Wednesday, August 22, 2007

Home Contractor Claims - to Litigate or to Arbitrate (From the Contractor's Point of View)?

Unless a contractor has a provision in his contract that entitles him to attorney's fees when pursuing a claim against a homeowner, at least in Massachusetts, the contractor will be forced to pay his attorney's fees whether he is choosing to arbitrate or litigate. If the homeowner opts to file with the Home Improvement Contractor Arbitration Program in MA, then neither side is entitled to attorney's fees.

So, let's assume the following scenario: The contractor has fully performed, and the homeowner now refuses to make the final payment, or the homeowner is withholding payments, or the homeowner has unlawfully terminated the agreement (the contractor should have the terms for termination included in her contract). What should the contractor do?

First of all, do not underestimate the stress and impact of a lawsuit (the subject of an upcoming post). It should always be one's goal to try to resolve disputes without a formal proceeding. Contractors should attempt to communicate with clients so that irresolvable conflicts do not arise. However, there are situations where the communication does break down and it is helpful to have a plan if this occurs.

First of all, most states offer a powerful option for contractors/construction workers, and that is the mechanic's lien. The procedures required for filing liens vary by state, so it behooves contractors to try to familiarize themselves with their rights under the law. You should also form a relationship with an attorney so that you do not have to frantically search for one if you need to file a lien.

The contractor should also consider sending a demand letter to the homeowner. Although this is not required, it is helpful to spell out your side of the story and understanding about how the work has progressed, what (if anything) is left to be completed and why payment is due.

Then, consider whether you want to arbitrate or litigate if all other options fail. Actually, the time to decide whether to arbitrate is when the contract is drafted, but the homeowner might agree to arbitrate even if there is no arbitration provision in the contract.

Advantages of arbitration: The parties choose the arbitrator (as opposed to a judge, where there is usually no choice), they choose the location and timing of the arbitration, they can elect an arbitrator with expertise in construction, and the process is frequently more expedient and less expensive than litigation.

The main disadvantage? Arbitration is usually binding and not appealable. That means that the parties are subject to the whims of the arbitrator, and there may be little or no discovery (the exchange of information prior to the hearing), and in some states, arbitrators can disregard the law. The bases for appealing an arbitration are so limited (bias or fraud on the part of the arbitrator and in some states, manifest disregard of the law) that one must assume that the arbitration will be final.

Litigation is a well-established process with rules of evidence and legal precedent. The parties all work with the same rules and there is an opportunity to exchange information by sending out interrogatories (written questions), document requests, requests for admission and taking depositions. This gives each side the chance to continuously assess the strength of their cases and consider whether settlement is an option. If one is unhappy with the outcome, then appeals are possible. However, one should keep in mind that parties usually do not appeal because the process is costly.

The main problem with litigation is that costs can spiral out of control depending on how the other side approaches their case. If they request numerous depositions for example, costs can quickly accumulate. In addition, one is subject to the court's timetable, and hearings and trials frequently get postponed even though the attorneys have prepared. They will then need to prepare again which adds to the cost.

All in all, it is better to avoid disputes altogether. However, it is better to be well-informed about one's alternatives and think them through before an irresolvable conflict occurs.

P.S. I always appreciate questions or comments.

38 Comments:

At 7:31 PM, Blogger A said...

I had to have my house rebuilt four years ago and there are problems from the foundation up due to pure maliciousness on the part of the contractor. There is blatant evidence and proof of them hiding rather than fixing and replacing materials all through out the house. The plumbing is completely backed up all the time. The wiring is not done to code. Every where you look there is some kind of problem they never fixed or obviously did it wrong on purpose because there is no other explanation. The appearance and performance of the house is as if I went a found some random person off of the street and told them to do it. Oh, and the person had some kind of grievance with me. This is literally ruining my life. My house is falling apart piece by piece and taking me with it. I live in Michigan, please give me any recommendations or tips. Thank you.

