What If My Builder Goes Bust?
It is unsettling, but there is a clear order of steps. Confirm what has happened, make the site safe, and deal with whoever is now handling the business's affairs.
The short answer
Confirm what has happened, secure the site, then deal with whoever is handling the business's affairs.
If your builder goes bust, first confirm it: for a limited company, check Companies House and The Gazette for an insolvency notice. Then make the property safe and weathertight, photograph the work as it stands, and gather your paperwork. If an insolvency practitioner has been appointed, contact them to register what you are owed. Check whether you were given any insurance-backed warranty or deposit cover, and claim on it if so. You can then get the remaining work quoted by another contractor.
The honest limit is that money paid to a business that has become insolvent can be difficult to recover, and a standard workmanship warranty depends on the business that gave it. Knowing the steps still helps you limit the disruption. Our guide on when a contractor goes out of business goes into more detail.
Step by step
What to do, in order
Confirm the position
Rumours aren't enough. Companies House shows a company's status, and The Gazette publishes official insolvency notices. For a sole trader, GOV.UK has a search of the individual insolvency register. Our answer on checking a builder on Companies House shows where to look.
Make the site safe
If work is part done, especially on a roof, arrange temporary weatherproofing. Keep invoices for anything you pay for.
Record the work as it stands
Dated photographs of every area, plus a note of what materials are on site. This helps whoever finishes the job and supports any claim.
Contact the insolvency practitioner
If one has been appointed, their details are usually on the insolvency notice. Tell them what you paid, what was done and what is outstanding.
Check any cover you were given
Look through your paperwork for an insurance-backed guarantee or deposit cover. If you have one, contact the provider named in it.
Money and warranties
What usually happens to deposits and guarantees
When a business becomes insolvent, the insolvency practitioner deals with its assets and its debts in an order set by law. Customers who paid for work that wasn't done are usually unsecured creditors, which means they are paid, if at all, after others. It is still worth registering your claim.
A standard workmanship warranty is a promise by the business that gave it. If the business no longer exists, there is usually no one left to honour it. An insurance-backed guarantee is different: it is designed to continue in that situation, subject to its own terms.
Materials on site can be a grey area. Don't let anyone remove them, and don't use them, until you know who owns them. The insolvency practitioner can advise.
Getting the job finished
Moving on to a new contractor
Get a fresh survey
A new contractor will want to see what was done before quoting. Some may not want to take responsibility for work they didn't do. Ask how they will handle that.
Check them properly
This is the time to be thorough. Our contractor checking checklist sets out the essentials.
Think about payment timing
Paying on completion, or in stages matched to finished work, limits exposure. See staged payments explained.
Companies House, The Gazette and GOV.UK publish official information on company and individual insolvency. Citizens Advice explains what to do if a trader goes out of business. This is general information, not legal advice.
Looking ahead
Keeping your exposure small on any job
No check can promise that a business will keep trading, and that is true of large firms as well as small ones. What you can control is how much is at stake at any one time.
Keep deposits proportionate to the job and tied to something specific, such as ordering materials. Pay later stages against work that is actually finished, not against dates in a calendar. Keep every invoice and receipt, and make sure the quote names the business you are contracting with, so you know exactly who to deal with if something goes wrong. Our guides on building deposits and preventing problems before they start cover these habits in more detail.
None of this is about expecting the worst. Most jobs finish without any of it mattering. It simply means that if a business does fail part way through, the money and the work outstanding are both as small as they reasonably can be.
If you use Mortaro
We coordinate the next steps with you
With Mortaro, your deposit and final payment are paid to your contractor, who is named in your quotation, and we pass them on as payment administration agent without unnecessary delay. We don't hold client funds and we are not an escrow service. The workmanship warranty is your contractor's, so, as with any contractor you hire, it depends on their business continuing to trade.
Checking contractors before they join the network reduces the risk of ending up with the wrong one; it doesn't remove it. If your contractor stops trading, tell us and we will help you work out the next steps. See putting things right.
Straight answers
Questions about a builder going bust
Will I get my deposit back?
It depends on the business's assets and whether you have any separate cover. Register your claim with the insolvency practitioner and check your paperwork for insurance-backed cover. This is general information, not legal advice.
Can I tell if a builder is struggling before I hire them?
Not with certainty. A long trading history and up-to-date filings on Companies House are reassuring, but no check removes the risk completely.
Start here
Tell us about the work you have in mind
We will confirm we cover your postcode, arrange a site visit with a contractor from our network and send you a written quotation. No charge, no obligation.