Remodeling? Check Contract Carefully

Dear Jane, My husband and I are in the beginning of a large remodeling project to our home. We have […]

Dear Jane,

My husband and I are in the beginning of a large remodeling project to our home. We have received three bids from different construction companies. We are surprised at how different the bids look. One contractor, the highest bidder, has a lot of paperwork (material lists, legal sounding forms and contracts for us to sign), while the lowest bidder has submitted a bid on one page. When we ask the latter if something is included, he says “yes” and that his “word is his bond.” They all seem trustworthy, but I’m not sure I’m comfortable conducting business on somebody’s word. Can you help me?

Mandy, Hastings, Minnesota

 

Dear Mandy,

Your instincts are correct—good for you! When it comes to hiring a contractor and signing a contract, it is important to make sure your home and finances are protected. Each contractor presents their bid in a different manner, indicating what they will be doing and how much it will cost. There is much variability in what is included and how the contract is written, and yes, some contractors are more detailed than others. Beware of contracts that are brief; too little information leaves a lot to be interpreted . . . or misinterpreted.

Before signing any contract, it is recommended you check with the Minnesota Department of Labor and Industry to see if your contractor is licensed by the State of Minnesota. Contractors and remodelers doing work in Minnesota are required to be licensed, though there are some exceptions to this rule. If you hire an unlicensed contractor, even one who is not required to be licensed, you may have less protection if something goes wrong. Unlicensed contractors may not carry liability or property insurance that licensed contractors are required to have…and you may not have access to the Contractors Recovery Fund if you need to file a claim against the contractor.

A contract should be written using simple language to avoid any confusion. Characteristics and specific information recommended to be included in any remodeling contract are as follows:

Project Scope and Specifications

Ensure that all contractors bidding on your job are bidding off the same information. The scope of work should be very specific as to the remodeling you want done. It should include drawings and dimensions, the kinds of materials to be used, brand names, colors, grades, styles and model numbers. A brief bid leaves too much room for interpretation, and you have nothing with which to protect yourself in the event the contractor does not construct what you had in mind.

Building Permits

Whoever obtains the permits is required to ensure that the work meets all building codes. The contractor should be the one to obtain the permits so that they are responsible for the work.

Starting and Completion Date

Construction delays are to be expected; however, they should be limited. A general statement establishing a starting and completion date while allowing for “reasonable” delays should be included in any contract…as well as the consequences.

Change Order Clause

A change order clause requires that all changes be in writing to protect all parties involved. Any changes made to the contract must be approved and signed by both you and your contractor.

Names of Sub-Contractors and Suppliers

The contract should include the names of all sub-contractors and material suppliers so you can obtain lien waivers indicating all sub-contractors and material suppliers have been paid before you issue final payment to the contractor. This will protect you from any action against you by the contractor, subcontractors or suppliers.

Schedule of Payments

Avoid any contractor who requires a large percentage of the payment up front. It is customary to make a “good faith” down payment of a small percentage of the total job and set up a payment schedule based on completed stages of the project. The total project price or how the price will be calculated should also be clearly defined in the contract.

Holdback Clause

This states that final payment will be withheld until sometime after job completion. This will allow you time to inspect the work, provide an incentive for the contractor to remedy any problems, and obtain lien waivers from the contractor indicating all subcontractors and suppliers have been paid.

Cleanup

Construction and remodeling projects make a huge mess! Be sure to establish who will do the cleaning, how often, and to what level of cleanliness.

Home Warranties

Minnesota law requires that contracts for new-home construction and home improvement projects include warranties against defects. These warranties are in addition to other warranties the parties agree to, and are in place even if no written warranty is provided to the homeowner.

This is a list of the basics that should be included in a contract; there are many other items that can be included, depending on the type and size of job. If your contractor is not incorporating these items, you may want to take it upon yourself to ensure the following issues are documented and signed by both parties. And if you have any questions regarding your interest, you may want to have an attorney review the contract before you sign anything.

Remember, ultimately the contractor works for you, you are the boss! Do not sign anything until you are absolutely comfortable with the contractor and that the terms of the contract are meeting your needs.

Questions for Jane? We’ll cover them in future issues of Home Access Answers. Please contact us at 952-925-0301, www.accessibilitydesign.com or info@accessibilitydesign.com. Jane Hampton, CID, Access Specialist and president of Accessibility Design, founded the company in 1992 to enhance lives through design and project management. They provide design, consultation, project management, and product recommendation services specializing in home access for individuals with disabilities at all stages of life.

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