How to Decide Whether to Hire an Attorney - The Contractor

Here is a very simple piece of advice: a contractor should ALWAYS have an attorney review his or her contract. The reason for this is simple. Contractors are in business, and they need to protect themselves. There are so many factors to consider that even if a contractor has a good resource for buying a contract (The Journal of Light Construction, for example) there may be some items of importance missing.

In addition, more states are passing home improvement contractor statutes that impose serious burdens on contractors. In Massachusetts, the requirements for the contract alone are extensive, and if a contractor does not comply with the law, then he is automatically violating the consumer protection statute, which could entitle the homeowner to double or treble damages, attorney's fees, interest and costs.

One common scenario is when a contractor sues a homeowner for nonpayment. The homeowner then counterclaims (counter-sues) and invariably the contract will have some required clauses missing. The contractor is then the party who is now in danger of losing the claim and the homeowner may be awarded multiple damages.

When one considers the cost of having an attorney review a contract, it is insignificant compared to the risk of not being protected by a comprehensive contract. It should just be viewed as one of the costs of doing business.

How to Decide Whether to Hire an Attorney - The Homeowner

Homeowners do not always need to hire an attorney to review the contract before they embark on a home improvement project. If the job is a small one, or falls within the small claims limit in your state, you may decide to forgo the expense of having a lawyer involved. The trick is to envision the worst case scenario and think about whether you can deal with it on your own. Having floors refinished can cost less than $2000.00, so it is probably not worth it to pay someone to review the contract. On the other hand, if the job has the potential of causing damage to the premises, the damages might be much greater than one might anticipate.

Another benchmark is if your state has a Guaranty Fund. In Massachusetts, homeowners can collect up to $10,000.00 if a contractor does not pay a judgment, files for bankruptcy, flees the jurisdiction, etc. I know one acquaintance who hired someone to install new windows in her home. He took the money and disappeared. She was able to collect from the Fund, and did not need to involve an attorney in the process.

If you are going to review your own contract, you need to educate yourself. There is a sample contract at a Massachusetts government website that provides a good guideline. Be careful about clauses awarding attorney's fees or mandatory arbitration or mediation clauses. One client won his claim in arbitration, but the arbitrator awarded attorney's fees to the losing party, and the contract allowed him to do so.

Having an attorney look over your contract is generally not that expensive, and may prevent huge problems down the road. I know that I spend approximately 2 - 4 hours reviewing a simple contract and I have always had suggestions to make. At the same time however, it may not be truly necessary. Just make sure you make an informed decision.

How to Decide Whether to Hire an Attorney

As my caseload increases, I become more and more impressed with the fact that there are many issues that could have been avoided if homeowners or home contractors were to hire an attorney before signing the contract. However, hiring a lawyer is not an inexpensive proposition, so one needs to evaluate the project before taking that step. In addition, as a project progresses, problems may arise, and then the same question may come up. The next few posts will discuss when to hire a lawyer, and when it may not be necessary

The Home Referral Network

I just discovered another interesting website: http://www.homereferralbiz.com/

Debra Cohen has created a business linking homeowners with prescreened contractors. She has also developed kits for others to start their own referral businesses in their communities. I am interested in finding out more about how she rates her contractors and chooses those to include in the network. I am going to spend some more time looking through her website, and I will report back.

Can I Use Your Bathroom?

Here's an odd issue that was raised by a contractor friend of mine. She said she now has a clause in her contract about using the client(s)' facilities. Apparently a colleague was forced to drive down the road every time he needed to go to the bathroom because the homeowner would not let him use the one in the house.

So, the clause states that either she and her employees have to be allowed to use the client's bathroom, or they have to pay for a Port'O'Potty. After all, contractors are people too.