201 CMR, § 14.14 - Determining Actual Loss

The calculation of Actual Loss for determining payments from the Guaranty Fund shall be measured by the following methods:

(1) Calculation When No Work Is Performed. If the contractor, or subcontractor abandoned the contract without doing any work, the actual loss shall be the amount the homeowner paid to the contractor, or subcontractor under the terms of the contract.

(2) Calculation When Some of the Work is Performed. If the contractor, or subcontractor partially and properly completed some of the work which was agreed to under the terms of the contract, the actual loss shall be totalled by adding the amount of the reasonable cost of completing the contract and, if necessary, repairing the contractor's, or subcontractor's defective performance, and by subtracting the part of the contract price that has not been paid by the owner.

(a) Determination of Grossly Underbid Contracts. Upon a determination by the arbitrator or OCABR that the contractor, or subcontractor grossly underbid the contract with the result that competent workmanship to finish the contract will cost significantly more than the original contract price, the actual loss will not include the owner's cost to complete the contract.

(b) Calculation for Grossly Underbid Contracts. Upon such a determination, the actual loss shall be the amount which the owner paid to the contractor or subcontractor, minus the value of any work properly completed, minus the cost of any materials properly used, plus, if necessary, the cost to correct that portion of the contracted work that was improperly completed.

(3) Calculation When All of the Work is Performed, but Performed Incorrectly. If the contractor, or subcontractor fully but improperly completed work that was agreed to under the terms of the contract, the actual loss shall be the amount required to correct the improperly completed work.

Notes

201 CMR, § 14.14

Amended by Mass Register Issue 1314, eff. 6/3/2016.