Why a contractor gets a deposit and a written contract .

[Matthew Paul]

I received an email this afternoon from a customer we are contracted to do an addition on in 2 weeks  . The customer informed me that he can no longer do the project , wishes to cancel and get his deposit back , says the recent stock market drop hit him hard and he can no longer afford to do the addition . 

I called  him and said he needs to send me that in writing .I had to explain to him there is no money to return . And to also read the paragraph in the contract about canceling and liquidated damages . I had to remind him that deposit has already paid for permits , engineering , surveys , cinder block already on site . And since this job had a 40 day completion , this amount of the companies time has been blocked out . 

Naturally he is a bit upset , and says that we can go right on to the next job . I had to remind him that it took 4 months to get his permit , and yes we have permits for other jobs in the process but they arent due for final review for 30 days . The deposit will almost cover his contractual obligations . I did tell him I will transfer the permits to his name and as long as he gets 1/3 of the work done in the 1 year , he can extend the permit . ( permits engineering reforest bond etc over $12K already spent ) . I told him I also took a hit on paper in the market but he wont be getting any deposit back as per the contract . And the cinder block is his . 

Needless to say he is not happy .