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Navigating Abandonment of a Construction Project

No construction or real estate developments goes completely as planned. Despite the expectation that modifications will likely be necessary to finalize a project, far too many parties suffer losses related to these projects. 

In California, abandonment of a project without legal excuse gives rise to a legal claim. An abandonment occurs if there was a material failure to complete any construction project or operation for the price stated in the contract or in any modification of the contact. If abandonment occurs, litigation likely follows. 

Disputes most commonly arise when the parties fail to retain a paper trail. Therefore, to limit litigation, document everything. Change orders can offer protection, but they must be in writing. Handshakes or oral promises are not sufficient. Rather, obtain written agreements signed by the contractor, and retain all documentation provided by the contractor, including invoices, receipts, work estimates and change orders. 

If the construction project has been abandoned, take photographs and/or videos of the job as it appears. To mitigate damages, preserve any leftover materials that a new contractor may be able to use. 

After gathering all necessary documents, it is best to send the contractor a registered letter requesting a settlement and reasonable reimbursement based on the value of the outstanding work. In that settlement demand, it is best to include copies of documents to substantiate claims. To increase the chance of receiving a timely response, set a firm deadline and clarify that litigation will commence if no timely response is received. 

If the contractor does not respond to a settlement demand, there are several options: (1) Report the contractor and their businesses or locations to their licensing board to ensure that the regulatory body for the construction profession gets involved; and/or (2) If the contractor has not returned money owed and/or business was in relation to the abandonment, litigation to recover damages can commence.  

If you have an issue with potential abandonment of a construction project, whether you’re the contractor or the landowner, contact Bremer Whyte Brown & O’Meara, LLP to assist.