What should an HOA board do when a contractor abandons a project?

By OurHOA · General information · Revised September 28, 2026

What an HOA board does when a contractor walks off the job: document the default, send a cure notice, claim the bond, hold back payment and hire someone to finish.

Part of the HOA board handbook: vendors, projects and upkeep.

The short answer

When a contractor stops showing up halfway through a roof or a paving job, protect the unpaid balance, the bond claim and the property. Stop all payments the day the crew disappears. Send a written notice of default that follows the contract's termination clause, give the cure period it requires, and only then terminate. If the contractor posted a performance bond, notify the surety before you hire anyone else. Then clear the lien exposure and bring in a completion contractor under a new, tighter contract. The order matters. A board that fires the contractor by text and hires a replacement before telling the surety can lose the bond claim and invite a countersuit for wrongful termination. Rules vary by state and by your governing documents and contract. This guide is education, not legal advice, and a stalled project of any size is worth an hour with the association's attorney before the termination letter goes out.

Confirm it is abandonment and not a slow job

A supplier backorder or a pending inspection can stall a job for a week. Before treating silence as abandonment, call and then email the contractor asking for a written schedule to finish by a stated date. Keep the reply, or the lack of one. State law gives some useful markers. Florida section 489.129(1)(j) lets the licensing board discipline a contractor for abandoning a project, and a project may be presumed abandoned after 90 days if the contractor ends it without just cause or proper notice to the owner, or does no work without just cause for 90 consecutive days. Section 489.129(1)(g) separately covers a contractor who abandons a job when the percentage of work completed is less than the percentage of the price already paid, unless the contract allowed it or the difference is refunded within 30 days. In Colorado, section 38-22-109(7) treats a three-month stop of all labor and materials on an unfinished job as the equivalent of completion for lien filing deadlines. Your contract may set a much shorter trigger, such as 10 working days without work. Read it first, because the contract usually controls what the association can do and when.

Build the file before anyone argues

Within the first few days, pull together the signed contract with every change order, the payment log showing each draw and what it paid for, lien waivers received, the permit and inspection record, emails and texts with the contractor, and the notice of commencement if one was recorded. Walk the site with a camera and date-stamp photos of every area: what is finished, what is half-done, what materials sit on site, and anything left unsafe, such as an open roof deck, an unfenced excavation or exposed wiring. Make the site safe right away. A tarp on an open roof or a rented fence around a trench protects owners, and the cost can be claimed later as damages. Then compare work in place against money paid. Paying 60 percent of the price for work an inspector calls 35 percent complete is the core of the claim.

Send the cure notice, then terminate by the contract

Most construction contracts allow termination for cause only after written notice and a cure period, often 7 to 10 days. Send the notice to the address and by the method the contract names, and keep proof of delivery. If the contract requires notice to the surety or an architect as well, send those copies the same day. A cure notice can read: "Under section [number] of the contract dated [date] between [association] and [contractor], the association gives notice that the contractor is in default. No work has been performed at [site] since [date], and the contractor has not responded to requests on [dates] for a completion schedule. If the contractor does not resume work and deliver a written schedule to complete the project by [date, matching the cure period], the association may terminate the contract for cause and complete the work with others at the contractor's expense." When the cure period runs out, the board votes to terminate at a properly noticed meeting and sends a termination notice by the same method. Our guide on HOA vendor contract red flags covers the termination and cure language to require before the next contract is signed.

Go to the surety before you hire anyone else

If the contractor furnished bonds, find them now. The SBA describes a performance bond as one that ensures a contract is completed, and a payment bond as one that ensures subcontractors and suppliers get paid. A performance bond is often the association's best source of money to finish the job, but only if the board follows the bond's own steps. Read the bond form, because bond forms differ. Common conditions include written notice of the default to the surety, a formal declaration that the contractor is in default, and holding the unpaid contract balance for whoever finishes the work. A surety can contest a claim when the owner skipped a required notice or hired a replacement before giving the surety its chance to act. The surety may pay the association to finish, bring in its own completion contractor, or deny the claim and dispute the default. Keep it in writing and let counsel lead once an adjuster is assigned. Without a bond, the association recovers from the contractor directly, by demand letter, small claims court or a lawsuit. A license complaint adds pressure, with the Department of Business and Professional Regulation in Florida or with whatever state or city board licenses the trade.

Protect the unpaid balance and close out lien exposure

Unpaid subcontractors and suppliers are the second wave of an abandoned job. Hold every dollar still owed under the contract, including retainage, until lien deadlines pass or the claims are released. Our guide on what to do when a contractor files a lien on HOA common area covers bonding off and contesting liens. Texas. Property Code section 53.107 requires the owner, within 10 days after the contract is terminated or the contractor abandons performance, to notify each subcontractor who sent a notice of claim or asked in writing to be told. It must give the termination or abandonment date and warn conspicuously that a claimant has no lien on retained funds without a timely affidavit. Under section 53.103, claimants then have 30 days from the termination or abandonment date to file for a lien on the retainage. Skip the notice and section 53.107(d) loosens the rules for the subcontractor instead. The section does not apply to residential construction projects, so ask counsel how your project is classified. Florida. Section 713.13(5)(a) says a new notice of commencement or notice of recommencement must be recorded to change contractors. A notice of termination under section 713.132 can be recorded only after all lienors have been paid in full or pro rata under section 713.06(4). Colorado. Section 38-22-127 makes money paid to a contractor on a construction project a trust fund for the subcontractors and suppliers who worked on it, and a violation is theft. It does not apply where the contractor furnished a performance or payment bond.

Hire the completion contractor

Write a new scope from the photos and an inspection of the work in place. Expect completion bids to run higher than the original, because the new contractor inherits someone else's work. Ask each bidder to say which existing work it will warrant and which it will not. Our guide on how to write an HOA request for proposal covers the scope, the bid form and comparing bids. Check whether a bidding rule applies. Florida section 720.3055 requires competitive bids for HOA contracts above 10 percent of the total annual budget, including reserves, but says nothing in it limits an association's ability to get needed products and services in an emergency. An open roof in hurricane season may qualify for the emergency portion of the work. In Texas and Colorado, check the declaration and bylaws for a bid requirement. The second contract should fix what failed in the first. Tie each draw to inspected milestones, keep 10 percent retainage, collect lien waivers with every pay request, and define abandonment, such as five working days without work after written notice.

A sample timeline and owner update

Day 0: the crew stops showing up. The project lead calls and emails for a schedule. Day 3 to 5: no answer. Stop payments, photograph the site, make it safe, pull the file and call the attorney. Day 5: send the cure notice and a copy to the surety. Day 15, or whenever the cure period ends: the board votes to terminate. Within 10 days of termination in Texas, send the section 53.107 notices. Weeks 3 to 6: surety response and completion bids. Week 6 to 10: sign the completion contract, record a new notice of commencement in Florida, and restart work. A motion can read: "Move that the board find [contractor] in default of the [project] contract dated [date] for failure to cure after written notice dated [date]; terminate the contract for cause under section [number]; direct the president to notify [surety] and demand performance under bond number [number]; withhold all unpaid contract funds; and authorize up to $[amount] for site protection and an inspection of work in place." Owners will notice the empty site. Keep the update short and factual: "Work on [project] stopped on [date]. The board sent the contractor a formal default notice, terminated the contract when it was not cured, and has notified the bonding company. The association has not paid for unfinished work. We expect to select a contractor to finish by [date] and will report at the [month] meeting." Leave opinions about the contractor out of it.

Sources

These guides are general education for HOA boards and residents, not legal, tax, or financial advice. Rules vary by state and by your community's governing documents - check with a professional for your situation.

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