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.