When the Scaffolding Stays Up: A Homeowner's Guide to Construction Contracts That Go Wrong

A half-finished extension in the rain is one of the most stressful positions a homeowner can find themselves in. The builder has stopped answering calls, the budget has quietly expanded by £18,000, and the contract — if you were given one at all — sits unread in a kitchen drawer.

At Bentley Law, construction disputes form a steady stream of our Dispute Resolution caseload, and the pattern is remarkably consistent: the outcome usually turns on clauses that neither party read carefully at the outset. Understanding those clauses before trouble strikes is the cheapest legal advice you will ever receive.

The Clauses That Decide Who Pays

Most residential and small-scale commercial building contracts in England and Wales — whether a JCT Homeowner Contract, a FMB standard form or a bespoke agreement drafted by the builder — contain four mechanisms that matter when a project falters.

Delay damages (liquidated damages). This is the sum the contractor pays per week for late completion. Many homeowners never notice that the figure has been left blank or set at a nominal amount. If the contract is silent on delay damages, your remedy is general damages for breach — which means proving your actual loss, a slower and less certain route. A figure of £150 to £400 per week is common for domestic extensions; on larger developments it can run to thousands.

Interim certificates and payment notices. Under the Housing Grants, Construction and Regeneration Act 1996 (as amended), contractors are entitled to staged payments, but each payment must be supported by a valid payment notice, and you have a right to issue a pay-less notice if you have grounds to withhold money. Paying cash on request without certificates strips away your leverage.

The retention. A standard arrangement holds back 5% of each payment (often 3% on smaller jobs) until practical completion, with half released then and half after the defects liability period — typically six to twelve months. If your builder is asking for 100% of interim valuations, ask why.

Practical completion and snagging. The date of practical completion triggers the release of retention money and starts the defects period. Disputes over whether a job has genuinely reached practical completion — as opposed to being merely "nearly there" — are frequent and consequential.

A Worked Example

Consider a typical scenario. A couple in Cheshire contract for a rear extension at £85,000, with completion in sixteen weeks and delay damages of £250 per week. The builder falls eight weeks behind, citing "unforeseen ground conditions."

The outcome depends on the contract. If the builder bears the risk of ground conditions (the default position in most standard forms), the couple can deduct £2,000 in delay damages from the final account. If a valid extension of time has been granted, those damages fall away. If the contract is silent, the couple must prove their actual losses — perhaps additional rent or storage costs — which is where disputes become expensive to run.

Adjudication: The 28-Day Referee

The Housing Grants Act gave parties to construction contracts a powerful and distinctive remedy: statutory adjudication. Either party may refer a dispute to an adjudicator at any time and receive a binding decision — usually within 28 days.

The advantages are speed and cost. The disadvantage is that the decision is temporarily binding: the losing party may still pursue the matter in arbitration or litigation later, though few do. For homeowners, adjudication is often the most proportionate route for claims in the £10,000 to £100,000 range, where court proceedings would take a year or more.

Note that the Act applies to most construction contracts but contains exceptions — most significantly, contracts with residential occupiers are excluded from the payment and adjudication provisions unless the contract itself incorporates them. Many standard homeowner contracts opt in. Check yours.

When to Escalate — and When Not To

Not every overrun justifies formal action. Before instructing solicitors, ask three questions:

1. What does the contract actually say? Delay damages, extension of time provisions and the payment mechanism will usually determine the answer more than the merits of the argument.
2. What would it cost to pursue? Adjudicator's fees, expert surveyor reports and legal costs can consume a modest claim. A rule of thumb: if the disputed sum is less than the realistic cost of the process, settlement is usually the wiser course.
3. Is there a relationship worth preserving? Where the builder is still on site and capable of finishing the work, a structured settlement — often a without prejudice meeting and a revised programme — frequently delivers a better result than a victory on paper.

Practical Steps Before Dispute

• Put every concern in writing, dated and factual, from the first sign of slippage.
• Keep a photographic record of progress and defects.
• Never make final payment while defects remain unremedied and the retention is unfixed.
• Consider a professional inspection by a chartered surveyor before practical completion is accepted.
• Preserve the contract, drawings, variations and all payment notices in one file.

A Final Word

Construction disputes reward preparation and punish delay. Limitation periods, the terms of your particular contract and the availability of adjudication all have time-sensitive dimensions. If a project is drifting off course, early advice — even a single consultation to review the contract — is invariably cheaper than a dispute conducted after the builder has left the site and the money has gone.

Bentley Law advises homeowners, landlords and small developers on construction contracts and disputes, including adjudication proceedings under the Housing Grants Act. Contact us for an initial consultation.