ever start a job without a contract, the other pice of advice any other competent professional would give.

Federation of master builders contract is okay, I use the JCT Homeowners Contract – plain English campaign endorsed and very simple to use & fill out. I use it for 90% of the domestic jobs I do.

Getting your deposit back, I think you’ll be lucky as the contract says 14 days and this has passed.

However, you should have been talked through the contract by the person proposing it (I do this to ensure all clients are aware of what they are signing upto – I am required to do this to avoid any misunderstanding by a client and would if it went to court explain why I choose that contract). You should have then had it explained to you why this contract was appropriate for the job concerned. If you didn’t a solicitor might be able to argue that you didn’t understand the conditions / weren’t made aware of them.

hope this helps

I sincerely doubt that a contract produced by the FMB will be judged ‘unfair’. (& was the 5% deposit in the contract anyway??)

As I said further up, if you break a contract then you’re liable for the other party’s loss of profit and direct cost.

5% is cheap in my opinion (they were probably hoping to make 5% profit on the job and will be able to show some direct costs too (time spent by management etc)).

one piece of advice I give any potential client I go to see whether I am employed by them or not is do not pay anything upfront. sorry you probably don’t want to be told that.

But surely that relates more to paying for materials up front etc.? I’d say a deposit is different, just to hold a place in a queue and to cover any pre-job costs would be enough to justify a 5% deposit.

If I were in the OPs position I can see why it stings and it’s hard to just let go (especially if that 5% is in the £thousands) but given it was a deposit to secure the builder’s services and not to cover material costs etc. I really don’t see how you can think it’s reasonable to expect the deposit to be returned. Sure, it’s worth asking as the builder may throw you a bone but if they’ve said no then it’s time to walk away.

As someone who buys a lot of materials in big and small quantities the worst restocking fee I have ever had was 5%. And many builders merchants are currenty short of materials and waiving all restocking fees.
OP needs to heed advice above and should only pay for the builders proven loss.

There will be intangible costs though, if the builder subbed out a roofer and a sparky for example, thier time has essentially been wasted too and there’s also loss of reputation of the builder has cancelled the subbies etc. etc.

What are the OPs actually grounds for wanting the deposit back?
“I want some money” isn’t sufficient grounds.

If he’s prebought the materials, dont those now belong to you ?.

@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?

Robust legal advice on that point is likely to cost more than your deposit! Note that the CMA says they can charge you for loss of profit as well as direct costs etc… Reshuffling the jobs is not without its costs. Someone has to call all the people in the pipeline, someone has to call all the suppliers, someone has to contact the subbies who were lined up to do the plumbing or electrics, that’s a lot of moving pieces any of which can trip you up and make you go back to the start, cost you more etc.

Does the contract have an arbitration or dispute resolution clause? I’d expect a trade association in construction to have something like that. Beware – depending what it says talk of going to court may at least be premature, and in some cases make going to court the worst course of action.

For my sins I’m an architect, one piece of advice I give any potential client I go to see whether I am employed by them or not is do not pay anything upfront. sorry you probably don’t want to be told that.
There is no reason to do so – all contractors have trade accounts – these are paid for 30+ days down the line from order.

That’s handy, I’m thinking of remodelling the house – could you pop over and do some drawings for me.

do you credit check domestic clients? probably far more effective to ask them for 5% upfront – the dreamers, people with no money, or no agreement from the other half to spend the money, or who need to sort out a loan are suddenly forced to get things in order.

However, you should have been talked through the contract by the person proposing it (I do this to ensure all clients are aware of what they are signing upto – I am required to do this to avoid any misunderstanding by a client and would if it went to court explain why I choose that contract). You should have then had it explained to you why this contract was appropriate for the job concerned. If you didn’t a solicitor might be able to argue that you didn’t understand the conditions / weren’t made aware of them.

. They MIGHT, but equally I’d never take legal advice from the person providing a contract or a builder in general. It might be appropriate to get advice from an architect on the type of contract used to manage a building project, and the architect’s professional body might expect him to advice the client on the suitability of that contract, but the builder almost certainly has no such professional obligation. If the sum of money is large enough then of course it would have been wise to ask a solicitor to review the contract – how big that sum is will depend on your own circumstances. However, builders are busy enough to walk away from clients who challenge their contracts just the same as they can walk away from clients who won’t pay 5% up front. I’m surprised all your clients can afford to be that selective in the current market.

If he’s prebought the materials, dont those now belong to you ?.

I’ve now got an image of the OP pranging their car as they turn into the drive and find 10 palette of bricks that weren’t there in the morning.

OP. If you do get anything back i’d be interested to know how so please report back when you are done. Cheers

We get one of these every few months. In my minds eye/imagination, I see a self entitled snowflake wah waahing at the unfairness of it all; ‘but why won’t he/she just roll over for me? It’s so unfair…’ etc.

