Saturday, January 16, 2010

Why You Need a Good Contract

I have posted on this issue before, but when I was at a BAGB (Builders Association of Greater Boston) meeting the other day, contractors where talking about how difficult it is to present homeowners with a contract, and how they worry about scaring them off with something too long or complicated.

I am sympathetic to that issue, and understand that contracts make people uncomfortable. What I try to emphasize with both homeowners and contractors is that 1) the law requires a written contract for renovation work over $1000; and 2) a contract reflects a "meeting of the minds." The contract is the most important part of preparing for a renovation or new construction project because it helps the contractor manage expectations with the homeowner. Discussing the contract terms requires the homeowner and contractor further define the scope of the project and set a realistic payment schedule. It lets the homeowner know what is included and which additions would require a change order.

The clients learn what would happen if change orders are necessary and how they will be handled. The parties agree on what would constitute an unreasonable delay. Problems are anticipated and dealt with preemptively. As an arbitrator I know says, "A good contract is negotiated, and then it gathers dust on the shelf."

This experience is in huge contrast to the usual scenario in my practice. I receive a call from a desperate contractor or homeowner and things are going terribly wrong. It is usually too late to get the project back on course, and on some level, everybody loses. That is why I started this blog; to serve as preventative medicine, and to encourage more people to take the proper approach to a renovation or new construction project by discussing the project thoroughly. This process ensures a successful home improvement project.

Lead: Renovation, Repair and Painting Program

Over the past couple of weeks I have started learning about the new lead paint law that is going into effect on April 22, 2010. Contractors who do renovation work on pre-1978 houses will have to obtain certification in lead containment procedures. If they do not comply with the law, the penalties are stiff: I have heard that they range from $32,000 to $37,000.

So, I am doing everything I can to get up to speed on the law as quickly as possible, and organizations like BAGB (Builders Association of Greater Boston), HBAM (Home Builders Association of Massachusetts) and NARI (National Association of the Remodeling Industry) are running meetings and trainings to prepare for this change in the law.

As a lawyer, it is my job to anticipate where the legal issues will arise when this law is implemented.

So far, I see the following:

1. Contracts with homeowners will have to spell out the requirements and protect the contractors from liability as much as possible.

2. Contracts with subcontractors will have to allocate liability and record-keeping requirements for each party's role in the job.

3. Documentation will have to be reviewed for compliance.

4. Construction companies will need representation before the Environmental Protection Agency when being investigated or fined.

So, I will be doing my best to protect you and enable you to continue in your business in a productive, successful fashion. Now, more than ever, you will need to have your contracts reviewed and updated to reflect the changes in the law.