 
At 7:32 PM, Blogger A said...

I had to have my house rebuilt four years ago and there are problems from the foundation up due to pure maliciousness on the part of the contractor. There is blatant evidence and proof of them hiding rather than fixing and replacing materials all through out the house. The plumbing is completely backed up all the time. The wiring is not done to code. Every where you look there is some kind of problem they never fixed or obviously did it wrong on purpose because there is no other explanation. The appearance and performance of the house is as if I went a found some random person off of the street and told them to do it. Oh, and the person had some kind of grievance with me. This is literally ruining my life. My house is falling apart piece by piece and taking me with it. I live in Michigan, please give me any recommendations or tips. Thank you.

 
At 3:26 PM, Anonymous Anonymous said...

Last year, my contractor and I signed a T&M Contract With A Not To Exceed Base Contract Amount (243k), using the AIA form provided by my architect. The job involved a remodel and new addition, to be built to the design provided by the architect. To make a long story short, the 8 monthly Applications for Payment were paid, change orders (that increased & decreased the Base Contract Amount) were properly recorded and signed by all parties, and Lien waivers were provided. I also paid the architectural firm for project management. Last week, the final Application for Payment was 30k over the Base Contract price. Despite numerous onsite meetings with the contractor, the architect and I were stunned to learn that he was over the Not-To-Exceed. There was absolutely no communication from the contractor to indicate he was over by any amount of money. We are tapped out and scared. The contract calls for binding arbitration.....Is it conceivable that I could actually lose or be forced to pay any monies? In Montana. HELP Thank you

 
At 4:33 PM, Anonymous Anonymous said...

Hello there, just became aware of your blog through Google, and found that it is truly informative.
I'm going to watch out for brussels. I'll be grateful
if you continue this in future. Lots of people will be benefited from your writing.
Cheers!

Feel free to surf to my weblog - Registry Cleaner

 
At 4:33 PM, Anonymous Anonymous said...

Hello there, just became aware of your blog through Google, and found that it
is truly informative. I'm going to watch out for brussels. I'll be grateful
if you continue this in future. Lots of people will be benefited from your writing.
Cheers!

My blog ... Registry Cleaner
my webpage: windows xp registry cleaner

 
At 6:39 AM, Anonymous Anonymous said...

I waѕ suggested this web site by mу cousin.
I am nοt surе whеther this poѕt
is written by him as nobody еlsе κnow ѕuch
detailеd аbout my problem. Υou are incrеdible!
Thanks!

Ϻу web page; fast weight loss

 
At 6:29 AM, Anonymous Anonymous said...

І always uѕed to read article in
nеws paρers but now аs I am a uѕer of net therеfοre frοm now I am using net for aгtіcles
or revieωs, thankѕ to web.

Тake a look at mу blоg ρost ::
credit card debt consolidation credit score

 
At 1:12 AM, Anonymous Anonymous said...

Helpful info. Lucky me I discovered your web site
unintentionally, and I'm surprised why this twist of fate didn't came about earlier!
I bookmarked it.

Feel free to surf to my blog :: Louis Vuitton Handbags

 
At 6:41 PM, Anonymous Anonymous said...

What's up, the whole thing is going fine here and ofcourse every one is sharing data, that's
actually excellent, keep up writing.

Also visit my blog; Michael Kors Handbags

 
At 4:32 AM, Anonymous Anonymous said...

It's very straightforward to find out any matter on web as compared to textbooks, as I found this paragraph at this web page.

Also visit my website; Chaussures De Football Pas Cher

 
At 3:53 AM, Anonymous Anonymous said...

When some one searches for his necessary thing, therefore he/she wishes to be available
that in detail, thus that thing is maintained over here.


my webpage: Sidney Crosby Black jersey

 
At 4:07 PM, Anonymous Anonymous said...

