When a D.C. Construction Job Goes Wrong: Licenses, Contracts, and Liens

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The kitchen has no cabinets. A tarp covers the space where the rear wall used to be, the contractor stopped answering in week nine, and the owner has paid about 70% of a contract that is maybe half built. Or the roles are reversed: the contractor is owed $40,000, the owner keeps adding work and refusing to pay for it, and a lien is on the table.

Both sides want to know who breached and how much they are owed. In a District home improvement case, those questions often come second. D.C. law asks an earlier question, and its answer can decide the case before anyone looks at the tile work.

This post walks through a D.C. construction contract dispute in the order a court is likely to reach the issues: licensing, the written contract, permits and scope, breach and damages, and finally liens and deadlines. For an overview of the most common disputes and how to prevent them, see Common Construction Disputes in D.C.

First Question: The Contractor’s License

This is the most consequential rule in District home improvement law. Under 16 DCMR § 800.1, no person may require or accept any payment for a home improvement contract to be performed in the District before all of the work is fully completed, unless that person is a licensed home improvement contractor or a licensed salesperson employed by one.

Taking a deposit is ordinary. Taking a deposit without a home improvement license violates the regulation, and the courts have attached a severe consequence to that violation. As the D.C. Court of Appeals put it in Watkins v. Howard, 736 A.2d 974, 975 (D.C. 1999), the court “consistently has held home improvement contracts void where unlicensed contractors have accepted or received payments before full completion of the work.” The line of cases includes Marzullo v. Molineaux, 651 A.2d 808 (D.C. 1994), and Cevern, Inc. v. Ferbish, 666 A.2d 17 (D.C. 1995), and the court extended the rule to condominium common areas in Carlson Construction Co. v. Dupont West Condominium, Inc., 932 A.2d 1132 (D.C. 2007).

Marzullo sets out the consequences. The contract is void and unenforceable, so the contractor cannot recover under it. The contractor cannot fall back on quantum meruit. The homeowner can recover what was already paid. The trial court in Marzullo awarded the homeowners $107,366.41, the amount they had paid under the contract, and the Court of Appeals affirmed.

The rule applies even when the homeowner knew the contractor was unlicensed. The court has acknowledged that the result can seem harsh and has explained that it serves the regulation’s purpose of protecting homeowners from fraudulent and unscrupulous practices. Arguments about fairness have not moved it.

The rule covers home improvement work, which is residential in character. Whether a particular project qualifies can itself be disputed. In Marzullo, renovating a vacant row house into a two-family dwelling counted, and the court left open how the rule applies to the renovation of former office or business space. Commercial construction is governed by ordinary contract principles.

So the first step in any home improvement dispute is to establish whether the contractor held a license while the work was performed and whether any payment was accepted before completion. For an owner, that can turn a weak defect claim into a strong claim for repayment. For a contractor, it can mean that a well-documented claim for unpaid work is worth nothing and that the owner’s counterclaim reaches everything already paid.

The Written Contract the Regulations Require

16 DCMR § 808 prescribes the form of a home improvement contract, and § 808.1 bars the contractor from accepting any payment until the agreement has been reduced to a written contract that complies with the section. Among other things, the regulation requires:

a written contract signed in at least triplicate, with every blank filled in, signed by the homeowner and by the contractor or its salesperson;
a copy for the homeowner at signing, and a fully signed copy once the contractor signs;
the contractor’s name, address, telephone number, and home improvement license number;
the names and license numbers of every salesperson who helped negotiate the contract;
the payment terms and approximate start and completion dates;
specifications showing the work to be done and the materials to be used;
no change in the specifications without the homeowner’s written approval; and
a notice in bold type of at least 10 points telling the homeowner not to sign a blank contract and that the homeowner is entitled to a copy at signing.

If the contract is not binding until the contractor accepts it, § 808.6 requires the contractor to give written notice of acceptance or rejection within 15 days, and a rejected homeowner gets any payment back. Separately, when a sale is solicited at the home, D.C. Code § 28-3811 gives the buyer until midnight of the third business day to cancel and requires a written notice of that right.

Two items deserve particular attention. A contract with no license number on it is itself a regulatory defect, and it tells the owner something important about the licensing question. The written-approval rule for changes is built into every home improvement contract by regulation, which matters for the scope fights discussed below.

