Wednesday, September 27, 2006

The Difficult Contractor - When the Contractor Abandons the Job

When a contractor delays a project, it causes problems for the homeowner. When a contractor abandons the job in its entirety, even more serious consequences may occur. How can a homeowner know when a contractor has abandoned the job? Sometimes it's obvious. If the contractor comes and packs up his tools, it is clear that he is finished. If she does not show up for an extended period of time, then it is likely that she won't return. It is not uncommon for a contractor to stop paying subcontractors prior to abandoning a job.

What can a homeowner do? First of all, hopefully the homeowner has not paid the contractor in full. The homeowner should always have an agreement that some money will be retained (usually 10%) until the job is completed to the parties' satisfaction.

Then, the homeowner should send the contractor written notification that the contractor has breached his agreement, and that the homeowner is going to mitigate damages by hiring other contractors to finish the work.

The homeowner should not renew the permit in his own name, because he or she can then incur liability for the construction work and could invalidate rights under the law. The homeowner should also be aware that she may run the risk of her homeowner's insurance being cancelled if unsafe conditions exist.

The homeowner should not commit the same mistakes twice. She or he should get at least three quotes to finish the work. The homeowner should keep in mind that he has a duty to mitigate damages, meaning that he cannot just hire the most expensive contractor and go after the contractor for the full amount of the quote. The price for finishing the work must be reasonable.
The homeowner should also try to avoid paying subcontractors twice, unless the amounts are relatively small and it will make the work get done. The subcontractor's contract is with the contractor, and the homeowner is not liable if the contractor does not pay.

When the contractor abandons the job, the homeowner's only option is to try to recoup money once the project is finished. Hopefully he will have held back enough money to cover the cost of finishing the work. If the homeowner ends up spending more, he will have to do some research to find out if the contractor has any assets and if it is worth filing a claim against him. In Massachusetts, the state will pay up to $10,000.00 of a judgment if the contractor flees the jurisdiction, files for bankruptcy, or if the homeowner is unable to collect.

Homeowners should follow their instincts if they see evidence of trouble. If the contractor starts asking for more and more money, the subs start to complain about not getting paid, or the contractor disappears for days at a time, these are signs that the contractor is having some sort of problem, and may bolt. The best way to deal with this is to make sure that payments are made as work is completed, and try to meet with the contractor to work things out. If the contractor refuses, the homeowner must make sure that he retains the funds for the work not yet completed in order to be able to pay someone else.

Friday, September 22, 2006

Home Improvement Contractor Program

I was notified a couple of weeks ago that I have been accepted to the panel for the Massachusetts Home Improvement Contractor Arbitration Program that is run by the state Office of Consumer Affairs and Business Regulation.

I will report back as I start to get cases.