Hi, i think that i saw you visited my blog so i came to go back the
want?.I'm attempting to to find issues to enhance my site!I assume its adequate to use some of your concepts!!

my blog post :: Wholesale Jerseys Cheap

 
At 2:52 AM, Anonymous Anonymous said...

I think everything said was actually very reasonable. However,
think on this, what if you composed a catchier post title?
I am not suggesting your content is not good., but what if
you added something to possibly grab a person's attention? I mean "Home Contractor Claims - to Litigate or to Arbitrate (From the Contractor's Point of View)?
" is kinda boring. You should glance at Yahoo's home page and watch how they create post headlines to get people interested. You might add a related video or a related picture or two to grab people excited about what you've written. In my opinion, it would make your posts a little bit more interesting.

Look at my webpage - Solde Air Jordan

 
At 9:10 PM, Anonymous Anonymous said...

Saved as a favorite, I like your blog!

Look at my web page ... Louis Vuitton Handbags

 
At 7:14 AM, Anonymous Anonymous said...

Greetings! Very useful advice within this article!
It is the little changes which will make the most significant changes.

Thanks a lot for sharing!

Also visit my web-site Nike Free Run Sko

 
At 4:58 PM, Anonymous Anonymous said...

Quality articles is the crucial to invite the visitors to pay a
quick visit the website, that's what this web page is providing.

my website - Full Article

 
At 1:35 AM, Anonymous Anonymous said...

I truly love your website.. Very nice colors & theme.
Did you develop this website yourself? Please reply back as I'm attempting to create my own site and want to find out where you got this from or what the theme is called. Thanks!

Feel free to visit my site Recommended Site

 
At 2:03 PM, Anonymous Anonymous said...

Do you mind if I quote a couple of your articles as long as I provide credit and
sources back to your weblog? My blog is in the very same area of interest as yours and
my visitors would genuinely benefit from some of the information you provide here.
Please let me know if this ok with you. Thanks a lot!


Here is my blog post - Extra Resources

 
At 10:37 AM, Anonymous Anonymous said...

Right here is the right webpage for anybody who really wants to find out about this topic.
You realize a whole lot its almost tough to argue with you (not that I
personally would want to…HaHa). You certainly put
a new spin on a topic that's been discussed for many years. Wonderful stuff, just great!

Feel free to surf to my weblog: click for source

 
At 12:05 AM, Anonymous Anonymous said...

It's genuinely very complex in this active life to listen news on Television, so I just use web for that purpose, and get the newest news.

Feel free to surf to my blog binauBeats By Dreral beats mp3

 
At 11:11 AM, Anonymous Anonymous said...

We stumbled over here different web address and thought I should check things out.
I like what I see so now i am following you.
Look forward to looking at your web page yet again.

Also visit my web blog; Michael Kors

 
At 8:01 PM, Anonymous Anonymous said...

Nice post. I was checking continuously this blog and I am impressed!
Very useful information specially the last part :) I care for such
info much. I was seeking this certain information for a long
time. Thank you and best of luck.

My webpage: Sac a main Guess

 
At 9:30 AM, Anonymous Anonymous said...

Thank you, I've just been searching for info about this subject for a while and yours is the best I've came upon till
now. But, what concerning the conclusion? Are you positive
concerning the supply?

Look into my webpage Cheap Oakley Sunglasses

 
At 11:25 AM, Anonymous Anonymous said...

Wow, this paragraph is fastidious, my younger sister is analyzing these things, thus I am going to let know her.


Here is my web page Air Max

 
At 7:30 PM, Anonymous Anonymous said...

Hi there everyone, it's my first visit at this website, and piece of writing is really fruitful for me, keep up posting such articles or reviews.

Feel free to visit my page; helpful resources

 
At 2:06 AM, Blogger trademarkconstruct said...

Hello Very Nice Blog..

The Basement contractor in Baltimore will take care of all water proofing, electrical fittings and structure repair work.

Thanks For Sharing...

 
At 5:01 PM, Anonymous Anonymous said...

