Home Renovation

 

Creating the Right Contract


Write it Down!


Before you start building,
get the legalities right.

The more complex the renovation, the more to nail down at contract time. And remember – never assume. When it doubt, write it all down.

Once you’ve chosen your architect, specialized kitchen or bath designer, contractor, design/build firm, or some combination, it may take several meetings on-site, at trade or supply houses, or in their offices to specify materials, finishes, fixtures, appliances, and so on. These are called “selections,” and they should all be written into the final contract. At time of contract signing, you will make a relatively small payment as a deposit on the work to come.  

The Contract Should Include:

  1. Detailed description of the project
  2. Specification of materials, finishes, fixtures (bath, lighting, kitchen, built-ins, trim work, floor finishes, countertops, tile, doors and windows, door & window hardware, and any other selections)
  3. Specification of any materials, fixtures, accessories, etc., that will be provided by the homeowner
  4. Other allowances for fixtures, finishes, etc. that may be chosen during the course of the project
  5. Start date, estimated finish date
  6. Schedule, milestones, other project plan items such as permits, inspections
  7. Payment terms (amounts, dates or milestones)
  8. Communication methods
  9. How disputes are handled
  10. How change orders are handled
  11. Portable toilet facilities, safety, waste disposal, cleanup
  12. Protecting plantings/landscape; dirt-moving/fences
  13. Warrantees
  14. What constitutes final acceptance
  15. Attached architectural plans
  16. Attached site plans
  17. Attached surveys

Note – if you do sign a contract and then have second thoughts, the Federal Trade Commission’s “cooling off rule” may apply. It allows you a 72-hour period in which to cancel the agreement.

For a few more tips, peek here.

More tips for contract time and after

  1. Stay informed. Research new materials, new methods; ask about changes to code.
  2. Many contractors are happy to make special provisions for doggy doors, temporary fencing, or other accommodations to make you and your family as comfortable and safe as possible. Write these into the contract if you wish.  
  3. Long periods of time can pass between meetings with designers and the start date of construction. If you’ve forgotten what you selected and need to know - faucets, fixtures, countertops – just ask.
  4. Designers are happy to email or fax copies of specifications during the job so you can match other items like paint colors, lighting fixtures, or other accessories.
  5. Ask anything – there are no stupid questions.

Contractor Qualifications – Licensing

When you are qualifying contractors, be sure to ask if they are licensed. If you don’t meet in their office, and see their licensing, ask to see it, or, verify it.

Licensing or other qualification is generally regulated on a state-by-state basis. Many states have no licensing requirements for general contractors. In some instances there is regulation at a local (county or city) level. Licensing and certification does exist for many specialty areas, for example asbestos handling, electrical work, and mechanical work.

Why Does Licensing Matter?

Licensing potentially impacts the consumer’s safety. In a nutshell, licensing means a certain standard of skill, ongoing training, and experience is required and verified through periodic examinations.

That means increased likelihood of safe practices, and reduced likelihood that you will be paying for inexperience, time overruns, or shoddy workmanship that will not pass local building codes, or make you happy with its quality.

Licensing Trends

Increasingly, states are moving towards requiring general contractors to be licensed or certified. Even if a state does not require licensing, good renovators will undertake various certification programs, hire only qualified (certified, licensed) subcontractors, and will be happy to tell you so.

Click here to Show/Hide Examples of State Licensing Requirements

The following are examples of state licensing requirements for general contractors and certain specialty areas drawn from various parts of the US. This is not an exhaustive list. Check available resources at the time of your contractor assessment.

State Sample Licensing Requirements
Florida - Must be registered or certified to do construction work
- Registered contractor’s licenses are obtained at local level
- Certain counties may require certified license to work in their area
- Licensing is required for general contractor, electrician, asbestos handling
California - Must be licensed to do most building project work if any part of the contract totals $500 or more
- Building projects are grouped into categories, including 39 specialty areas (electrical, plumbing, roofing, hazardous material handling, etc.)
In general, licensing requires four years of experience in applicable trade
Georgia - In the process of setting state-required licensing for general and residential contractors, expected to come into effect in 2006
- Currently requires licenses of electricians, plumbers, and other specialty areas
Texas - No license required for general residential
- Home builders are not required to be licensed, but are required to be “registered”
- Certain specialty areas require licenses, including electrical, fire sprinkler systems, plumbing, well drilling, HVAC 
Arizona - License required for residential jobs over $750
- Individual trade certifications may be obtained for a variety of areas, e.g. general swimming pool contractor, concrete, masonry, electrical, plumbing, etc.
Illinois - Most contractors are not required to be licensed
- Roofers are required to be licensed
Maine - No general licensing required
- Specialty licensing in electrical, plumbing, a few other areas
New York - Regulated at the local level, with the exception of asbestos handling
Minnesota - License required of residential builders & remodelers
- Specialty licenses in electrical, HVAC, and other areas

