Tuesday, May 30, 2006

The Question of Insurance

Insurance is an important issue when dealing with home improvement projects. Unfortunately, what is covered by insurance is frequently not clear until a problem arises, and then, it may be too late.

On the homeowner side, it is important to make sure that your contractor carries workers' compensation insurance for his employees, or you may be subject to liability if a worker is injured on the job. You must ask for a copy of your contractor's certificate of insurance to make sure he is covered.

You should also call your homeowner's policy and find out if there is anything special you need to do as a result of your improvement project. Ask what kind of scenarios are covered (generally something like water damage from the roof leaking is, but something due to a construction defect is not). Ask your broker if you need premises liability coverage, or if you need to increase the value of your insurance prior to completion of the work.

I know of one contractor who insists that he be listed as a beneficiary to protect himself if something should go wrong during the work.

The time to determine which insurance policies are in place and what kind of coverage is needed is before the job even starts. That way, everyone will be protected and there will be no nasty surprises if something goes awry.

Wednesday, May 24, 2006

The Materials to be Used

Another important provision in a home improvement contract is the list of materials to be used. This is an area in which both homeowners and contractors make assumptions that get them into trouble. Homeowners tend to assume that they are entitled to a level of materials that should be included. Contractors may cut back on materials in order to reduce costs, or may fail to inform homeowners that items may cost extra.

There are two ways to handle this issue. Contractors may include allowances for materials in their contracts and then list additions as change orders. This gives the homeowner the most leeway. Conversely, the contractor can spell out the materials with very specific details that will not be misunderstood.

Contractors may choose to protect themselves by putting in a clause that states that if the fee for materials goes up by more than 10%, that the homeowner will either have to compromise, or pay for a change order. The important point here is that both sides must make their expectations clear.

Friday, May 19, 2006

The Journal of Light Construction

In a recent meeting with a contractor, I learned about a wonderful resource for contractors. The Journal of Light Construction offers all kinds of advice in print, and online at
http://www.jlconline.com/cgi-bin/jlconline.storefront. I have only had a glance at this site so far, but it has an enormous amount of useful information for contractors. I hope you will find this helpful.

Wednesday, May 17, 2006

Creating a Workable Contract

This is going to be a series of posts about the elements of a good home improvement contract. I attended a lawyer dinner last night, and met another attorney who handles construction matters. He said, "the most important words in any construction contract are 'all change orders must be in writing." Not only should all change orders be in writing, but both the homeowner and contractor should sign off on them.

Most of the cases we see arise from a misunderstanding about what is or is not included in the scope of a project. The more the parties communicate, the less likely it is that problems will occur. So, Rule #1 of home improvement contracts: put those change orders in writing!

Thursday, May 11, 2006

For the Love of Subs

by Kris Sawyer, President
Redlands Construction

As a general contractor, trade partners, often called subcontractors, who are part of our company team, are the life blood of our business. Without them there is no business. On the other hand, they also can make or break a general contractor’s reputation. This fact is so important that I usually find a project at my own house for a new sub to do before using him or her on one of our client projects. This gives us the opportunity to work together and find out if our work style is compatible; if we click.

It’s taken a number of years to develop a solid working relationship between our trade partners and myself where there is a clear understanding of expectations and mutual respect. I need to learn what was important to them, and then, most importantly I have to treat them well.

It is very important to our clients that our trade partners who supply labor and skill to our projects as part of our team also have the same values about quality of workmanship, communication, customer responsiveness and respect for our customers’ homes. My trade contractors are the face of my business.

As such, our sub contractors are very much a part of the Redlands Construction vision and are truly valued. Our subcontractor agreements include both their responsibilities to Redlands Construction and to our clients as well as individual protections for them, too.

They are paid just as we are; they receive a 1/3 deposit upon acceptance of the agreement with progress payments laid out in their agreement based on completion of certain project benchmarks such as the completion of the rough inspection.

From a subcontractor’s standpoint it’s important to check out a general contractor before deciding to work with him or her. Check references of other subcontractors they use regularly and ask questions like:
What is most important to the GC and in what order? Quality of work, cost, or time frame? Does this fit with what’s important to you?
Is the job site ready and prepped for your work when you arrive?
Are the project specifications clear and concise? Are the plans detailed with all the information necessary to do your job properly?
Does the GC pay on time?
Does the GC have a subcontractor agreement?