Yeah it’s right someone else should take a swift kick to the plums and absorb your indecisiveness just because you’ve changed your mind. Fkc the change of circumstances, they’re not the builders fault… How about if he came back to you asking for more £££’s or time as his situation had changed. How accommodating do you think you’d be?

Wasn’t it Geordie Mick last time with car purchases or some such?

I’ve not come across a building supplier that doesn’t accept returns

A lot of places won’t be paying back 100% refund. Pick up /delivery costs, etc.

If I were the contractor (I am, but not for op) I’d be keeping the deposit and saying go swim.

I got the distinct impression when we had our extension done that there wasn’t a huge amount of planning ahead by the builder, and he relied heavily on the merchant delivering next day. This was in 2020 so there were materials shortages due to covid.

So many bullish comments qbout someone else’s money – most ignoring legal rights and government guidance.
The OP’s builder is likely thinking…they won’t challenge, they’ll swallow losing the deposit.
I’m very clear about what I would do – and how and why – and it doesn’t involve rolling over for a builder.

I wouldn’t get too excited about ‘Govt guidance’. Have you seen them?

It’s very telling from these comments who’s been self-employed/run a business or understands what that entails, versus those who just look down their nose at the “little people” such as tradesmen, business owners etc – who have the bare-faced cheek to try to earn a living for themselves and try to support their families, employees etc and should just be bloody grateful that you even considered using their services as it is your god-given right to piss them about as you see fit 😉

and it doesn’t involve rolling over for a builder

So the builder should roll over for an individual because they have changed their minds despite committing to the work? I am glad I don’t meet people like you in my business.

It’s very telling from these comments who’s been self-employed/run a business or understands what that entails, versus those who just look down their nose at the “little people” such as tradesmen, business owners etc – who have the bare-faced cheek to try to earn a living for themselves and try to support their families, employees etc and should just be bloody grateful that you even considered using their services as it is your god-given right to piss them about as you see fit 😉

Very much this… you win the internet for me today

I’d be really interested to hear how this plays out –

deposit which is an amount enough to buy a very nice bike

let’s say a very nice bike is £2500, that’s 5% of £50k, so it’s a substantial building job that would require a lot of planning, prep, more than likeley the builder would need to sub parts of the job out to other tradesmen collegues, so before we even get onto materials, theres an administration/project management overhead.

I think it would be pretty easy for the builder to reasonably assert £2.5k in lost man hours, reputation, materials, general faffing about cancelling subbies, and any costs associated with that..

I wonder what the OPs solicitor has said about chances of success? I can’t see it personally, but IANAL.

I think some of it might depend on how much 5% actually is. If it was £2k, I can kinda see that the builder might have incurred those kinda costs. If it was £20k, I can see why you might want some of it back.

OTOH, 5% is 5% – more expensive projects have more expensive up front costs and planning.

he relied heavily on the merchant delivering next day.

They do.
And in the unlikely situation that the builder has already bought materials using the deposit then those materials belong to the OP.

there’s still all the admin they had to do to price up the job

Quoting costs money but companies quote for jobs all the time and never get them…. That’s just part of running a business.
If the OP asked for prices from 5 companies, then 4 of them would have incurred costs with for no return.

I amazed anyone sees ‘non refundable deposit’ on a contract, signs it thinking ‘yeah but not really 😏’.

Put the shoe on the other foot, you get commissioned to do a chunky bit of work, clear your calander to do it, losing out on other potential jobs and not only does the customer cancel, they expect thier deposit back?

I can’t see that that will fly in court.

What’s the point of tradesmen taking a deposit if you can just cancel and demand it back on your whim?

I don’t understand what you thought the deposit was for if you though that was the case?

Also, what zilog said.

I think some of it might depend on how much 5% actually is. If it was £2k, I can kinda see that the builder might have incurred those kinda costs. If it was £20k, I can see why you might want some of it back.

OTOH, 5% is 5% – more expensive projects have more expensive up front costs and planning.

Very good point actualy, but we can only speculate as we don’t have that information.

Quoting costs money but companies quote for jobs all the time and never get them…. That’s just part of running a business.
If the OP asked for prices from 5 companies, then 4 of them would have incurred costs with for no return.

That’s correct, except that’s not what’s happening here is it. Companies offer free quotations and until accepted you aren’t in contract with them hence they aren’t entitled to any monies if you decide not to pursue it any further.

As the OP was now in contract with the builder he is subject to the terms of that contract which (although we haven’t seen the actual contract) seems to say a deposit is refundable within 14 days, which has been exceeded.

Anything more than that regarding deciding what actual loss may have been incurred if any by the builder is academic unless he chooses to involve dispute resolution or litigation, surely?

Having had a look at a cheekily uploaded version of the federation of master builders contract which is stated was used, I can’t actually see anything relating to a deposit being due so I’m not sure why OP has paid a deposit in the first place.

Would be good to get some clarity from the OP on the payment terms in this contract.

“Would be good to get some clarity from the OP on the payment terms in this contract.”

IT would be good to get some clarity on his moral compass…