You may very well have grounds to sue or to demand a reduced price. While it is always best to put all such deals in writing, the contractor cannot arbitrarily raise the price after you made the deal and began relying on his original price. This concept is known as "detrimental reliance." Unless the contractor offers new consideration to you, he is stuck with the original price. You have the right to demand a lower price (or a refund if you already paid it).
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Questions always engender more questions. The answer is no, the contractor cannot increase the contract price “dramatically.” However, did he do more work? Did you request any changes? Was the scope of the work changed during the project? All of these things could be a basis for changing the price. I don’t know because there are not enough facts to go on. But, if the job was to do A, B and C and that is all that was done, then no, he can’t change the price. On the other hand, if A, B and C were requested, but it turned out through nobody’s fault that D, E and F had to be done to complete the first 3 tasks, then more will be charged. Same is true if you asked him to add anything to the job (“Could you put in a window since you have the wall open anyway?”) or if you delayed his completion.
So in sum – if nothing extra was done, and nothing changed from the first day to the last, then no increase in amount is allowed. But when he files a lien, you better call a construction attorney right away.
My first recommendation to you would be to send the contractor a letter stating the original amount you agreed to and then requesting an explaination of the additional cost. Depending on their response, this will help you establish you did have an agreement for a certain amount and alleviate the contractor stating the amount they are currently requesting is the amount you originally agreed to. As stated in the previous response, whether the contractor is due additional money depends on whether the scope of work significantly changed. During the process did you ask for different things to be added to the project, have the contractor re-due work already in place because you did not like the original product you selected (things of this nature). Or did the contractor run into unforeseen conditions (things that could not be seen or know during the time of bidding...i.e. open drywall and find wood studs full of termite damage). If you did not change the scope of work or they did not run into unforseen conditions, the contract should not be requesting more money. This is also presuming your verbal agreement was for a fixed price contract and not a cost plus agreement. In any case the contractor should have notified you along the way any cost changes or items they felt would have additional cost to them. In some cases it has been noted if a contractor proceeds with work and does not notify the owner there is additional cost involved, they are not due the added cost if they bring it up later. On the other hand it is noted the owner cannot be engrossly enriched, meaning you should not receive something of value without paying anything.
In summary, send a letter to the contractor establishing the original contract amount. Request a detail explaination for the additional cost. Review each change with them and if you feel fair or justified negotiate a price acceptable to both. If you cannot come to an acceptable remedy consultant with a construction attorney and explain to them all of the facts in your case. Minor details can change the outcome of any case. Hopefully you find resolution to your problem prior to needing legal assistance; but if you find this issue presist or a lien if a lien filed you need assistance with getting it remove, please feel free to contact our office for a free consultation.