How do I get a refund of upfront payment that I made to a contractor?

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How do I get a refund of upfront payment that I made to a contractor?

I paid a contractor $13,000 upfront for materials to do the stucco on my house. He did not show for 2 months. I hired someone else to do the work. Now I cannot get the original contractor that I paid $13,000 to refund me for work he never did. He also never purchased any materials. I spoke with the one stucco supply company to find out that he never bought materials. How do I get my money back and why is this not theft?

Asked on August 18, 2016 under Business Law, Colorado

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

The key issue is, was there any start date for the work, which the contractor missed? If there was, then he breached the contract and you could recover on that basis; if he took no steps to start the work (e.g. buy the materials) before that date and lied about what he would use the money for, then he may also have committed conversion (a form of theft; keeping money entrusted to you, but which is for a specific purpose) and/or theft by deception (stealing by lying) and/or fraud (lying about what he could or would do, to get you to sign up with him). 
The case is much less clear cut if there was no agreed upon date which he missed; in that case, he may be able to successfully argue that he had not done anything wrong because the time to start had not come up yet (e.g. was finishing up other projects, and had not yet gotten to yours, but was going to do so in a few weeks). If he can convince a court of that, then *you* breached the contract by pulling the work to give it to a different contractor and he may be able to keep the money.
(For future reference: always make sure there is a written start date. If there are reasonable delays on either side, that date can be adjusted in writing--but having a written date puts you on much stronger ground if the work does not begin.)
The above is not to say to not sue for the money--suing is the only legal way to get it back--but to aware that without a written start date, it is not necessarily clear that he was legally in the wrong. In many areas, for example, like where I live (Northern NJ), it often takes 3, 4, or more months before a contractor starts work, so 2 months may not have been unreasonably long, when no date was specified.


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