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.

This is the third of my articles about how to protect yourself when contracting for a remodeling of your home.

As I mentioned in my earlier articles, California law requires a written contract between you and your contractor for any work that cost more than $500.  There are some other things you should know as well.

Deposit – Under California law the deposit that can be charged can be no more than 10% of the purchase price up to a maximum of $1,000.  Thus, do not pay more than $1,000 for your deposit.

The written contract must have an approximate start date and an estimated date of completion.  The contract must contain: (1) the price, (2) a schedule of progress payments, (3) a list of the contract documents (including things such as the architect’s plans), and the contractor’s address and license number.

The contract is also required to provide for a way to approve and pay for changes, called change orders.  There should be language about how to keep your project free of liens from not only the contractor, but from the subcontractors and material suppliers.  You should make it a requirement of your contract that you get periodic lien releases every time you make a payment and final lien releases when the project is completed.

You should require that your contractor provide liability insurance and that it has the legally required workers compensation insurance.

Finally, remember that  is illegal in California for a contractor to bill you for work that has not been done or material that has not yet been delivered.

These are some general tips so that you know what the issues are and generally what your rights are, but this is not legal advice and no substitute for a qualified legal review of your contract prior to signing.  It is always better to make sure you are protected before hand, than to have to deal with litigation afterwards.

I have been involved in construction related contracting and litigation for 25 years and have seen many great projects and some amazingly problematic ones.  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.  In my next article I will discuss the types of construction contracts and I will start with the basics on how to protect yourself in advance of problem arising.  If you need more information from me, please take a look at my websitewww.bronitsky.com.

This is my second post on home improvement contract in California.  In my first post I provided some of the basics issues to know about and this article expands on that.

There are basically two types of construction contracts, fixed price contracts and cost plus contracts.  Fixed price contracts are where you give the contractor the design and the contractor tells you what the entire project will cost.  Beware, however that just because a contractor gives you a price for the entire project does not mean that you have a fixed price contract in place.  Often I have seen homeowners who thought they had a fixed price contract only to have the contractor provide documentation showing that what the contractor provided was an estimate, not a fixed price.  That is why it is important to set it out in writing in the contract.

A cost plus contract is where the homeowner agrees to pay the contractor’s costs plus overhead and a fee.  I strongly recommend homeowners not to enter into cost plus contracts without a good understanding of the risks.  The largest risk is that you have agreed to pay whatever the project costs and in fact you may be paying more than that without knowing it.   Labor rates, markup of subcontractor and supplier bills are common areas where homeowners can get charged more than they are expecting to pay.  Be very wary of entering into cost plus contracts.  I will cover this in greater detail in a later article.

The written contract should have provisions for the start and completion of construction and the process of dealing with unexpected conditions and changes from the initial plan.  In the industry, this is known as the “change order” process whereby the contractor submits a request for more time or more money (although sometimes less) resulting from a change from the plan or the discovery of some unexpected condition.  It is critical to set out this process in the written contract so that you do not end up getting a change order from your contractor after the work is done and the costs incurred.  Often times there are alternatives that may cost less and you will want to know that before the work is done.

Payment terms are, of course, critical to the process.  Did you know, for example, that a contractor cannot ask for an initial deposit of more than $1,000 or 10% of the project, whichever is less?  Did you know that it is illegal for a contractor to bill you in advance of completing any particular portion of the work?  California law sets out how the payment process is required to be set out in the written contract and it is designed to make sure that you are getting what you are paying for.  Following the State’s requirement is a must.

In my next article I will talk about how to manage the project to keep you property free from liens and if and when to pay subcontractors and material suppliers directly or by joint check payable to the contractor and the sub or supplier.  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.  You can always contact us at www.bronitsky.com.  Thanks.