hiring a contractor
Want to fix your bathroom? Get a new countertop or cabinets for your kitchen? If you’re not a DIY carpenter, most real estate owners or developers have to hire a contractor to complete their projects. It is important to hire a contractor that you can trust. It is important to have a well structured agreement with a contractor, even the ones you trust, just in the unfortunate but all too common scenario where your project faces an unexpected hiccup. If you want to fire your contractor, your hiring agreement may or may not allow you to get a refund.
Essential elements of contractor contracts
What happens when, three months into your project, the price of materials skyrockets, the contractor’s employees quit, or they start to deviate from the design you gave them? The answer to any of the questions may be complex, but they all start in the same place, what does your contract say? These projects are complicated and expensive. The owners that get burned by bad contractors are the ones that did not have a well drafted agreement for their unique project. It is important to protect yourself by consulting with an experienced real estate attorney, like GLO.
“Payment Provisions” should appear in every written contract during a construction project. Most of the time, these provisions will describe an installment contract. Understanding the terms of the installment contract is important, this allows the homeowner to stand their ground against a contractor demanding more money before they’ve earned it. If the contract has a Payment Provision other than an installment contract, then it’s possible the contractor could start the project, run into a minor issue that they don’t want to deal with, and walk away with all your financing. Ensuring that this provision is clear, unambiguous, and sets up unique markers will be the best way to protect your project.
We’ve already talked about the part of the agreement where you have to give your money to the contractor, but is there a way to get your money back after the contractor failed to meet your expectations? That all depends on whether you have “Material Breach Provision” and “Termination and Recover Provisions” in your written contract. Material Breach Provisions include what happens if the contractor fails to complete work on time (any unexcused delays); poor workmanship; excessive change orders; executing unapproved changes; and abandonment. It is also advisable to include a “no damage for delays” clause with the exceptions of the following: delays not contemplated by the parties; unreasonable delays resulting from fraud, bad faith, gross negligence, active interference or abandonment. The Termination and Recover Provision will outline how you can fire your contractor for any of these issues, and potentially get some of your money back in a refund.
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