It's simple but have to be purely well done with appropriate directions well followed.
A jailbreak continues to be produced for iOS 4.3.1. In case you actually need a guide.


my web blog: jailbreak iOS 7.1.1 (http://www.pokemontrash.com/)

 
At 8:58 PM, Anonymous Anonymous said...

I've been sharing business news, responding to feedback, and retweeting
other incredible things out there.
Correct solutions are tallied and the gamers are provided a rating
for instant bragging legal rights.

Also visit my site; cydia sources

 
At 3:19 AM, Anonymous Anonymous said...

Hi there, I discovered your site via Google at the same time
as searching for a comparable matter, your web site came up, it looks
great. I have bookmarked it in my google bookmarks.


Hello there, just turned into aware of your blog via Google, and found that
it's truly informative. I'm gonna watch out for brussels.
I will be grateful in case you continue this in future. Lots of
people might be benefited out of your writing.
Cheers!

Also visit my blog post - parquet floor sanding

 
At 9:07 PM, Blogger oakleyses said...

louis vuitton outlet, michael kors outlet online, red bottom shoes, longchamp outlet, polo ralph lauren outlet, ray ban sunglasses, louboutin shoes, coach outlet store online, nike air max, michael kors outlet online, nike air max, cheap oakley sunglasses, michael kors outlet online, christian louboutin outlet, ray ban outlet, jordan shoes, louis vuitton outlet, kate spade outlet online, nike shoes, michael kors outlet online, oakley vault, oakley sunglasses, coach outlet, louis vuitton outlet online, tiffany jewelry, christian louboutin shoes, prada handbags, tiffany and co jewelry, gucci handbags, coach outlet, louis vuitton handbags, longchamp handbags, prada outlet, burberry outlet online, longchamp outlet online, burberry outlet online, kate spade handbags, louis vuitton, tory burch outlet, michael kors outlet store, michael kors outlet, polo ralph lauren, chanel handbags, coach purses, nike free

 
At 9:07 PM, Blogger oakleyses said...

north face pas cher, converse pas cher, hermes pas cher, oakley pas cher, vans pas cher, michael kors canada, mulberry, lacoste pas cher, sac michael kors, nike air max, ralph lauren, nike huarache, nike trainers, nike free pas cher, longchamp pas cher, nike blazer pas cher, burberry pas cher, michael kors uk, sac vanessa bruno, louis vuitton, hollister, timberland, chaussure louboutin, true religion outlet, louis vuitton uk, ray ban uk, north face, air jordan, longchamp, true religion, louis vuitton pas cher, lululemon, tn pas cher, barbour, sac louis vuitton, guess pas cher, ray ban pas cher, air max, scarpe hogan, nike air force, nike free, ralph lauren pas cher, nike roshe, air max pas cher, true religion outlet, new balance pas cher, abercrombie and fitch, nike roshe run, hollister, nike air max

 
At 9:07 PM, Blogger oakleyses said...

p90x workout, soccer shoes, asics shoes, ugg boots, wedding dresses, ugg outlet, beats headphones, mont blanc pens, herve leger, lululemon outlet, marc jacobs outlet, rolex watches, reebok outlet, hollister, canada goose, longchamp, ghd, canada goose outlet, jimmy choo shoes, vans outlet, nfl jerseys, soccer jerseys, uggs outlet, canada goose pas cher, instyler ionic styler, abercrombie and fitch, bottega veneta, babyliss pro, ferragamo shoes, moncler, new balance outlet, ugg, roshe run, moncler outlet, north face jackets, canada goose outlet, uggs on sale, birkin bag, mcm handbags, celine handbags, ugg soldes, giuseppe zanotti, canada goose outlet, north face outlet, chi flat iron, insanity workout, moncler, mac cosmetics, canada goose uk, valentino shoes

 
At 1:08 AM, Blogger ninest123 said...

