Preventive Law Tips for Home Construction Projects

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Posted almost 6 years ago. Applies to Oregon, 0 helpful votes

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When Thinking About Renovation of Construction For Your Home

Tis the Season. There's something about Spring. As we crawl out of the cave from our long Winter's hibernation, perhaps it's seeing the sun once again that triggers an apparent desire to also hear the sound of carpentry, to smell fresh paint, to wiggle our toes in newly laid carpet and generally make the neighbors envious. It's time to build something. As our caveman ancestors often discovered the hard way though, there are also pitfalls and predators out there waiting to trip up the unwary. To avoid hazards to your pocket book and preserve your peace of mind, here are a few simple tips which can help somewhat in keeping your project proceeding smoothly and out of court. Try to use as many of the following safeguards as possible.

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Seek Competitive Bids

Get several bids. But, don't necessarily take the absolute lowest without further investigation, particularly if it is way out of line with the others or if the contractor does not seem to own much more than a used truck and some tools. If something sounds too good to be true, that's usually the case.

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Do Background Checks

Regardless of the glowing recommendation from your reprobate uncle or your drinking buddies, run a thorough background check on all the contractors being considered to do the work. The overwhelming majority of contractors are hard working and scrupulously honest, but it never hurts to get others' opinions on the subject. Check at least the Oregon Construction Contractors Board and Better Business Bureau websites to see if the contractors selected are licensed and whether there have been any complaints. Try to find prior customers to see if they are satisfied. Perhaps even check at the County Courthouse to see if there are any lawsuits in the last few years with any of the proposed contractors named as plaintiff or defendant. The court has a public access computer there that allows a name search. A history of disputes, especially unresolved ones, suggests you should keep looking.

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Consider Requiring Performance and Completion Bonds

Even though it might cost a little extra, consider selecting contractors who are able to obtain performance and completion bonds to insure the work will be done as promised. Perhaps insist on "builder's risk" insurance coverage being provided for the particular job. Speaking of insurance, if the contractor will have more laborers than himself on the site, make sure as well that he has workmen's compensation coverage. And, don't just demand it in the contract language. You can ask to see copies of all the actual bonds and policies themselves. At least confirm coverage exists before the work is allowed to start by checking the government websites which have such information.

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Spell Out Both What Is to Be Done and What Isn't

Get a written contract, preferably using a standardized or even preprinted form from a "neutral" third party such those sold by the American Institute of Architects and available in most office supply stores. It doesn't have to be a long one. There are relatively simple small project forms available.

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Get Signatures

Get ALL aspects of the deal detailed. Written "estimates," by the way, are not necessarily the same thing as a signed legally binding contract. It's better than nothing, but not by much. Whatever is agreed upon by the contractor, it should specify who does what, where, when, for how much and possibly even how. Do you have a right to fire and replace the contractor or any subs if displeased? What happens if you do? Must disputes go to court or can they be handled by mediation or arbitration? The bottom line is that if you want to protect your "bottom line," get and keep a fully signed copy. Whatever you do, don't just rely on everyone's memory. That is a recipe for problems. The contractor can be completely honest, but each side merely remembers it differently. For instance, if a contractor says it will cost "between $500 and $1000," it is the former that will tend to stick in the memory of most homeowners. Consequently, put it all in a permanent record with copies.

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Agree on "Convenience" Issues

Eliminate potential sources of irritation during constructions by specifying who does site cleanup for example and how often? What safety procedures will be in effect? Where are supplies and equipment to be stored on site and at whose risk? What are the start and completion dates? Are they firm or are there excuses available for delay? Are there penalties for not completing on time? What defines completion? What standard of quality will be used? Is it industry standard, pursuant to local building code, or something greater than either? Must existing finishes be matched exactly or just approximately? How early and how late will they be on the job site?

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Document Any Changes

The admonition to get it in writing applies to change orders. As projects progress, almost invariably things need to be modified. Before having the contractor go forward, have him or her commit in writing as to exactly what is being modified and how it will affect the overall cost and timing.

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Have the Progress Inspected by Experts

Get all required permits. City permits cost money, but at least it means someone hopefully knowledgeable besides the contractor will be periodically inspecting to see if the caliber of the work meets the minimum building code requirements. Moreover, getting permits helps insure that you will not receive a cease and desist order because the city happens to determine your project is somehow not allowed by the current zoning or other restriction in the ordinances. While you're at it, make sure you are not part of any subdivision that requires advance review or approval from a third party such as a homeowner association architectural control committee. Surprise, surprise.

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Inspect Frequently

Closely inspect the work yourself as it proceeds and closely examine all bills submitted preferably with supporting sub invoices. Don't be paying for the roof for instance if walls are not up yet. Definitely, don't be paying for the roof twice.

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Pay As It Progresses

Minimize advances to the contractor. Also, out of each progress payment, try to have an agreement in place that, say, 10% will be held back by you as a "retainage" until all "punch list" items are finally finished to reasonable satisfaction. Unfortunately, the last 10% details sometimes adds 90% to the total time, especially if you have already paid in full. Think of it as an incentive to hurry completion.

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Get Lien Waivers As Payments Are Made

Get written lien waivers with each progress payment from the contractor and all key subcontractors as to work completed to date. When making progress payments, have the contractor break down the bill into its separate components such as the portion for plumbing or electrical work. Then, write separate "double payee" checks made out jointly to both the contractor and each major subcontractor or supplier for the particular portion being paid.

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Conclusion

If a contractor objects to these techniques, that might itself be a "red flag." Insisting on these supplemental safeguards does not automatically mean you think someone is a crook. They constitute mere good business sense. And, honest contractors will fully understand. Frankly, they are, or should be, just as interested as you in weeding out the bad contractors who tend to give everyone a bad name. Applying these defenses works toward that goal. Obviously, it is not possible in this amount of space to mention all available safeguards, and even if all the above were adopted, it would not necessarily prevent all potential construction related problems. Sometimes stuff just happens even with the best intentions of all parties. However, the suggestions above should go a long way toward either making construction difficulties less likely or minimizing their adverse impacts. In any event, when you are contemplating an upcoming construction project, practice "preventive law."

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A Reminder

[It should be noted that reading this article does NOT constitute formal legal advice or creation of an attorney/client relationship in any way. Nor is it meant to be inclusive of all possible legal issues on the topic discussed. The article is provided merely as a starting point or additional information regarding potential matters.]

Additional Resources

http://law101.us/usefularticles/achecklistforavoidingconstructionwoes.html

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