Click here to Show/Hide Examples of State Licensing Requirements

A good source for finding out if your state regulates contractors is www.reliableremodeler.com/lic_req.asp

Insurance and Bonding

A good renovator will carry workers compensation and liability insurance, should anyone be injured on your site.

Bonding means that the contractor is essentially guaranteeing his work. While it isn’t insurance, it is similar to insurance. The contractor is purchasing the availability of a certain amount of money, in case of financial difficulty. Or, should he ever abscond with your payment and not deliver on the work, the bonding agency will compensate you.
 
Both insurance and bonding are the sign of a good renovator – and a good sign for you that this is a financially stable, professional organization.

Conduct Background Checks

Verifying licensing and certifications, as well as financial status, insurance, and other facts about your renovator (any liens against them, any suits or other legal hassles) is as easy as a few phone calls, or clicks on the Internet. The local Better Business Bureau is a good resource, as are various online background checking services which can provide a great deal of information at relatively low cost.

If you’re about to embark on a $30,000 or $130,000 project, isn’t $130 for 3 background checks a good investment?

Permits

Before your renovation can begin, a number of permits may be required. Certain cities and counties require permits for

  1. mechanicals (heating & air)
  2. plumbing
  3. electrical
  4. sewage
  5. chimneys & fireplaces
  6. tree removal.
Variances, Surveys, and Ordinances

Exterior changes may also require permits, and proposed changes in the footprint of your home may require a variance – in other words, there may be mandatory “set back” distances from the street, from your property lines relative to neighbors, and so on.

A survey is often part of the paperwork involved in purchasing your home. If you don’t have a copy of your site survey, find a surveyor through the Internet, phone  book, or a realtor. Surveys are easy to get, and not terribly expensive. A survey of your property is used by your architect in his or her drawing. If a digression from the usual rules is needed, then a variance can be applied for.

Note – obtaining permits requires knowledge, money, and patience. The timeframes to get permits will vary, and permits as well as variances must be applied for before beginning construction.

Be sure your architect or contractor is aware of local permitting, variances, as well as local ordinances governing noise, trash disposal, where dumpsters can be located on-site, and so on. Qualified remodelers will have the experience and knowledge to build all of this into the project planning and the budget. Failure to do so may mean delay and additional cost that comes from a “stop work” order and possible fines.

Inspections

Another source of delay – but a necessary part of the process – are inspections. At various points in the process, city, county or other officials will be scheduled to come and inspect the work that pertains to complying with safe local building code.

Building codes vary by location. For example, hurricane strapping in roof structures is now code in regions that are affected even by peripheral hurricane wind and rains. Earthquake areas have very different building code needs, to accommodate tremors as well as quakes. Qualified contractors will know local code, have access to the trades people with the necessary skills to implement it, and access to the materials you need so your renovation is built for safety, as well as function.

In the example of a bathroom addition, a typical set of inspections would take place at both rough and finish stages of each of these:

  1. framing
  2. pouring of any footings
  3. mechanical (heat, ventilation, air conditioning)
  4. plumbing
  5. electrical.

A final “certificate of occupancy” is issued to the renovator or contractor when all inspections have been passed.

One of the reasons that renovations do not always run on schedule is because of delays in getting permits, and delays in inspections. Remember that even the best renovation contractors can’t control the schedules of city and local government.

Another good reason to follow code and pass inspections is future resale. Following an accepted offer on your home, it will be inspected prior to completion of the purchase transaction. Any code violations found at that time will be disclosed, and need to be addressed. So it’s pay-me-now or pay-me-later, and today’s dollars are probably cheaper.

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