Contractor Went Out Of Business After Starting Work In Minnesota: How To Protect Myself Legally?

Starting a construction project typically takes a lot of planning and careful consideration, especially when deciding what contractor to hire to do the work. Sometimes homeowners experience common problems with their contractor, like budget overages or delayed completion of work. In these situations, you may be wondering what recourse a homeowner has if a contractor went out of business after starting work in Minnesota.

Going Out of Business

Unfortunately, like many small businesses, construction companies experience high rates of business failure. There were 941,000 construction establishments in the US in 2024, including 18,400 in Minnesota. According to data from the Bureau of Labor Statistics, 19.1% of construction businesses fail in the first year of operation, 44.1% within the first five years, and 57.1% within 10 years.

Many new residential home communities are being built in Brainerd, Breezy Heights, and the Pequot Lakes region in Minnesota. There are an estimated 2,306 general contractors in Minnesota, with 8.6% of all general contractors operating in Minneapolis.

Hire a Construction Contract Dispute Lawyer

If your residential general contractor has disappeared from your work site because they went out of business, they may be in breach of contract. A contract dispute lawyer can help you navigate this complex legal process. The team at Minnesota Construction Law Services understands this issue from both sides. Founder and Principal Attorney, Bill Gschwind, worked for years in both construction and business before entering the legal profession.

A contract dispute lawyer can review your contract and determine if you can file a construction contract case to collect damages for work that was not completed or additional costs that you may incur to complete the work.

It may be prudent to attempt to contact your contractor through a registered letter. A registered letter requires a signature and may prompt your contractor to resume contact with you.

Another option can be to consider withholding payment in cases where your contractor is not showing up and claims to have gone out of business. Often, funds are released at certain milestones in the project. If the contractor quits before achieving these milestones, further payments may be suspended.

A contract dispute lawyer may be able to determine if the contractor carries performance or liability insurance. If the contractor is insured, you may be able to file an insurance claim for incomplete work. A lawyer can help ensure the claim is filed properly with the appropriate documentation.

Tips for Hiring a Residential Contractor in Minnesota

If you are looking for a reputable residential general contractor, following these steps may be helpful:

• Verify the license number with the Minnesota Department of Labor and Industry
• Request references and find out how long they have been in business
• Request a local telephone contact number for the business
• Verify that they have a physical business address that is not a post office box
• Use the state court system’s online tool to check for any litigation history

Minnesota Contract Dispute Attorney

When you encounter an issue with your residential general contractor, the experienced team at Minnesota Construction Law Services can help. If you are experiencing a miscommunication, misunderstanding, or a disagreement related to the terms of your contract, our attorneys have a deep understanding of construction contract law and can offer legal guidance. Contact our office to schedule a consultation.