Steamboat Pilot, May 14, 1992
By Ed Miller and Deborah Ward
At a meeting of home builders, local attorney rich Tremaine pointed out that one of the major problems we face, as builders or homeowners, is that when we listen to the other side we tend to focus on our own interest.
For example, the contractor asks, "Am I going to be paid on Friday?"
The homeowner responds, "Are you working on Saturday?"
Any time a homeowner sets out to complete a remodeling project and hires professional help, communication is the key to a successful business relationship.
One of the best ways to ensure a positive experience is to talk with the contractor, and then put your final agreement in writing. although many homeowners may be intimidated by the legal sound of the word "contact" it is always a good idea to write one.
That doesn't mean anyone hiring a contractor, even for a minor project, must also hire an attorney. Contracts can be simple statements of a verbal agreement between a homeowner and a contractor.
Steamboat Springs attorney Rich Tremaine shared his observations with the builders about contracts and communications. Much of what he told the group is applicable to contracts for home-improvement projects, too. Writer Ed Miller summarized Tremaine's remarks at the meeting. With permission of Muir's Original Log Home Guide, Fall 1991 Edition, a summary is reprinted for the readers of our 1992 Home Improvement Guide.
Any written home building contract needs to address the following provisions:
1. Documents- There may be many documents in the course of a building project, including blue prints, construction manuals, specification sheets, zoning restrictions, etc. These define the scope of the work.
2.Concealed Conditions- There are situations where information is simply incomplete at the time of contract preparation. For example, underground rock formations can cause construction costs to rise considerably.
3. Schedule- This is simply states in calendar time, the target dates for completion time of the project. Without getting lengthy on the subject, be aware that the benefits of finishing on time are generally realized by both the buyer and the builder. Delays can be caused by either party and I'd have to say that it's evenly split. Invariably, the best course is get it right the first time, a re-do later is usually more costly in terms of the time and money.
4. Payment- It is necessary to establish the amounts to be paid, the frequency of the payments and the objectives which warrant payments. Clauses which may stop payment of the work should be clearly defined. Both the owner and builder must respect the fact that the owner may be operating with high interest construction loan and the builder may be operating on a tight cash flow.
5. Changes in work- Almost invariably, changes take place during the course of construction. Frequently, contracts for the projects fail to address this adequately.
6. Dispute Resolution- Provisions should be made to resolve differences that might arise between parties. This should also cover the site of arbitration and how costs for arbitration are to be handled.
7. Responsibility for and to the Subcontractors- Often, in a building project, owners and builders split the responsibility for hiring, firing, and paying subcontractors such as carpenters, plumbers, heating and air conditioning people, electricians, etc. This is a sticky situation if some of the subs happen to be relatives of the buyer.
8.Warranty- Like it or not, the builder legally assumes the liability for a construction project, weather the contract is in writing or not. It's best to not only define the conditions but also to attach stipulated time limits to the warranty.
9. Insurance- This defines the responsibility and the amount of coverage for personal liability, property damage, material loss and workmen's comprehensive insurance during the course of the project. the homeowner will inevitably absorb these costs, but the coverage needs to be indicated.