Actual Loss (Home Improvement)

Actual loss is the amount of money that the state decides a creditor is actually owed due to an improper job. In home improvement law, actual loss is the amount of money that an individual can gain from the Guaranty Fund, not to exceed $10,000.

Actual loss is calculated in one of three ways :

When Actual Work is Not Done
If the contractor, or subcontractor abandoned the contract without doing any work, the actual loss shall be the amount the homeowner paid to the contractor, or subcontractor under the terms of the contract.

When Some of the Actual Work is Done
If the contractor, or subcontractor partially and properly completed some of the work which was agreed to under the terms of the contract, the actual loss shall be totalled by adding the amount of the reasonable cost of completing the contract and, if necessary, repairing the contractor's, or subcontractor's defective performance, and by subtracting the part of the contract price that has not been paid by the owner.

1) Determination of Grossly Underbid Contracts . Upon a determination by the arbitrator or OCABR that the contractor, or subcontractor grossly underbid the contract with the result that competent workmanship to finish the contract will cost significantly more than the original contract price, the actual loss will not include the owner's cost to complete the contract.

2) Calculation for Grossly Underbid Contracts.  Upon such a determination, the actual loss shall be the amount which the owner paid to the contractor or subcontractor, minus the value of any work properly completed, minus the cost of any materials properly used, plus, if necessary, the cost to correct that portion of the contracted work that was improperly completed.

When All of the Work is Done, But Done Improperly
If the contractor, or subcontractor fully but improperly completed work that was agreed to under the terms of the contract, the actual loss shall be the amount required to correct the improperly completed work.