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:
1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.