Contractor Did Bad Work: How to Get Your Money Back

The tile in the bathroom is lifting after four months. The slab has cracked. The paint is peeling along every seam. The contractor answered twice, promised to come back, and now goes to voicemail.

It feels hopeless — the money is gone, the crew is gone, and it's your word against theirs. In most cases your position is considerably stronger than it feels. Here's the order to work in.

First: was the contractor licensed?

Ask this before you argue about workmanship, because in some states it ends the argument.

Contractor licensing is enforced at state level in the US, and the penalties for working without one can be severe. California is the sharpest example: under Business and Professions Code §7031, an unlicensed contractor cannot sue to collect payment for work performed — and the person who hired them may bring an action to recover all compensation paid, even if the work was performed perfectly. The statute punishes the unlicensed status itself, not the quality.

Not every state goes that far, and the thresholds differ — in California the licensing requirement kicks in at $500 in labor and materials. But almost every state attaches some consequence to unlicensed work, and many make an unlicensed contract unenforceable against the homeowner.

Do this first: look up the license number on your state licensing board's website. Confirm it was active on the dates the work was performed, that the classification covers the trade, and that the licensed entity is the same entity named on your contract and your cheques. A license held by "ABC Builders LLC" does nothing for you if you contracted with "Mike's Remodeling."

Step 1. Document before you touch anything

Do this before the phone calls, before any patching, before another contractor sets foot in the house.

• Photograph and video every defect — wide shot for context, close-up for detail, with a level, straightedge or tape measure in frame where the issue is an out-of-tolerance condition.
• For moisture, mould or movement, shoot the same spot on several dates to establish progression.
• Collect every document: contract, exhibits, plans, specifications, change orders, invoices, proof of payment, permit records, inspection reports, and the entire message history.

Do not demolish, patch, or hire a replacement crew before this is complete. Removing the defect removes the evidence.

Move everything to writing. Text messages are generally admissible, but follow up by email to the address on the contract. A message where the contractor says "yeah, that's on us, we'll fix it" is worth more than any argument you can make later.

Step 2. Read the contract before you write to them

Specifically: the scope exhibits, the workmanship standard, the warranty or correction-period clause, the dispute resolution clause, and any notice requirement.

Two things matter most.

Notice and opportunity to cure. Many states have construction defect statutes — often called right-to-repair laws — that require a homeowner to give the contractor written notice of the defects and a chance to inspect and repair before filing suit. Skip that step and your case can be dismissed or stayed regardless of merit. Check whether your state has one and what it requires.

Dispute resolution. A binding arbitration clause, particularly with a distant venue, changes the economics of everything that follows. Know it before you commit.

Step 3. The demand letter

This is the pivot point. Done properly, a meaningful share of these disputes settle here.

Include:

• the contract reference and parties;
• a specific, itemized list of defects — by room, by trade, referencing the contract scope and, where you can, the applicable code or industry standard;
• one clearly stated remedy with a number: repair by a stated date, or payment of $X representing the cost to correct;
• a deadline;
• a statement of what happens next — licensing board complaint, bond claim, litigation;
• an attachment list: photographs, inspection report, repair estimates.

Vagueness kills demand letters. "The work is unacceptable" is not a demand. "Master bathroom: shower pan fails to hold water at 24-hour flood test; remediation quoted at $6,840, estimate attached" is.

Send it properly. Certified mail, return receipt requested, to the address on the contract and on the license record. Keep the receipts. Email in parallel.

Step 4. Get an independent report

If they refuse or go silent, you need a professional opinion. It converts "I don't like it" into "the deviation is X against a tolerance of Y."

Depending on the defect, that's a licensed home inspector, a specialty consultant, or a forensic engineer. Get repair estimates from two or three independent contractors as well — courts and boards want to see the number substantiated.

Notify the contractor in writing of the date and time of any inspection and invite them to attend. Otherwise expect an argument that the inspection was one-sided.

