Contractor dies after putting a deposit down for work

[Andy Rousch]

So I purchased a rental property which needed some foundation work. In the sale agreement the seller gave the contractor a check to start work on the foundation after closing. The contractor had a stroke and passed away before starting the work or ordering material. Of course I will go to the family for a refund (and will feel like an *** asking for one at this time but business is business) but if the money has already been spent any idea what happens then? do I just take the loss as the sole proprietor of the contracting company has passed? Although it sucks this is a new lesson to be learned in the books for me! any advice is appreciated!