Thursday, November 1, 2012

HOME IMPROVEMENT PROJECTS


Home improvement projects that require a contractor to complete are often fraught with problems unless proper planning is made from the start, including selecting the right contractor, knowing the applicable local laws, and knowing your rights as a homeowner. 

            The first step in any successful project is knowing what is required by your local community.  Many homeowners pursue projects without appropriate approvals, and then end up with fines, and expensive restoration projects instead of improvements.  If you live in a city, you should check with the local planning department to determine if a permit is needed and any restrictions on your planned project.  Each city is different, and just because one city does not require a permit (say for exterior painting) does not mean that another does not either.  If you live in an unincorporated area, the county determines applicable permit requirements.

            In addition, many owners are subject to a homeowners or condominium association restrictions, and therefore any exterior projects will likely require approval from the Association as well.  In addition, in a condominium, interior projects that affect the common elements also require Association approval prior to commencing any work.

            Selecting a contractor is often purely driven by price, but you should always interview at least two to see different perspectives.  Also, if the price different is substantial, there may be issues that the cheaper contractor is not considering, so meeting a third contractor may be necessary.  Sites like Angie’s List and the Better Business Bureau should be checked, as well as the state’s contractor license website for validity of licenses and complaints.  In addition, always ask for a copy of the contractor’s license and current insurance before giving any money to a contractor.

            One extra question to ask any contractor is simply, “will you use subcontractors.”  If the answer is yes, or during the work you receive a Notice to Owner in the mail, extra precaution is necessary when paying the contractor.  That is because subcontractors are entitled to receive payment even if the owner has paid the contractor.  For example if an owner owes a contractor $30,000, and the subcontractor is owed $15,000 and the contractor fails to pay the subcontractor then in that event the owner will have to pay the subcontractor to avoid a claim of lien. While the owner may pursue a claim against the contractor, if the contractor has gone bankrupt or has no funds the owner may have no avenue of recovery. Therefore, if there are subcontractors or you receive a notice to owner (which is notice from a subcontractor that they are providing work at the project) you should make sure that before the contractor is paid you receive a release of lien from any subcontractors before making payment. The release of lien protects the owner from the subcontractor pursuing a claim against the owner for payment.
            One common problem in many projects is that once the work is completed the contractor fails to obtain a final certificate of completion from the local municipality. The work may appear done but may in fact not be properly completed, or the contractor may have failed the final inspection. Sometimes the contractor simply fails to call for a final inspection. In that event, the projects permits will eventually expire and the owner will be cited by code enforcement for failure to obtain final approval of the permitted work.  This can result in fines and costs for failing to complete the project.

            Therefore, final payment due any contractor should be conditioned upon the contractor providing proof of completion as well as proof of passage of any final inspection and a certificate of completion from the local municipality. If you have work that has been completed but that does not have a final certificate of completion and the contractor no longer is why cooperative, and owner has the option of reopening the permit as owner builder, requesting inspection and assuming all work has been properly done, obtaining a final certificate of completion.

            As you can see, hiring a quality contractor is crucial to a successful job. In addition, large project should be reviewed by an attorney to make sure that all your legal rights are protected. Failure to heed this warning can result in a costly mistake to your most valuable asset, your home.

Michael J Posner, Esq., is a partner in Ward Damon a mid-sized real estate and business oriented law firm serving all of South Florida, with offices in Palm Beach County.  They specialize in real estate law, and can assist owners and lenders in all real estate construction matters.  They can be reached at 561.842.3000 or at www.warddamon.com

16 comments:

  1. There are three main approaches to managing a home improvement project: hiring a general contractor, directly hiring specialized contractors, or doing the work oneself.

    A general contractor oversees a home improvement project that involves multiple trades. A general contractor acts as project manager, providing access to the site, removing debris, coordinating work schedules, and performing some aspects of the work.

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  7. Contractors are often difficult to work with and never meet deadlines - make sure you get hardlined deadlines in the contract!

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  11. General Contractors manage all aspects of your project, including hiring and supervising subcontractors, getting building permits, and scheduling inspections. They also work with architects and designers.

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