It’s just as important for a subcontractor to check out reputation and references before deciding to work with a general contractor as is the reverse.

Deciding to work with a particular general contractor can be a big investment for a trade partner or subcontractor and that decision should not be taken lightly. As a subcontractor, make sure you do your homework before making your decision.

As a general contractor, I know that treating subcontractors well, and making sure there is good communication pays off, and everyone wins!

Kris Sawyer is the president and founder of Redlands Construction, Inc., a residential remodeling company based in West Roxbury, MA. She can be reached at 617-469-9012 (www.redlandsconstruction.com)

Saturday, May 06, 2006

Dealing With The Person With Authority

Today I had reason to meet with a contractor myself. My slate roof is leaking and I am having my house (interior) painted, so we need to fix the leak quickly. Unfortunately the roofer also discovered a number of problems with my chimneys. He then asked me who would be making the decisions about the repairs to my home.

After explaining that I would be consulting with my husband, he requested a meeting with both of us to discuss his proposal. He pointed out how difficult it is to deal with homeowners when it is unclear who has the decision-making power.

Another contractor gave me his contract to review, and he has the owner list the names of the people who will be making the decisions right in his contract.

Homeowners have similar issues. They are often faced with whether an employee or sub has the power to make a decision when the general contractor is not present. They also need to ask who has the authority to make these decisions, or they may be faced with unexpected change orders when they think something is included.

Whether you are a contractor or a homeowner, it is important to know who has the power to make choices over the course of a project. If that person is unavailable, he or she should either designate another responsible party, or provide cell phone accessibility. Projects can get delayed if there is no one available when something unexpected arises, or a change is necessary. That is why it is important to know who has the true authority.

Tuesday, May 02, 2006

Where The Good Contractors Are

Contractors, like lawyers, frequently have a bad reputation. The few who do cause problems for their clients overshadow the numerous excellent contractors who do wonderful work. So, how can one find them? I have frequently said that word of mouth is best, but sometimes you can't find the right person for the job. There are other options than the yellow pages, however.

http://www.homeworkssourcebook.com/ prescreens contractors for inclusion in their journals and on their website. They are located in Massachusetts.

http://www.nari.org/ is the National Association of the Remodeling Industry. NARI members are self-selected, but they can go through the NARI certification process. The website offers all kinds of advice for homeowners and contractors.

http://www.bagb.org/ is the Builders Association of Greater Boston. It is also a great resource for contractors and homeowners.

These are examples of some websites that can help you become better educated about home renovation. The more you educate yourself, the less likely you are to have problems with your project.

Monday, May 01, 2006

Why I Created a Blog

Given the fact that more and more blogs are flooding the Internet every day, why create another one? In my practice, I see homeowners and home contractors making the same mistakes over and over again. While doctors try to persuade patients that they should come in for a yearly physical, as a lawyer, I rarely see clients unless they are having a problem. Unfortunately, the problem has usually escalated by the time the client will call. If only I had the opportunity to exercise some "preventative" care, these matters might not end up being as complicated and costly.

For example, Massachusetts has a very strict home improvement contractor law that is weighted towards the "consumer" side of the transaction. Home contractors' contracts have to be in compliance with this law, or they will automatically be deemed to have violated the consumer protection statute, M.G.L. c. 93A. Any violation of 93A entitles the consumer to the possibility of double or triple damages, attorney's fees, interests and costs.

Let's say a contractor wants to bring a claim against a homeowner for failure to pay his bill. The homeowner will then counterclaim (sue) the contractor for not complying with the law. Even if the contractor has a legitimate claim, he or she runs the risk of paying double or treble damages, attorney's fees, interest and costs.

If that contractor were to consult with me in advance, and make sure that his contract is in compliance, he would be able to pursue his claim without facing a potentially damaging countersuit. That is a small example of how prevention can save quite a bit of money and hassle in the long run.

Obviously, if one is about to sign a contract for a small sum, consulting with an attorney might not be worth it. It amazes me however, that clients will sign contracts for $400,000.00 additions without having an attorney look over the paperwork, or calling more than one reference.

If my blog prevents one individual from getting into trouble, then the time I am spending on this topic will be worthwhile. Comments are welcome.