Thursday, August 06, 2015

Why You Need a Lawyer to Review Your Home Improvement Contract

The economy is good.  Home improvement contractors are busy, and homeowners are finally undertaking those renovation projects that they postponed when times were bad.  You’ve done your research and found a great contractor.  Everyone is excited to start the job.  Perhaps you glance at the contract, and it seems fine.  Why hire a lawyer to review your contract?

It always astounds me when homeowners undertake six-figure projects without having a lawyer review the contract.  My rule of thumb is simple.  Always have an attorney look over your agreement unless it’s for an amount of money that you are willing to lose.

Honestly, most contractors (and I represent many, many of them) get their contracts from the internet.  They include standard clauses that are required by state law.  They may have had an attorney review the contract, but that attorney is working for them, and is not representing your best interest.

A contract is a “meeting of the minds.”  It is a way to establish expectations while the relationship is good.  Hopefully, the parties negotiate the contract and then it collects dust on a shelf.
Here are some of the clauses that I put into contracts that are important, and in many cases, required by Massachusetts law.

1.      Scope of work-What exactly is the scope of work?  Which materials will be used, including brands and models?  What is not included in the scope of the work?
2.      Begin and end dates-When is the work going to start? Are permits required? Does the homeowner have a strict deadline for completion of the job? Is the work weather-sensitive? Should there be a penalty for delay?
3.      Payment schedule-Is it a fixed price or time and materials contract? Does payment occur at the beginning or end of milestones? Is it contingent upon a bank loan? Is payment required even if there is an issue with the quality of the work? Can the contractor stop work for nonpayment? Jobs are more likely to stay on track if the payments do not get ahead of the work and vice-versa.
4.      Termination-Can either party terminate the contract? What issues form the basis for termination? How is a termination supposed to take place?
5.      Insurance-What types of insurance are required? Has the contractor provided the homeowner with evidence of insurance?
6.      Authority to make decisions-Who has authority to make decisions on behalf of the homeowners? The Contractor?
7.      Warranties-What types of warranties will be provided?
8.      Dispute resolution-Will the parties attempt to mediate disputes before going to arbitration or filing a lawsuit?
9.      Permits-Which permits are required?  In Massachusetts, the contractor must obtain the permits, or the homeowner will be denied access to the State Guaranty Fund, which is a victim’s assistance fund run by the state to compensate homeowners who have suffered damages as a result of defective work by contractors.
10.  Finally, Rule #1!-All change orders must be in writing, reflect any change in the contract price and the date of substantial completion.

These are just some examples of the issues that should be considered when drafting a home improvement contract.  By making the effort to have a clear understanding of how the project is going to work, both contractors and homeowners can prevent disputes.  The contract can also provide a guide for how to handle disputes if they occur.

When one considers the amount of money and effort that goes into a home renovation, the incremental cost of having an attorney review the contract is well worth it.  In addition, that lawyer can serve as a resource if problems occur during the project.

35 Comments:

At 7:07 PM, Anonymous Anonymous said...

Great site and very helpful information. What would your recommendation be regarding the below scenario?

I had a new roof installed 10 months ago. Upon completion the roof looked fine and passed inspection. However, 3 days later our area received a substantial rainfall and the roof started leaking into the interior of my house in 7 different places. To make a VERY long story short I have had the contractor come back on 9 separate occasions to fix the leaks and nothing is working. Getting them out here anytime there is a leak is like pulling teeth. Typical response time is 2 weeks before someone shows up. The bottom line is I believe the evidence of a continued leaking roof is proof of poor workmanship. I don't want to go to court but I do want to take them to small claims court for the maximum allowable amount. In my area that is only $5,000. At least I can recover some of my funds.

What would you suggest? I have full documentation of all visits and plenty of pictures to support the roof still leaks.

Thank you.

 
At 4:31 AM, Blogger Bill Hauser said...

Hi

I would suggest you to please Don't go with court. You should try to know the real Reason for leaking .Many factors works in this case like poor material , inexperienced contractors , Workman ..etc .
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At 6:56 PM, Blogger Jason Strong said...

My parents are wanting to find a general contractor to come out and take a look at our home. They are wanting to add on to it, but they aren't sure what the perimeters are to do this. I'll have to show them this and see if it can assist them in finding what they are looking for.

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At 6:15 PM, Anonymous Annie said...

Very informative post for those first time home buyers. I believe it's better to make sure you have all your basis covered. Thanks for sharing.

 
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At 2:32 PM, Anonymous Anonymous said...

I will say this when a homeowner is in emotionally charged situation,example I live in a condo, with an Hoa.They change alot for monthly fees, 260/ mo. No mantainance,not to mention a long list of problems.I had pipe explode.It took 30 min for an Hoa after-hours to shut off the hot water,which is locked on the outside of building. I gotc mitigation started. A+ rating BBB.It took over 4 months to put in floors,baseboards.Ihad insurance,Today the work still isn't done.Homeowners become taken advantage of, your risk goes up when you are,a senior,single woman, demographic area,disabled,I fit the entire list.I bet it is still my fault, because this CONTRACTORS know who to size up.Oh this place only had appx 1000sq.ft.I have pics from a property /realestate photographer.Ihave no more energy left. This happens more than reported. It takes money to hold someone accountable.

 
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At 1:08 AM, Blogger East Coast Construction said...

There are many reasons that we need a lawyer before going for new construction in New Jersey. Every professional builder always recommend their clients to do this.

 
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