Wednesday, April 04, 2012

When the Homeowner is a Bully

I've seen a new trend in contractor disputes lately, and it isn't pretty.  Some homeowners are making unreasonable demands on contractors, and bullying them into doing work without getting paid.  They unreasonably withhold payments, or impose penalties for delays that they cause.  They expect contractors to do all kinds of extra work without being paid or changing the completion date.

I have had a series of these recently.  What is a contractor to do?
  1. When first meeting with a homeowner, trust your instincts.  If you are sensing red flags, do not take the job.
  2. Never let the work get ahead of the money.  If there is a change order, make sure that the payment is contemporaneous with the work.
  3. Make sure that all change orders are in writing and reflect any change in the contract price and date of substantial completion.
  4. Include a provision in your contract that entitles you to get attorney's fees if you have to go after a client for payment.
  5. Make sure that your contract is in compliance with state and federal law.
  6. Include clauses in your contract that allow you to stop work if payment isn't made in a timely fashion.
  7. Make sure that your pricing is contingent upon reaching clear-cut milestones and that your clients understand how allowances work.
  8. Do not cut your margins so much that you don't have a cushion in order to profit from a job.
  9. If you work on a Time and Materials basis, bill weekly and communicate regularly with the homeowner.
  10. Send me your contract.  I will review it and let you know if it needs work, and I will quote you a flat fee for bringing it into compliance with state law and adding clauses to protect you.