In the local media there have been several horror stories over the past year of homeowners being taken advantage of by contractors. Weekly in our office we hear of contractors, sub-contractors, suppliers, and other vendors going out of business. The sad reality is that anyone working with these companies – consumers and other businesses alike – gets hurt.
Home construction and remodeling are some of the biggest investments families make in a lifetime. Too often homeowners have a false sense of security about their knowledge in home construction. With their defenses down, homeowners are often not thinking about protecting themselves.
Commercial construction projects have precautionary measures in place to protect the owner and quality contractor, such as certifying applications for payment (making sure the people who work on the job are receiving fair compensation), waiver of liens (requiring all companies that are working on a project to be paid to date as the project progresses), and bonding (additional insurance that will cover the costs to complete the project if the contractor is unable to do so). Residential construction projects do not have the same standards and although there are new laws in place today requiring fair and understandable contracts, most homeowners and small contractors are not aware of them. It is so easy for good intentions to result in a bad experience that today we suggest doing business on a handshake AND A CONTRACT. In addition to a written contract, we recommend:
- Notify your municipality about the project. While you are in the office ask them about the history of the contractor in your area. The building inspector is also there to protect your health and safety, ensuring construction adheres to local codes.
- Even if you don’t need a bank loan, consider obtaining one. The bank will review the contract and guide the pay draws based on the work completed. The bank’s role can be vital in contract protection.
- Obtain construction drawings and written specifications before you bid your project to ensure that you are receiving apples to apples pricing. If you are only working with one builder this will also be to the benefit of both parties. These drawings and specifications will outline what you expect to be constructed. Quality contractors also want a clear scope of work so that they know what they are agreeing to perform at what price. If you are told any differently this should be cause for concern.
- Be skeptical of pricing that is more than 15-20% below other bids as this could be a warning sign that the contractor missed services, is not providing the same detail, or is in financial trouble and needs the job to stay afloat.
- Talk to people. Even if your contractor has a good reputation, the industry continues to face challenging times. It is easy for a contractor to get in financial trouble without anyone knowing. Visit current project sites, talk with recent clients, and ask the proposed subcontractors about their relationship with your general contractor.
- Once the project starts, keep talking! Tell the subcontractors when you make payment, ask them if they are getting paid, and keep the conversation going until the project is complete.
Using these steps should result in happy home building and renovations. For more tips and advice – continue to visit our Facebook page and website blog.