You’ve undoubtedly heard the new version of the Golden Rule: “He who has the gold makes the rules.”
That, says contractor-author Allen Gorin, should be your mantra whenever you hire a remodeler, whether it’s a major do-over like rebuilding your kitchen or a relatively simple project like replacing your roof.
It’s your money, says Gorin, who recently added a book entitled “How to Nail Down Your Home Improvement Contract Without Getting Screwed” to a virtual library of manuals, tapes and special reports, so you have the power to set the parameters.
Here are some of the specifics the Thousand Oaks, Calif., contractor says should be included in every home improvement contract:
– The contractor’s name, business name, address, phone number and license number. The contractor and his workers will be traipsing through your castle for days or even months, says Gorin, so you’d better be certain who you’re dealing with.
Before you sign, check out all this information with your state contractors’ board. If it doesn’t jibe, the contractor may be unlicensed or perhaps even a fraud.
Incidentally, a post office box won’t do for an address, the contractor advises.
– The project’s start date. This will protect you from a remodeler who says he’ll start the job as soon as possible, cashes your deposit check, and then gets around to you whenever he’s darn well good and ready.
– A completion date. Since a contractor technically can begin work by simply delivering a few materials, this will help prevent him from leaving you hanging. You also need a penalty provision, say $50 a day, so there will be some incentive for the contractor to finish the work on time.
– Extra work or change orders. These should be in writing, not because you or the contractor can’t be trusted, says Gorin, but because they document exactly what has been agreed to.
In fairness to the contractor, extra work or change orders should include a provision for extending the completion date. But Gorin says you also should insist on a clause to protect you, should you decide to change the color before the paint has been purchased or move a fence post a few feet.
– Deposits. “Don’t pay contractors a lot of money up front,” Gorin advises.
Not only is it unwise to hand over a large deposit, it may be a violation of state law for the contractor to even request it.
– Payments. Divide the project into phases, each representing a percentage of the work. Then multiply those percentages by the entire cost so that a dollar amount can be ascribed to each phase. But don’t pay for any phase until it is completed.
– Specifications. Spell out the project in the greatest detail possible, not only the final product but also what labor and materials, including model numbers, will be used.
Once you sign the contract and your deposit check is cashed, “vague specifications work to the advantage of the contractor,” Gorin warns.
“His incentive from that point onward is to bring the project to fruition in as cost-conscious a manner as possible, which is a diplomatic way of saying he’ll probably use the cheapest materials and labor he can while still being consistent with his contractual responsibilities.”
– Allowances. To protect yourself further, the contractor also suggests you add the following clause: “Contractor to specify brand and model number to be installed or to establish a budget within which homeowner may select item.”
This way, you’ll be credited with any money saved from selecting, say, a cabinet, that is less expensive than the one for which the contractor budgeted. And you’ll be charged extra if you pick one that’s over budget.
– Work hours. Set forth the days and times during which the work can be performed. Contractors like to start early, so if you’re a night person, be forewarned.
– Daily cleanup. Designate a single location for debris; otherwise you’ll feel like you’re living at a construction site. And set parameters for protecting your property, such as requiring that carpeting be covered with plastic or drop clothes.
Adding such details to your contract “will scare away those contractors you’d rather avoid,” says Gorin, “and inform the others that sloppiness will not be tolerated.”
– Permits. Address the question of not only who is going to obtain the necessary building permits, but who is going to pay for them. In other words, are the fees included in the contract price, or do you have to pay extra?
– Conflicts. Spell out the manner in which any disagreements will be resolved. But don’t limit your ability to file a lawsuit or at least take the case to binding arbitration.
– Warranties. Ask the contractor how many years he or she will stand behind their work. And make sure the answer is put in writing.
– Insurance. Be sure the contractor carries not only worker’s compensation, which protects you if a worker is injured, but also comprehensive liability insurance, which covers damage to you, your family and your possessions. And make sure all policy numbers are written into your contract.
– Bonding. There are two types of bonds-a license bond and a performance bond. The former is relatively inexpensive and applies only if you can prove the contractor violated the state’s contracting law. With the latter, you are assured that the bonding company will assume responsibility for completing the work properly should the contractor not.
But while a performance bond provides greater protection, Gorin points out, it is more costly, a detail that is usually factored into the cost of your project.
Protecting against a lien
The phrase “mechanic’s lien” brings dread to even the most stout-hearted homeowner. But contractor-author Allen Gorin says there are steps you can take to protect yourself from having liens filed unnecessarily.
Mechanic’s liens are encumbrances placed upon the property as security for the payment of labor and materials. If one is placed against your property, you won’t have clear title-and, consequently, you won’t be able to sell the place-until the lien is satisfied.
Require subcontractors and suppliers to file preliminary notices with their addresses, phone numbers and license numbers so you can contact them to be sure any funds you pay the contractor actually reaches them.
Only issue checks made out to the contractor and either the subcontractor or the supplier. Disputes must be resolved before either party endorses the check over to the other.