Permits and Work Beyond Them

Permit problems come in three forms.

The first is who was supposed to pull the permit. A good contract says so, and a contractor who agreed to obtain permits and did not has breached. Contractors sometimes ask the owner to pull the permit as an owner-builder, which shifts responsibility to the owner in ways many owners do not appreciate when they agree.

The second is work done with no permit. Once the Department of Buildings notices, a stop work order halts the job. DOB’s compliance review request form must be filed within 15 calendar days after the order is posted, and filing it does not lift the order while the review is pending. The schedule slips, and the cost of the delay falls wherever the contract puts it.

The third is work that outgrew the permit. A permit covers the work it describes. When the job expands as the project goes along, the added work is unpermitted even though a permit is posted in the window.

The consequences can arrive long after the dispute seems settled. Unpermitted work has to be disclosed at resale and will be found by a buyer’s inspector. It complicates appraisals, financing, and insurance claims. Bringing it into compliance can require opening finished walls so an inspector can see inside them. Much of the District also sits in historic districts, which add a review layer for exterior work, and the remedy for unapproved exterior work is sometimes to undo it.

We have written about District property enforcement in Defending a D.C. Housing Code Case.

Scope and Change Orders

Few contractors walk off a job outright. Most construction disputes are arguments about what the price covered.

The pattern is familiar. The owner asks for something during a site visit, the contractor agrees, and nobody writes it down because the relationship is still friendly. Three months later, the invoice includes $23,000 of work the owner does not remember authorizing, or the contractor refuses to finish work the owner is sure was included.

The contract’s scope and specifications decide these disputes, which is why § 808 requires specifications. A contract that says only “renovate kitchen” gives a court almost nothing to work with. And because § 808.13 requires the homeowner’s written approval for any change in specifications, a contractor seeking payment for unapproved extra work starts uphill even when the owner really did ask for it.

A few points from practice:

Email counts. A change confirmed by an email the owner answered approvingly is far better than nothing.
Allowances cause disputes. A $12,000 tile allowance and an owner who chooses $30,000 tile produce a legitimate overage that the owner often experiences as a surprise. Track allowance spending as it happens.
Unforeseen conditions are real. Opening a wall in a century-old rowhouse can reveal knob-and-tube wiring or a missing header. The contract should say what happens next, and the discovery should be photographed the same day.
Small additions add up. An owner who keeps adding work without pricing each change will see the total at the end.

For both sides, the discipline is the same: price the change, put it in writing, get approval before the work is done, and keep the thread.

Proving Breach

If licensing does not decide the case, a breach of contract claim needs a valid contract, performance or a lawful excuse by the party suing, a breach by the other side, and resulting damages.

Owners often lose on performance. Most contracts require written notice of a deficiency and a chance to cure before termination. An owner who changes the locks and hires a new crew without following that sequence hands the contractor a defense: the contractor was never allowed to finish, was denied the cure the contract promised, and the owner breached first. That argument works often enough to matter, and it is avoidable by reading the clause before acting. A contractor who stops work over nonpayment should likewise follow the contract’s notice terms first.

Documents made during the job decide these cases. They are usually tried two years later by people who remember the project very differently. The most useful records are the signed contract and specifications, the full email and text thread, dated photographs from throughout the job, the payment ledger, permit and inspection records, and the change orders, approved or disputed. Defect claims usually also need an expert to show that the work departed from the contract or the applicable standard and to price the repair.

What the Case Is Worth

The usual measure for defective or incomplete work is the cost to complete or repair, which puts the owner where the contract promised. For an abandoned job, that is the cost of finishing, minus what remained unpaid under the original contract. Where repair would be grossly out of proportion to the harm, courts may instead award the diminution in value, the difference between the property as promised and as built.

Other issues come up often. Delay damages, such as alternate housing or lost rent, may be recoverable where the contract and the facts support them. Contractors frequently argue betterment, meaning the owner received something better than the contract called for. Many contracts waive consequential damages, so read that clause before building a claim on them.

