Legal Tools for the Contractor's Toolbox
I was just thinking about two recent clients who were owed money by owners. One had a contract that was not in compliance with the Massachusetts Home Improvement Contractor Statute and had waited a long time to pursue his money. The other had a contract that fully protected him and contacted me once communication had broken down with the customer. In the first case, my client ended up writing the homeowner a check because he couldn't face the risk of the multiple damages, attorney's fees, interest and costs that are available to the homeowner under the Consumer Protection Statute (c. 93A). In the case of the second, I had no qualms about filing a mechanic's lien and pursuing payment aggressively because my client was in full compliance with state law.
Just as no respectable contractor would work with poor quality tools, contractors and construction companies should make sure that they are working with high-quality legal "tools" that will protect them in the event of a dispute or investigation by regulating authorities.
So, here is a list of the legal tools that should be in your toolbox:
- Make sure you have all required registrations for your field. That includes staying up-to-date on developments in the construction arena. Are you familiar with the special licensing required for roofers, windows and siding, demolition, etc. Do you know about the lead law for residential renovation work? Are you aware of the new continuing education requirement for contractors?
- Invest in a good contract. The Massachusetts Home Improvement Contractor Statute (142A) has numerous requirements for contracts for home renovation work. However, that contract does not necessarily have clauses that protect you. For example, if you don't have a provision that allows you to recover your attorney's fees if you have to pursue payment from a client, you can't collect. Contracts for new construction are different and should not be the same as your renovation contract. All contractors should have contracts with their subcontractors. I have written on this extensively in other posts.
- Use mechanic's liens. Mechanic's liens are a great tool for getting paid. However, the deadlines and procedures for filing them are very strict, and if you don't do it correctly and you miss the deadline, it is usually impossible to fix.
- Demand letters. When clients call, they often ask about filing suit when a dispute occurs. However, filing suit should really be the last resort when there is a dispute. A well-written demand letter can frequently resolve a dispute, and is much less expensive and stressful then a full-blown lawsuit.
- Your lawyer. Clients should call me before an issue arises. I draft contracts on a flat-fee basis and tell clients to call me (for no additional charge) when they want to delete clauses or add language for a particular job. I want to become familiar with their businesses and act as a trusted advisor. Preventing problems before they occur is much less expensive and stressful and enables you to focus on your business. If a dispute does happen, we will discuss the best way to resolve it. We will consider mediation and arbitration as well as the possibility of filing a lawsuit with your goals in mind.