Step 5. Leverage that isn't a lawsuit

Most people jump straight to court. There are cheaper levers first.

License bond claim. Licensed contractors in most states carry a surety bond. Bond amounts are modest — often $10,000–$25,000 — but a claim is fast, costs little, and directly threatens the contractor's ability to keep working. For small and mid-size losses it's often the most efficient route.

Licensing board complaint. File it. Be realistic about what it does: boards discipline licensees — citations, suspension, revocation — and in some states can order restitution as a condition of keeping a licence, but they generally cannot award you damages. Money usually still comes from a bond, a fund, or a court. The value of the complaint is pressure and a documented record.

State recovery or guaranty fund. Several states — Florida, Virginia, North Carolina, Maryland and others — maintain funds that compensate homeowners harmed by licensed contractors. Note the sequencing: these are typically last-resort funds requiring a final judgment, arbitration award, or board restitution order first, and they're capped (Virginia, for example, limits a single claim to $30,000). Worth knowing about now, not something you file today.

Credit card chargeback. If you paid by card and are within the issuer's window, dispute the charge. Fast, free, and sometimes decisive.

Mechanics lien defense. If the contractor has recorded a lien against your property over the disputed balance, deal with it promptly — deadlines to contest are short and vary by state.

Step 6. Court

Small claims handles disputes up to a statutory limit that ranges roughly from $5,000 to $25,000 by state. No lawyer needed, filing fees are low, hearings come quickly. For a single defective trade, this is often the right forum. You can waive the excess to fit under the cap — sometimes worth it for speed and certainty.

Civil suit for larger losses. Before you commit, get a realistic estimate of cost and duration, and check two things: whether your contract has a prevailing-party attorney fee clause, and whether your state's consumer protection statute applies to home improvement work. Some state statutes provide for multiple damages and attorney's fees in cases involving deceptive practices, which changes the arithmetic substantially.

Deadlines you cannot miss

Two different clocks run, and people confuse them.

The statute of limitations starts when the claim accrues — for latent defects, often when you discovered or reasonably should have discovered the problem, not when the work finished.

The statute of repose is an absolute outer limit measured from completion or occupancy, and it can extinguish a claim even if you only just discovered the defect. It ranges from about four to fifteen years depending on the state.

Find both for your state early. A meritorious claim filed late is worth nothing.

What kills these cases

• Signing off on the work with no exceptions noted, when the defect was visible at handover.
• No written contract. You then have to establish the terms before you can argue about breach.
• Cash payments with no receipts. You can't prove what you paid.
• Repairing before documenting. The evidence is gone.
• A vague demand. No specifics, no number, no leverage.

Outside the United States

The structure of the remedy differs, but the sequence doesn't: document, check whether the trader is properly registered and insured, give formal written notice with a defined remedy, obtain an independent report, then use whatever statutory consumer protection and trade registration regimes exist in your jurisdiction. Defect liability periods in most European jurisdictions run substantially longer than the one-year warranties commonly written into contracts.

Where MEXUM fits

We handle the documentary side of the dispute. Upload the contract, the scope exhibits, the estimate, change orders, and the correspondence, and 14 specialist modules establish what the contractor was actually obligated to deliver, which obligations were breached, which code and standards apply, what your warranty position is, and where the contract shifts risk onto you. You get a written report in 24 hours — the raw material for a demand letter with specifics instead of adjectives.

To be clear about scope: we don't inspect your property and we don't replace a forensic engineer. We answer what you're owed on paper and what of that is provable. Often that's enough to decide whether the fight is worth having.

Reviews start at $99. Code TRYMEXUM covers your first one through August 31, 2026.

This article is general information, not legal advice. Licensing rules, notice-and-cure requirements, bond and recovery fund programs, small claims limits, and limitation and repose periods all vary substantially by state and country. Confirm the rules where your property is located, and consult a construction attorney on anything significant.