For this week’s Guest Post Friday here at Construction Law Musings, we welcome a great friend. Scott Wolfe Jr. (@scottwolfejr)is a construction attorney in Louisiana, Washington and Oregon, and is the founding member of the construction practice Wolfe Law Group. He authors the Construction Law Monitor. He is also the founder of the mechanic lien and preliminary notice filing service, Zlien, and the author of its Construction Lien Blog.
Residential construction disputes come in all shapes and sizes, but very typically have one thing in common: they can get very nasty.
This is understandable, especially in today’s economy. The homeowner is spending hard-earned money on something very personal to them, their home. They want it done right. The contractor is working on really tight margins, and with a diligent client.
These disputes can become frustrating legal battles that costs thousands of dollars. And since it’s such a hot topic politically (there is lots of pressure for legislatures to protect against construction fraud), many states have layers of consumer protection laws that are consequential to both the residential contractor and the homeowner.
This post does not discuss any one state in particular, but gives a bullet-point style summary of some things to keep in mind when starting a construction project. And that’s right, I said starting. The only way to adequately prepare for and avoid residential construction disputes is to take steps before any work begins, and in many cases, before signing the construction contract.
For Homeowner: Tips to Prepare and Avoid Residential Construction Disputes
Tip 1: Hire a Licensed Contractor. This one is very important. If you don’t have a licensed contractor doing your work, you’re taking a very big risk. Unlicensed contractors don’t have much to lose if they run from your job, construction fraud usually occurs with unlicensed contractors, and unlicensed contractors are usually without bonds, insurance, workers comp, and a lot of other things that can ultimately create liabilities for you.
So, tip one is to hire a licensed contractor. You can make sure the contractor is licensed by checking with the state’s agency for contractor licensing. Here are the agencies for a few states (in Virginia and where I practice). Typically, you can search for their license status right online. Washington, Oregon, Louisiana, Virginia.
Tip 2: Request a Written Contract. Get your agreement with the contractor in writing. If it’s not in writing, you can easily find yourself in a disagreement about the agreement.
Tip 3: Read Up on Hiring Contractors. Nearly every state’s contractor board agency has resources dedicated to helping homeowners understand the construction process. Take advantage of these resources. (see Consumer Video in Louisiana, Consumer Publications in Oregon, Virginia’s Consumer Services)
Tip 4: Condition Payments on Receiving Lien Waivers. Protect yourself against paying twice for the construction work, and from getting liens placed against your home. For each payment you make to the contractor, require lien waivers from the contractor and its subcontractors and suppliers.
For Contractors: Tips to Prepare and Avoid Residential Construction Disputes
Tip 1: Require a Written Contract. Get your agreement with the homeowner in writing. If it’s not in writing, you can easily find yourself in a disagreement about the agreement. Plus, many states require contracts be in writing. Breaking these state’s laws can result in penalties, fines, or the nullity of your agreement (depending where you are).
Tip 2: Understand Your Obligations. Unfortunately for residential contractors, there are a maze of requirements when performing work on a residential project. It doesn’t matter whether your just installing a new HVAC system or remodeling the kitchen, or if you’re building a residence from scratch – consumer protection statutes are abound in residential construction, and it’s your job to know them and know them well.
Most consumer protection statutes require some sort of pre-contracting notice get delivered to the homeowner. Understand what notices are required in your state, and fulfill them.
If you fail to furnish the notice, you may run afoul of consumer protection laws which subject you to penalties, damages, and the loss of lien rights.
Tip 3: Take Lots of Photos and Be Organized. From the start of the job, through the progress of work, and at completion – take lots of photos, make notes, keep a work log, and do other things to organize your work and document what you’ve done. You may need it…even before you think you need it.
Thanks again Chris for letting me post on Musings. Keep up the good work.