This is my fourth article regarding home remodel contracts. If you have not seen the basics, please take a look at my earlier articles here in my blog. Today I will talk about how to protect yourself during construction should problems arise.
The most important thing to do is to make sure that your contract provides for a change order process. What that means is that if and when something changes, hidden damage, hard rock drilling, upgrading appliances, your contract should have a process whereby the contractor must provide you with a written “Change Order” stating what the problem or change is and itemizing how much it is going to cost.
Perhaps even more important, your contract should provide that until you sign the Change Order, that the contractor cannot do the work. What you are trying to prevent is a situation where the work is done before you have approved it and you are stuck with the bill. Having a good change order process in your contract and enforcing it is very important.
Another thing to do is to require lien releases. In California your contractor, the subcontractors and even the material suppliers can place a lien on your property if they are not paid. Thus, it is essential that when you pay the contractor, the contractor provide you with releases from the subcontractors and material suppliers so that you know that they too are paid. There are forms that can be used for this and your contract should incorporate those forms and you should insist on getting the lien releases when you pay your contractor. That way you will not be in a situation where you have paid your contractor but your contractor did not pay the subcontractors and suddenly your property is being liened and you are stuck with potentially paying twice.
Last for this article, but certainly not least, is my recommendation that your construction contract allow you to issue joint checks. I do not recommend that you do that from the outset, but once you see that there are potential problems, it provides you with some additional protection beyond the lien releases in that it makes sure that the subcontractors and material suppliers are being paid and that your money is going where you want it to go.
In my next article I will talk about permits, owner-builder issues and inspections. The discussion above is not intended to provide legal advice to any particular individual but simply to give the readers some things to think about. Every situation is unique and if you have not done this before I strongly recommend that you contact your own lawyer and make sure you get it right before you get started. If you need more information from me, please take a look at my website www.bronitsky.com.