Are You Starting a Remodeling Project in Your Home?
Remodel projects can be rewarding, add value to your home, and increase the satisfaction you receive from your living space. Often, when owners decide to proceed with a remodel project, they fixate on their desired goals without properly appreciating the steps they should take to avoid having their project devolve into a nightmare. As construction defect attorneys, we regularly see well-intentioned remodel projects turn into costly messes that our clients might well have avoided with a few precautionary steps – taken long before a contractor swings a hammer – to protect themselves. Here are 7 steps that owners can take to avoid costly losses on remodeling projects:
- Always vet potential contractors. You should make sure that the contractor you want to use for your remodel project is properly licensed, insured, and bonded by visiting https://secure.lni.wa.gov/verify/. You can also use this link to see whether others have made claims against the contractor’s bond. Numerous claims against a contractor’s bond can be a sign that the contractor’s projects tend to end in dispute or litigation. Also, ask the contractor for a few recent references.
- Make sure that the plans, drawings, and specifications are clear. Having a detailed, specific scope of work before a contract is executed can be crucial to avoid paying a contractor more for work you thought was part of the contracted scope, but the plans did not clearly detail.
- Use a written contract. A contract that clearly and thoroughly lays out the parties’ respective rights and obligations. The contract should include specific terms detailing the method of payment (e.g., fixed price, time and materials, or cost plus), the contractor’s responsibilities to manage the work and follow code, who will obtain permits, the project’s scope of work, how payments are made, project commencement and completion deadlines, how the parties will proceed if changes to the project scope of work are needed or desired, and what happens in the event of a dispute. Don’t just sign the contractor’s contract. You should have an attorney review and, if necessary, modify the contract to ensure it is not completely one-sided in the contractor’s favor.
- Unless the project is small, avoid paying a major portion of the total contract price up front. A 50% down payment on a $150,000 remodel project could create major headaches for the owner if the contractor abandons the project early or cannot perform the work.
- Discuss Lien Waivers. If possible, include a provision in your contract that requires the contractor to provide you with lien waivers from itself and any subcontractors or suppliers before the contractor is entitled to a progress payment. Lien waivers can prevent owners from having to pay twice in the event the contractor fails to pay a subcontractor or material supplier.
- Identify red flags early. Failing to properly man the project for weeks, coming to the project only briefly each day, demanding payments beyond what is owed under the contract, performing certain work without permits (e.g., most electrical and plumbing work requires permits), failing to pay subcontractors or suppliers even though you paid the contractor for that work, and threatening to stop work unless you pay more money than what you owe are all red flags that appear often in projects that eventually come off the rails. If you see one or more of these red flags, seek the assistance of an attorney immediately. Project problems and financial losses only tend to multiply when owners ignore red flags.
- Know your contractual rights. If a project goes south or the relationship between the owner and contractor breaks down, know your rights under the contract. If the contract requires you to follow a certain procedure before terminating the contractor, you may have to follow that procedure. Failing to comply with termination terms, even if the owner could terminate the contractor for cause, could mean that the owner is in breach of the contract.
Regardless of the size of your project, consulting an attorney in the project’s initial phases can mean the difference between a smooth and successful project and litigation with a contractor that could span months or years and cost tens of thousands of dollars or more. And if your project has turned south, consult an attorney so that you might limit your losses down the road. If you’re seeking legal help for remodeling projects in your home, please feel free to contact us today!