Tuesday, February 19, 2008

Anatomy of a Claim Against a Homeowner

The other day I posted on the usual procedure for bringing a claim against a contractor. Today I am focusing on what the contractor should do when bringing a claim against a homeowner. Some of these steps specifically apply to Massachusetts law.

1. Make sure you have a good contract that is in compliance with your state law. In Massachusetts this means complying with the Home Improvement Contractor Act, M.G.L. c. 142A. Keep in mind that you cannot collect attorney's fees in MA unless you include that provision in your contract. Decide whether you want an arbitration and/or mediation clause in your contract.

2. Make sure you are registered with your state, if required.

3. If the homeowner refuses to pay, file a mechanic's lien. Remember that the law regarding mechanic's liens is very specific and it is very easy to fail to do it properly.

4. Write a demand letter to the homeowner with a clear explanation as to why you are owed the money. Give the homeowner a chance to say why he/she does not want to pay, and try to resolve the situation without being forced to take further action. It is much easier for a contractor to address a punch list item and get paid quickly than to be forced to file a claim against a client. In Massachusetts, you could be subject to double or triple damages, attorney's fees, interest and costs if you violate the MA Home Improvement Contractor Statute.

5. File suit to enforce your lien, or make a demand for arbitration or mediation.

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