Real Estate Law
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Certainly the town shares some responsibility for the over cost, but municipalities rarely agree to pay for mistakes made by employees. They are not generally held liable in the law for that kind of thing. What I'm wondering is why a local contractor wouldn't have known where the local laterals run, and/or why it would cost more than half the price of the total job just to locate the lateral. I can't judge his claim from this distance and I suspect that you will probably end up having to compromise and settle it with him. But those are several arguments that I would raise before shelling out that much extra dough.
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