Ask Art: Hiring A Contractor
Dear Art, I'm thinking about hiring a contractor to do some work on my home. Is there anything I should know? There will come a time for every house when outdated cabinets need replacing, flooring is worn out, a new bathroom is needed, or a new sunroom would be just wonderful. Shopping for a contractor to perform these tasks can be challenging. Here are some tips to use when looking for a contractor and entering a construction contract with them.
Make sure your contractor is licensed with the Virginia Department of Professional and Occupational Regulation or DPOR. You can check on the DPOR website to verify that they are licensed. If they are not licensed, they may tell you, “We have an employee who has a license.” Not enough. Make sure the company you hire has a license. How about a fun experiment – the next time you get a Home Magazine in the mail with all the ads for contractors, go on the DPOR website and see which ones are licensed and which ones are not. You will be surprised. Some unlicensed companies will subcontract the work to another contractor. Some flooring companies will sell you the materials and then hire a subcontractor to install them. Make sure subs on your job are licensed as well. The gold standard in a contract has the contractor stating in writing that it is licensed. This may come in handy if you need to sue for fraudulent inducement. By the way, having a website and a business license is NOT the same as having a contractor’s license. It takes 20 seconds to check online. Why not do it?
Does your project require permits? If so, who will be responsible for applying for them? Who will be responsible for calling the city or county development offices to arrange for inspections? Your contract with the builder should answer all of these questions. If you are not sure whether permits are required or not, you can contact the local development authority and ask. They will tell you. If you hire a reputable licensed contractor, they should know. Either way, the contract should reference questions relating to permits.
Completion dates are often completion goals. It is not going to be complete on the date they promised and if it is, well that’s wonderful but relatively rare. Things happen. If you need to have it done by a certain date, for let’s say a graduation or wedding party, a holiday meal or out of town family visitors, tell your contractor that. In fact, you can put in the contract (where it discusses the estimated date of completion) the following,“ The completion of all construction to be performed under this contract time is of the essence.” The contractor will likely not understand this provision, but it means that the project absolutely must be completed by the projected date or the contractor will be liable for any damages you incur as a result of the delay. Most contracts will state that the completion date is just an estimate and that the contractor is not liable for any delays due to a whole bunch of reasons. However, if you are targeting a very specific completion date, this needs to be discussed with the builder.
Make sure any changes and modifications are in the contract. Any decent construction contract will contain a provision stating that all changes and modifications need to be in writing and signed by both parties. Great provision, however, it is often ignored. The builder is busy, you are busy, and the change to the tile in the bathroom, well everyone agrees verbally that it will be green instead of blue, but does that mean it will happen? The written change is for your protection as well as the builder’s. Pay attention when modifications arise. Getting it in writing and signed is the gold standard. Hopefully, it will never be an issue.
Expect the unexpected. For instance, imagine that old cabinets are removed and the wall has black mold patches throughout. Be prepared for unanticipated costs and delays. Plan for them, especially if you are targeting a very specific completion date.
Paying the contractor is important, but can be tricky. The job costs $55,000 and the contractor wants $35,000 down. What do you do? In an ideal world, the contractor would set that money aside and use it for your project only. That’s very unlikely. More likely, the contractor is going to use those funds for other projects that have gone over budget. Every contractor has them. How you handle this depends upon your negotiating power. In my experience, I once knew a client with a $150,000 remodeling job on a house in New Jersey. He had the cash to pay it in full. I recommended that he take out a construction loan at a bank and let the bank handle the due diligence. They are better at it. He didn’t listen to me. He paid the contractor and the job went south quickly. He sued, but by then the unlicensed contractor was in the wind. That client was my brother, who ended up borrowing another $150,000 to get the job repaired and done correctly.
Do your research as you prepare for your project by selecting colors, looking at surfaces, or deciding between the flat panel and raised panel doors. Internet videos are available on every subject you could think of. Getting rid of carpet and putting in tile? How about researching how to install floor tile? Familiarize yourself with the details. It will help you communicate your concerns to the contractor.
It is everyone’s hope that a project goes smoothly, but sometimes you may need to call an attorney and say, “I just have a few quick questions about my remodeling job…” In that scenario, who is going to pay those legal fees? Under Virginia law, you. If you talk to a lawyer, you pay the legal fees at $400 an hour. However, if your contract has the following provision, “In any dispute arising out of or relating to this contract, the prevailing party will be entitled to recover reasonable attorney’s fees and costs,” that changes things. You may be able to recover those fees. However, be on the lookout for one-sided attorney’s fees provisions where the contractor would be entitled to recover fees but not the homeowner.
We have all heard the old sayings about assuming things and the ounce of prevention. They both apply in triplicate in your remodeling job. That’s because once the tile is up, the floor is down, or the roof is installed, there is little to be done to repair any wrong assumptions. Don’t assume they’re licensed. Don’t assume they will get the permits. Don’t assume. Make sure your builder knows what you want, when you want it, and how much you are willing to pay for it. Arthur Weiss, Esquire, is a graduate of the James Rogers School of Law at the University of Arizona. His other academic accomplishments include a master’s degree in accounting, a master’s of science degree in finance and an undergraduate degree in History and German. He is a member the National Association of Certified Valuation Analysts and regularly confers with business owners and attorneys in matters regarding business valuation.
Mr Weiss regularly lectures on tax matters, valuation issues and IRS representation.
He served twenty years in the U.S. Air Force, retiring in 1989. As a young officer he served in Thailand, England, Germany and a host of bases in the United States. He is married and has two children. HAVE A LEGAL QUESTION FOR ART? EMAIL IT TO HELLO@VIPALEXANDRIAMAG.COM. ALL LEGAL QUESTIONS REMAIN CONFIDENTIAL.