The client cancelled after you ordered materials

Your contract decides most of this. In general, you can ask for what you've actually spent and can't get back, like non-returnable special orders and restocking fees, plus any work already done. What you can keep beyond that depends on the contract and your state.

A contractor posted that a customer had decided not to go ahead with a remodel. He'd already used the deposit on special-order materials. Now the customer wanted the deposit back, and he had cabinets nobody else could use.

What to do now

1. Check whether the client can cancel without cost. If the sale was made in their home, federal and state cooling-off rules may give them a few days to cancel. See cancelling a home improvement contract.
2. Call the suppliers today. Find out what can be returned and what the restocking fees are. Every return lowers what you have to ask for.
3. Write up an honest account. Deposit received, minus what you spent and can't recover, minus any work done, equals what you owe back or what they owe you. Attach the receipts.
4. Offer the materials to the client. They paid for them, after all; they may want them.

Next time

• Say in the contract which items are special orders and non-returnable.
• Collect for special orders before you place them, as their own payment, and keep the receipts with the job.
• Write how cancellation works: what's refunded, what isn't, and how work already done is paid.

Check your state's deposit limits when you set this up. Some states cap the down payment on home improvement jobs, and a large deposit for materials can run into that cap.

The account, worked through

Say the deposit was $4,000. You'd ordered custom cabinets for $3,100, which the maker won't take back, and $600 of hardware the supply house will take back with a 15% restocking fee, so $90. You'd spent half a day measuring and drawing, which your contract prices at $300. That's $3,490 you can't get back, so you'd return $510 and hand over the cabinets, which the client paid for. Put that on one page with the receipts and the cancellation date. A client who can see every number is far less likely to fight it, and if they do, a judge can follow it in a minute.

This is general information, not legal advice. States differ on what a home improvement contract and its changes must contain. Check with your state’s contractor licensing board or an attorney.