My Roofer Broke My Roof. What Can I Do If They Can’t Pay?

You did everything right. You checked the better business bureau. You looked at yelp reviews. You looked at Angies list. And still, you’ve got a leaky, unfinished roof because your roofer either did a terrible job or bailed on you.

Now they’re saying that it either wasn’t their fault or, more likely, they’ve stopped answering your calls altogether. Worse, it looks like they’re broke. You’re never getting your money back.

Seem familiar? This incredibly common circumstance doesn’t have to be the end. You may be able to still get your roof fixed without more out of pocket costs or chasing down a deadbeat.

If you’re in northeast Ohio, you may be able to recover the damage to your house without ever suing the contractor. This is because most municipalities, including Cleveland, require that general contractors have a certificate of registration. Cleveland Codified Ordinances 3107.02(a). Why does that matter? Because to get the registration a contractor needs obtain and file a $25,000.00 bond to guarantee that the work is up to code. Cleveland Codified Ordinance 3107.07(b)(4).

The bond, importantly, guarantees the work not just for the city, but also any person in the municipality for work that is not up to code. It is a strict liability provision, which means that it doesn’t matter why the work isn’t up to code, only that the contractor perform to code. Did they leave an unfinished, leaky roof? That certainly counts.

If that’s the case, you can recover on the bad work without ever even talking with the contractor. Instead you can make a claim against the bond company who provided the bond to the roofer in the first place. To do that, you’ll need to contact your municipality’s building department and get a few pieces of information (I recommend calling them rather than trying to find the information online). What you’ll need is:

1)The name of the bond company;

2) A copy of the bond; and

3) An inspection by the city to establish that the work is not up to code.
Once you have this information, you can make a claim against the bond company directly and force the bond company to pay you.

This can be especially valuable if the contractor doesn’t have insurance or is otherwise uncollectable. If you hired some guy working out of the back of a truck, it’s unlikely that you’ll want to try to collect on them when you could just have a bond company pay you instead.

This works because a surety bond is not insurance. An insurance policy transfers risk entirely to the insurance company; the insurance company shows a profit or loss based on whether paid losses exceed the total amount of pooled premiums. A surety has no risk — it has the contractual right of indemnity against the principal for any payment made to a third party under the bond. See Republic-Franklin Ins. Co. v. Progressive Cas. Ins. Co., 45 Ohio St.2d 93, 95, 341 N.E.2d 600 (1976) (“If the surety is compelled to make payment for damages caused by the principal, it has the right to seek reimbursement from the principal.”). In a sense, a surety bond is a form of credit — the only risk a surety faces to its right of reimbursement is that the principal might become insolvent and unable to pay.

The contractor license bond used in this case binds together the contractor (as the principal); the city (as the obligee); and bond company (as the surety). The terms of the bond usually state that it is to be held for the use of any person with whom the contractor shall contract to construct or remodel any building or structure in accordance with the Ohio Building Code and the city’s building code. The bond is payable to the city only if the contractor fails to “indemnify and pay” any person “for damage sustained on account of the failure of such Contractor to perform the work so contracted for in accordance with the provisions of the Codified Ordinances of the City of Cleveland[.]” In other words, if the contractor fails to fulfill the bond’s terms (compliance with the applicable building codes), a claim can be made on the bond as a way to gain compensation for any damages incurred for the contractor’s violation of the building code.

You, as the homeowner, are a third party beneficiary under the bond. You have the right to collect that an experienced attorney can help guide you through. All without ever filing a lawsuit.

Nick Weiss is the principal of NP Weiss Law. He can be reached at nick@npweisslaw.com, or via phone at 216-417-5111. npweisslaw.com.

This article is meant to provide general advice and does not create an attorney-client relationship with Nicholas Weiss. Your situation may be different, requiring a different analysis. Do not rely on this advice without first discussing your situation with independent counsel.