Homeowner Tips for a Remodeling Contract
by Robert J. Bornstein, esq.
Once you’ve settled on the company you wish to remodel your home, you should sign a contract. The one presented to you by the contractor was likely drafted by his attorney and designed to protect him, not you. Knowing what to look for and what suggestions to make can save time and money down the road. Remember, despite all the verbal promises made during the “courtship”, the contractor will likely only be bound by what is actually written on the contract itself.
Make sure the contract adequately describes the scope of work. Its critical to know exactly what tasks the contractor will perform and also what tasks it will not perform. The contract should state the start date and end date for the project. It should also describe the payment schedule. Do not pay more that 25% to start any project. This may be reasonable for the contractor to buy materials, but there are many horror stories about the poor homeowner who paid everything up front and never saw the contractor again. As the job nears completion the contractor will want to be paid in full. If there is a “punch list” of items yet to be completed, hold back enough money to ensure the contractor will finish the job. Then if he fails to complete the “punch list”, you should have sufficient funds to hire a new contractor to finish the job.
The contract should require any change orders to be made in writing. Don’t agree to any change orders unless the price is agreed upon. It is common for the homeowner to decide to go for extras during the project, but contractors view change orders as an opportunity to make extra money. Don’t let you guard down just because the job is off to a great start.
You must read the fine print! If you need a magnifying glass, get one! Look for forum selection clauses which control the jurisdiction for the resolution of any disputes. Don’t agree to go to court in New York, unless you want to hire a big city (read “expensive”) attorney. Also, look out for arbitration clauses requiring use of the American Arbitration Association. Agreeing to arbitration is fine, but there are less expensive options than the AAA.
Make sure both you and the contractor have signed the contract. If you are not dealing with the owner, have the associate sign as “authorized agent for (Name of Company)”.
If at any time you are uncomfortable with the contract have an attorney review it. You may not need to do this for a $300 job such as having your gutters cleaned, but should definitely do it for large jobs such as adding an addition to your home.
About the author:
Robert J. Bornstein has practiced law in Louisville, KY for 15 years in the areas of business law, family law, estate planning and probate and criminal/traffic defense. For more information go to www.LouisvilleAttorney.com or the Bornstein & Bornstein, P.S.C. facebook page.