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Hi and welcome to JA. Ray here to help you today.Please bear with me a few moments while I review your question and respond.
You need to send them an itemized bill of what the deposit was used for materials or whatever.If you used it for materials you cannot reuse then they belong to the party if you used the deposit for it.Take the time to itemize the charges because you may get sued.It is not realistic for them to expect a refund if you had labor or supplies but you need to address it to them what the money went for.
And you really need to consider a contract for your services.It should state in the event of cancellation the deposit is nonrefundable to avoid this problem.\
I appreciate the chance to help you , thanks again and the best here.
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You can argue it both ways, it could be an oral contract but then there are no terms like I mention above.
So then send them a bill showing what you spent the money on, labor, materials or whatever.If you didn't use it all refund the balance.
Remember you will have to defend this if sued in small claims.
Here are free contract forms
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