The Consumer Protection Procedures Act can change the economics of a residential dispute. Under D.C. Code § 28-3905(k)(2), a consumer may recover treble damages or $1,500 per violation, whichever is greater, along with reasonable attorney’s fees, punitive damages, and an injunction. Fee shifting usually matters more than the multiplier. A $40,000 defect claim that costs $35,000 to prove is hard to justify on a contract theory alone. Whether the CPPA applies to a particular job, and which practices qualify, depends on the facts. The same conduct that violates the licensing rule can sometimes support a CPPA claim as well, and a contractor facing both is in a very different negotiation.

The Mechanic’s Lien

A mechanic’s lien gives the contractor a claim against the property itself, and it tends to surface during a refinance or sale. The requirements in D.C. Code § 40-301.02 are specific:

The contractor must record a notice of intent during construction or within 90 days after the earlier of completion or termination of the project. Otherwise the lien ends when the 90 days run.
Within 5 business days after recording, the contractor must send a copy to the owner by certified mail. If the mailing comes back unclaimed or undelivered, the contractor must post a copy on the property.
The notice must include the information listed in subsection (b), including the amount claimed less credits for payments received, a description of the work and the relevant dates, and, where applicable, license and good-standing documents, a copy of the home improvement contract, and a sworn, notarized statement.

A notice that does not comply with subsection (b) is void. A home improvement contractor who was unlicensed, or who never produced the written contract § 808 requires, has trouble with the lien notice itself.

An owner served with a lien should check the recording date, the mailing date, the required contents and attachments, and whether the amount reflects payments made. A contractor should calendar the 90-day deadline on the day work stops.

Deadlines and Where the Case Goes

A breach of contract action in the District is generally subject to a three-year limitations period under D.C. Code § 12-301(7). Latent defects complicate when a claim accrues, so treat three years from the breach as the planning assumption and get advice early on older work.

Many residential construction contracts, especially those built on industry forms, require arbitration. That clause decides the forum, the cost, and the available discovery, so find it before filing anything. We discuss arbitration clauses in The Hidden Courtroom.

The Small Claims Branch of D.C. Superior Court hears claims up to $10,000, excluding interest, attorney’s fees, and costs, under D.C. Code § 11-1321. That covers some deposit and small defect disputes; see D.C. Small Claims Court. Larger claims go to the Civil Division.

A licensing complaint to the Department of Licensing and Consumer Protection is a separate track. It will not return an owner’s money, though it can create a record.

What to Do Now

If you are the owner:

Check the contractor’s license status for the period of the work, and whether any payment was taken before completion.
Compare the contract to 16 DCMR § 808, starting with the license number.
Read the termination and notice-to-cure clauses before firing anyone or changing the locks.
Gather the contract, every email and text, dated photographs, the payment ledger, and the permit and inspection records.
Photograph the property in its current condition before any remediation.
If a lien has been recorded, check its dates and contents against § 40-301.02.

If you are the contractor:

Confirm your license is current and your contracts comply with § 808 on every open job.
Do not perform extra work without the owner’s written approval.
Calendar the 90-day lien deadline for every project where you are owed money.
Follow your contract’s notice provisions before stopping work.
Document unforeseen conditions the day you find them, with photographs and written notice to the owner.

The Short Version

In a District home improvement dispute, the first question is whether the contractor was licensed and whether it took payment before finishing. If it was unlicensed and took payment, the courts treat the contract as void, deny quantum meruit, and let the homeowner recover what was paid, even if the homeowner knew. After that, the documents decide the case: the written contract the regulations require, written approval for changes, permits that match what was built, and a termination that follows the contract’s cure procedure. Damages usually equal the cost to complete or repair, the CPPA can add statutory damages and attorney’s fees, and a mechanic’s lien depends on a 90-day deadline and a notice whose contents the statute prescribes.

The Law Office of Jacobie K. Whitley, PLLC represents owners and contractors in construction and building disputes in the District, along with the business and real estate matters around them. If a job has stopped, a lien has been recorded, or a stop work order has been posted, call (202) 499-2403 while the evidence still exists and the deadlines are still open.

This article is general information about District of Columbia law, current as of October 2026. It is not legal advice, and reading it does not create an attorney-client relationship. Whether a project is home improvement work, whether the licensing rule applies, when a limitations period began, and what damages are recoverable all depend on the facts. Deadlines in this area are short; consult counsel promptly.