Who’s in My House?! What to Consider when Hiring a Contractor

Letting a stranger onto your property is anxiety-provoking as it is, but especially so when that stranger doesn’t have a company name attached to them in case something goes wrong. When you have a specialized project in mind for your property, hiring an independent contractor might be the smartest, or only, option you have to get things done properly. But with no real “employer” to review, how do you know who to hire and how to verify their credibility? Let this blog be your guide into the world of independent contracting, and how to make sure you’re hiring the right contractor for your project.

What should I look for when entering a construction contract with a general contractor?

If you’re looking to find a contractor to build, renovate, or start a new project to improve your home, there are a number of things you should look for before signing a contract with a worker. First and foremost, do your research into the contractor – do they have happy former clients or unhappy subcontractors? The contractor landscape is extremely competitive. While the cheapest option may seem like the best deal, it’s always best to make sure the contractor doesn’t have a reputation for cutting corners or for bailing on projects after being paid.

That said, even the best contractors can run into problems with a project, especially in today’s world with labor and supplies shortages. As a homeowner, it’s best to be informed of your own rights so you can better understand and accept some of the risks involved with a construction project. Colorado protects homeowners with the Colorado Construction Defect Action Reform Act (CDARA) and the Colorado Consumer Protection Act (CCPA) and fortunately, the rights under these laws cannot be contracted away. The purpose of these laws is to provide homeowners with a process to protect their investment, and ensure that the contractor completes the job to your satisfaction.

I feel like I found the right person for the job…Should I sign a contract?

When you hire a contractor to do work on your property, you become their employer, and the contract you both sign will be the most important aspect of the employer-contractor relationship, as it controls the construction process. Most contractors will provide their own form of a construction contract but, like most contracts, these are still negotiable, and there are numerous things to consider before signing a contract. First and foremost is cost and payment schedule. Generally speaking, construction contracts for labor tend to be pay-as-you-go, which helps protect you from the contractor walking out on the job with your money. Because construction requires the purchasing of so many resources, contractors will also usually require that any money you’ve paid is essentially non-refundable. However, you as the employer have the right to negotiate a different pay schedule, perhaps one that aligns with the contractor’s progress on the project, in order to help protect your investment in their labor and your project.

Changes to materials or design are another common issue when it comes to construction contracts. Whether supplies are unavailable or there are unforeseen complications with the project that require changes, it is important for the owner to ensure that the money they’ve spent towards the project materials does not go to waste. Making sure that the contract is clear about the cost of materials can help make sure that contractors properly document all material expenses and that any changes to their plan don’t result in an inferior outcome.

I signed a contract but my contractor is not working out, what can I do?

Before signing a contract with a contractor, it is important to be aware of any termination or recovery clauses you might be agreeing to when you sign. These types of clauses limit your ability to get your money back if you unfortunately have to fire your contractor. While money you’ve already spent on materials is almost certainly non-refundable, earnest money and money that you’ve paid but hasn’t been spent on materials should still be recoverable if you need to terminate your contractor. Be aware still (especially before agreeing), that some contracts may make termination a unilateral option, meaning your contractor is the only one who can terminate the contract.

If you’re considering a project and would like to hire a contractor, or have a construction contract you’d like reviewed, GLO can help ensure that your project goes smoothly. Fill out an intake form to see if GLO can help you.

GLO has prepared this blog to provide general information on legal issues that may be of interest. This blog does not provide legal advice for any specific situation and this does not create an attorney-client relationship between any reader and GLO or its attorneys. GLO engages clients only through specific fee arrangements and signed engagement letters. GLO does not guarantee any results.