How to Cancel a Contract With a Builder

Written by brad chacos
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How to Cancel a Contract With a Builder
Most contracts contain termination clauses or fall under FTC guidelines. (contractor image by Joy Fera from Fotolia.com)

Performing repairs, renovations or new construction on a house often involves significant amounts of labour and supplies, as well as quite a bit of knowledge. Homeowners who can't or won't make the renovations themselves frequently sign a contract with a licensed builder to do the work for them. If a homeowner decides to halt work after a contract was signed, he'll have to cancel the contract with the builder. Contracts are legally binding, but many jurisdictions and contracts contain termination procedures.

Skill level:
Moderate

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Things you need

  • Copy of the contract
  • "Cooling-Off Rule" cancellation form

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Instructions

  1. 1

    Fill out the one of the cancellation forms provided by the builder if the work performed falls under the Federal Trade Commission's "Cooling-Off Rule," and it has been less than three business days since you've signed the contract. Write your own cancellation letter if the builder didn't provide one. Send the cancellation form via certified mail before midnight on the third business day to receive proof of both the mailing date and the receipt of the letter.

  2. 2

    Read the contract if you aren't eligible for the "Cooling-Off Rule" or more than three days have passed since the contract was signed. Contracts often provide specific dates or criteria involved with cancelling a contract.

  3. 3

    Notify the builder in writing that you want to cancel the contract. Deliver the note by hand or send it via certified mail for proof of receipt. Call the builder and let them know verbally if you'd like, but a letter is written proof of the cancellation notice.

  4. 4

    Pay the contractor for any materials already purchased or any work that was already performed. Request both a formal bill for the items and a receipt of payment. Depending on the structure of your contract, you may only be responsible for a portion of the material costs. The labour costs often depend on the stage of work completion for the project, and you may need to negotiate the dollar amount with the builder if the contract doesn't specifically list building milestones.

  5. 5

    Consult with a lawyer if the builder refuses to cancel the contract.

Tips and warnings

  • States and local jurisdictions often have their own right-to-cancel and cooling-off laws in effect. Check local guidelines when cancelling a contract.
  • The "Cooling-Off Rule" has a number of exceptions, including emergency repairs. Not all contracts have a three-day cooling-off period.

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