What Can You Do If You're Defrauded By A Contractor For Work On Your Home

Watching a contractor walk away with your hard-earned savings while leaving your house in shambles is a nightmare that no homeowner wants to experience. It's important to spot the telltale signs that you're being scammed by your home renovation contractor, such as taking money for work they never intended to finish or intentionally misleading you. These issues are different from a simple lack of communication or a project running behind schedule. While a frustrating contractor might be slow to respond to texts, a fraudulent one often shows specific patterns: they disappear for weeks after receiving payment or perform work that doesn't meet building codes. If you find yourself in this situation, you may be able to file a claim against their bond, pursue the insurance company, report the contractor, or take legal action.  

Your first move should be to cut off all communication regarding future work and secure every piece of evidence you have on hand. Get all of your signed agreements, receipts, proof of every payment, and a log of all text messages or emails sent during the project. Taking clear photos of the mess left behind serves as a physical record of the failure to finish the job. Having this type of proof serves as your primary defense when you try to get your money back, and some states even have a special fund to reimburse homeowners who were tricked by licensed professionals. Moving quickly to get your records in order will significantly improve your chances of recovering what you lost. 

Your first contact should be the state licensing board, whichoversees the professional conduct of builders in your area. Because they have the authority to pull a license or fine the individual, reaching out to them often motivates the contractor to make things right. You can also find out if your contractor carried a surety bond, which allows you to file a claim against that bond for a payout without the hassle of a long trial. Once you know the surety company, contact their claims department with your contract, proof of payment, and evidence of the unfinished work. Checking the status of their insurance policy is another way to recoup costs, especially if their work caused damage to your home. 

For those who cannot recover funds through a bond or insurance, state contractor recovery funds offer a safety net, though they're usually only available after you have already exhausted other options. Most states require you to first win a civil judgment or a criminal restitution order before you can apply for a payout. Aside from the licensing board, the consumer protection office within the state attorney general's department handles serious cases of business fraud. You should also file a report with the Federal Trade Commission to help track scam patterns or notify local police if the situation involves a criminal act of theft. 

Notifying your local building department can also help, since they can prevent the contractor from pulling new permits in your town until the project is resolved. While these steps help after a problem occurs, it's always best to ask a contractor these questions before hiring them, such as whether they're licensed and insured and whether they hire subcontractors. 

Heading to court is often the only way to force a dishonest builder to pay for their mistakes. If the amount you're trying to recover is under a specific limit, which is usually around $5,000 to $10,000, depending on where you live, small claims court is your best bet. You can represent yourself in these hearings to keep the legal costs low while still getting a ruling from a judge. The process involves filing paperwork at your local courthouse and ensuring the contractor receives formal notice of the suit. Before taking this step, sending a demand letter via certified mail is often a legal requirement that proves you tried to resolve the issue privately first. This letter should clearly state the specific contract issues and provide a deadline for a refund before you proceed with the filing. 

For major renovations where the financial loss is significant, hiring a lawyer to file a civil lawsuit might be necessary. Some states allow you to ask for triple the damages if you can prove the person acted with the intent to scam you. This type of approach — which often helps fix the mistakes everyone makes when hiring contractors — puts pressure on the business owner to resolve the problem quickly.