Home Contractor vs. Homeowner

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 ...

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 ...

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

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.

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.

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...

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 mak...

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.

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!

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 quali...

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...

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. T...

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 damag...

When a homeowner hires a contractor, his contract is with the contractor. The contract is usually for a specific sum and the general contractor (GC) hires subcontractors to do various aspects of the work, and pays them out of the proceeds received by the homeowner. At least, that is the way it is supposed to work. The GC is also responsible for the work of the subcontractors if a problem arises. In the real world however, that is not always what happens. GCs do not always pay their subcontractors, and then subcontractors are faced with the possibility of having to go after the GC, who may be in financial trouble. Their only other alternative is to turn to the homeowner and ask to get paid directly. The homeowner is then faced with the issue of whether she should pay "twice" in order to avoid trouble with the subcontractor. In Massachusetts, subcontractors are protected in part by the lien law, because they have a right to place a lien on the homeowner’s property if the...

A new client came in last week. She is a homeowner who discovered well after her renovation project was underway that her contractor had not pulled the proper permits for the job. She is now subject to the risk that the work may not be up to code, she may be fined by the city, and work needs to be "undone" so that inspections can be made. Homeowners can suffer the consequences if the proper permits are not obtained by their contractors. In addition, in Massachusetts, the contractor must be the one to pull the permit in order for the homeowner to qualify for the Home Improvement Contractor Arbitration Program. When a homeowner is planning a project, he/she should call the town building inspector and find out if a permit is necessary. He/she should also ask if the plans need to be filed with the city. In addition, the homeowner should make sure that the work does not require plans stamped by an architect. Certain kinds of renovations do not require an architect’s involvement, b...

I was invited to a party last week to celebrate the completion of an extensive addition and renovation at a friend's house. The contractor, the architect and others were all present to appreciate the result of months of hard work. The owners could not have been more pleased. As one of the owners said, "We knew he would be slow, but we did not mind. Our contractor was reliable, and he really listened to what we wanted. He never said anything was impossible, or refused to hear us out." As a lesson to all contractors, as long as you do your job, and really listen to the clients, they are more likely to tolerate the delays and unforeseen problems that occur. After all, it's the end result is what really matters.

I have just been appointed to the National Arbitration Forum's panel of arbitrators and mediators. I assume that I will be handling construction disputes as well as other matters. I am also an arbitrator with the American Arbitration Association and the National Association of Securities Dealers.

A post from guest poster Robin Fisk: We’ve all heard the stories of the contractor who didn’t get paid or the sub who got “nicked” when the job ran over budget. The following are a few quick tips to increase your chances of collecting the amount you are entitled to: 1) When bidding or quoting a job, be sure to set a deadline for the owner or GC to accept. That way, they won’t try to hold you to an outdated price or schedule you at a time when you have a full plate. 2) Be sure your contract sets specific times for interim payments and clear rules for determining when they are earned and how much you are entitled to collect. 3) Add a line on your quote or estimate stating that you reserve the right to add an interest charge of X% per month if your bills aren’t paid within a certain time after the due date, and then DO IT. 4) Make sure your contract gives you the right to back charge attorneys’ fees if you have to use one to collect from the owner or GC. 5) State up front in the cont...

This post is aimed at homeowners. When a homeowner starts a renovation project, he/she needs to be realistic about the scope and budget for the project. It is important to make two columns for a home improvement project: "wants" and "needs." The needs are the items that are not negotiable. Usually, they're the reason for the project in the first place. The rest of the plans should fall in the "wants" category. That means that the owner must be flexible and understand that there will be items that fall outside his price range. Homeowners have a tendency to underestimate what things cost. They are also not always familiar with the process involved in adding a design feature. For example, a homeowner might choose to install recessed lighting in a room without realizing that the current electical wiring in the house is not up to code. The minute the contractor opens up the walls, he has a duty to bring the wiring up to code prior to installation. ...

As an attorney, I am often shocked by how quickly employees will turn on their employers when problems occur during home renovation projects. The employees are often as willing as subcontractors to "spill the beans" about a contractor's lack of attendance at the worksite, mismanagement of money, cutting corners, etc. At the NARI/BAGB event, employees had the chance to air their dissatisfaction with their employers in the workplace. So, here's a warning: listen to your employees. They are often the only people on the front line who can alert you if something is going wrong with a project, and protect your reputation. Advice to employers: 1. Pay your employees fairly, on time, and don't bounce your checks. 2. Make clear to your employees what their authority is on a project. 3. Give the homeowner a point person to talk to when you are not there, and let both the employee and the homeowner know whether the employee can make a decision without checking in wit...