ninest123 16.03
gucci outlet, louis vuitton, louboutin outlet, chanel handbags, ray ban sunglasses, louis vuitton, replica watches, longchamp outlet, michael kors outlet, jordan shoes, ugg boots, tory burch outlet, oakley sunglasses, louis vuitton outlet, oakley sunglasses, polo ralph lauren outlet, michael kors outlet, burberry outlet online, nike air max, michael kors outlet, nike outlet, tiffany and co, michael kors outlet, ray ban sunglasses, ray ban sunglasses, louis vuitton, michael kors outlet, louboutin, burberry, ugg boots, louboutin shoes, polo ralph lauren outlet, tiffany jewelry, ugg boots, replica watches, longchamp outlet, oakley sunglasses, christian louboutin outlet, prada outlet, oakley sunglasses, michael kors, louis vuitton outlet, nike free, cheap oakley sunglasses, uggs on sale, longchamp, nike air max, prada handbags, ugg boots

 
At 1:11 AM, Blogger ninest123 said...

nike free, mulberry, ray ban pas cher, new balance pas cher, hogan, converse pas cher, hollister, ralph lauren pas cher, coach outlet, michael kors, lacoste pas cher, true religion jeans, sac longchamp, north face, michael kors, hermes, nike trainers, true religion jeans, nike roshe, burberry, timberland, nike roshe run, nike blazer, true religion outlet, nike air max, vanessa bruno, louboutin pas cher, hollister pas cher, nike free run uk, longchamp pas cher, replica handbags, air max, lululemon, oakley pas cher, michael kors, coach outlet, ralph lauren uk, true religion jeans, nike air max, vans pas cher, tn pas cher, north face, sac guess, air jordan pas cher, coach purses, michael kors, ray ban uk, nike air max, air force, abercrombie and fitch, nike huarache

 
At 1:13 AM, Blogger ninest123 said...

soccer jerseys, lululemon, louboutin, north face outlet, iphone 6s plus cases, chi flat iron, instyler, giuseppe zanotti, soccer shoes, abercrombie and fitch, insanity workout, s5 cases, vans shoes, timberland boots, ipad cases, nike air max, celine handbags, reebok shoes, mcm handbags, iphone 6s cases, wedding dresses, bottega veneta, nfl jerseys, iphone cases, asics running shoes, iphone 6 cases, hollister, jimmy choo shoes, baseball bats, north face outlet, beats by dre, ferragamo shoes, valentino shoes, mont blanc, hollister, nike roshe, mac cosmetics, ghd, iphone 5s cases, new balance, babyliss, nike air max, hollister, herve leger, iphone 6 plus cases, p90x workout, oakley, birkin bag, longchamp, vans, ralph lauren, converse

 
At 1:17 AM, Blogger ninest123 said...

ugg boots uk, ugg,ugg australia,ugg italia, moncler, ugg,uggs,uggs canada, moncler, moncler, louis vuitton, canada goose outlet, hollister, louis vuitton, moncler, barbour, moncler, sac louis vuitton pas cher, ugg pas cher, karen millen, louis vuitton, lancel, bottes ugg, canada goose, canada goose uk, gucci, replica watches, juicy couture outlet, wedding dresses, coach outlet, montre pas cher, pandora charms, louis vuitton, converse outlet, moncler, links of london, barbour jackets, thomas sabo, toms shoes, canada goose, pandora jewelry, swarovski, pandora charms, marc jacobs, canada goose, moncler outlet, supra shoes, juicy couture outlet, doudoune canada goose, moncler, swarovski crystal, canada goose outlet, canada goose, ray ban, pandora jewelry
ninest123 16.03

 
At 4:01 PM, Anonymous Anonymous said...

File a warranty claim. They have to have some warranty that stuff will be right or you. Pull file a claim showing they are not up to code on their services performed or there was a defect. Unless you got some unlicensed shady guy.

 
At 7:29 AM, Anonymous Anonymous said...

Beware of tiny home builders in Cleveland Ohio

 

Post a Comment

<< Home