My Contractor Never Finished the Project. What Can I Do in Texas?

Is walking off the job a breach of contract?

Yes, if the contractor stopped without a reason the contract or the law gives him. A contractor who leaves a project unfinished has failed to perform, and the owner may treat that as a material breach, stop paying, and look to the contractor for the loss.

The first check is whether the contractor had a right to stop. Most construction contracts let a contractor suspend work if the owner does not pay. On non-residential projects the Texas Prompt Payment Act also allows a contractor to suspend performance ten days after written notice that an undisputed amount is overdue (Tex. Prop. Code § 28.009). If payments were current and no dispute notice was sent, the contractor's departure is on him.

The second check is the termination clause. Many contracts require written notice and a chance to cure, often seven to ten days, before the owner may terminate for default and hire someone else. Skipping that step can turn the owner into the party in breach. Terminating a contractor for cause walks through those clauses.

What can the owner recover?

The measure most Texas courts apply is the reasonable cost of completing the work as the contract required, minus any part of the original price the owner had not yet paid. The owner is put in the position he would have been in had the contract been performed, not a better one.

On top of completion cost, an owner may recover other losses the contract does not exclude: the cost to repair defective work the contractor left behind, delay losses such as extra rent or lost use of the space where the contract permits them, and consequential losses only if the contract does not waive them. Many standard forms waive consequential damages on both sides, so read that clause before counting lost profits.

Attorney's fees are recoverable on a breach of contract claim against an individual or a business organization under Tex. Civ. Prac. & Rem. Code § 38.001, provided the claim is presented and not paid within 30 days. That statute does not reach every defendant, and the contract may have its own fee clause that controls.

Example

Suppose a Dallas restaurant tenant signs a $400,000 build-out contract, pays $300,000 in draws, and the contractor leaves with roughly three quarters of the work done. The lowest reasonable bid to finish is $180,000. The tenant's basic damages are $180,000 in completion cost minus the $100,000 still unpaid under the original price, so $80,000, plus repair of anything the first contractor did wrong and any delay losses the contract allows. If the tenant had hired the most expensive finisher without getting other bids, the contractor would argue the completion cost was not reasonable.

What should I do before hiring a replacement?

Document the state of the work before anyone touches it. Date-stamped photographs of every room and system, a written punch list of what is incomplete or defective, and copies of every draw request and payment form the backbone of the claim. Documenting a construction dispute lists what to keep.

• Send the notice the contract requires, in the way it requires (certified mail is common), and keep proof of delivery.
• Get at least two or three written bids for completion from contractors who have inspected the site.
• Ask the original contractor in writing for his list of subcontractors and suppliers and what each is owed.
• Do not pay the original contractor anything further until the lien picture below is clear.
• Keep the replacement contractor's invoices separate from any upgrades you choose to add, because only the cost of the original scope is recoverable.

Can unpaid subcontractors lien my property?

Yes, and this is often the larger problem. A subcontractor or supplier who was not paid by your contractor can secure a lien on your property by sending the owner a notice of claim and filing a lien affidavit on time (Tex. Prop. Code ch. 53). The owner is protected only up to a point: the owner must reserve ten percent of the contract price during the work and for 30 days after completion (§ 53.101), and once a subcontractor's notice arrives the owner may withhold the claimed amount from the contractor (§ 53.081). An owner who paid the contractor in full before any notice arrived is generally liable to subcontractors only for the ten percent he should have reserved (§ 53.084).

In practice that means checking the county records and your mail for lien notices before releasing any more money, and understanding that funds you still hold may be the subcontractors' best source of payment. How mechanic's liens work in Texas explains the owner's exposure in detail.

If the contractor collected your draws and did not pay the people who did the work, the Texas Construction Trust Fund Act (Tex. Prop. Code ch. 162) treats those payments as trust funds and can make the contractor's principals personally responsible for misapplying them. That claim matters when the company itself has no assets.

Does a residential project change the rules?

For a house, the Residential Construction Liability Act adds a required step. Before suing a contractor over a construction defect in a residence, the owner must send written notice by certified mail describing the defects at least 60 days before filing, allow inspection, and consider any written offer of repair or settlement the contractor makes within the statutory windows (Tex. Prop. Code § 27.004). Rejecting a reasonable offer can cap what the owner later recovers. The notice step applies to defect claims; a claim that is purely about unfinished work is a contract claim, but most abandoned homes involve both. The Texas Residential Construction Liability Act covers the timeline.

How long do I have to sue?

Four years for breach of contract, measured from the breach, under the residual limitations period in Tex. Civ. Prac. & Rem. Code § 16.051. Negligence claims generally carry two years under § 16.003. Claims about defective work are also subject to the ten-year statute of repose in § 16.009, which runs from substantial completion regardless of when the defect is discovered; for a project that was never completed, when that clock starts is itself a question for counsel.

When does this need a litigator?

Early, in three situations: when subcontractor notices or lien affidavits have arrived, when the contractor disputes that he abandoned the job and claims you owed him money, or when the amount at stake makes the cost of a careful termination worth it. A demand letter that lays out the completion cost, the documentation and the fee exposure often produces a negotiated payment or an agreed completion plan before anyone files suit. Where it does not, the claim is typically filed in the district court of the county where the project sits, or sent to arbitration if the contract requires it.

Tina Wysk represents owners and contractors in construction disputes in Dallas state and federal courts and in arbitration.