Renovating Your Home? Get a Contract in Writing!
So you are you considering adding a master bedroom, building a new garage, perhaps a new in-law suite or a finished basement? You have financing in place, and you have met a contractor that you like and with whom you see eye-to-eye. Before you sign over that first check to begin work, make sure you have a writing that details the scope of work to be performed, a payment schedule and work progress terms. Complaints by homeowners against remodeling contractors consistently top the list of most frequent consumer complaints. Our experience substantiates this.
Renovations and remodeling projects to a home often cause major disruptions in one’s normal lifestyle and routine. The stress that can result from such upheaval often leads to resentment between contractor and homeowner. Having been involved in many such lawsuits, we cannot overemphasize the financial and emotional difficulties which can result from ignoring basic business formalities when embarking upon such a project.
A homeowner can easily spend $10,000 to $200,000 or more on home remodeling and renovation projects. Important details are often overlooked in initial discussions between the homeowner and contractor. It is most important to have some form of writing setting forth the basic parameters of the project. It may seem like a simple matter; however too often people casually assume that the parties understand and agree as to the work to be done and the contract price, when they do not. Unfortunately, problems often arise after the work has been “completed”.
The agreement should be reasonably detailed. Drawings and basic specifications should be attached when possible. Payment and work progress schedules should be outlined. Payment terms should specifically correspond to work progress, and a substantial amount of money should be retained by the homeowner for at least 30 days after work is completed. Finally, warranties and representations should be clearly detailed. Disputes between homeowner and contractor often result from changes to the original terms; therefore, it is very important that the agreement clearly state that there will be no modification of the terms or scope of work unless both parties agree to them in writing in advance. And, as the job progresses, be diligent in insisting on an executed change order before any work on the modification begins. There is often a tendency for parties to become too casual in preparing and signing change orders.
Often contractors will propose a form agreement. Form agreements can be good though they tend to favor the contractor. Additionally home remodeling/renovation projects are usually unique and thus may not lend themselves well to a form contract.
There are many good builders who loathe formal contracts and such details; after all, they are hands-on people, not lawyers. However, a reputable builder interested in your business should be able to provide a detailed agreement which will satisfy all parties involved. Lawsuits after the fact are frustrating and costly. It often comes down to the word of the homeowner versus the word of the contractor. It is helpful that you like and trust your remodeling contractor (obviously you should avoid someone you do not like and trust), but put all the details down in writing to avoid disputes in the future. A solid agreement protects the homeowner as well as the contractor. It can also serve to lower the stress that usually accompanies renovation and remodeling projects. Whether you are a contractor or a homeowner getting ready to begin a new project consider contacting our office to make sure the terms of your project are properly put into writing so as to make the project run as smoothly as possible. It is our observation that very often small contractors who do renovations are personal friends of the home owners. There is no device that can better preserve such a friendship than a well-drafted agreement. It can be your best insurance against litigation.
— J. Ken Butera