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Newsletter September 2005

 
 
Dear Karen,

As a community service, the Law Offices of Karen M. Riggio, LLC publishes a complimentary e-newsletter designed for business owners and independent contractors. Each month, we offer valuable tips and practical, real life answers to today’s common contract issues and collection problems. Feel free to e-mail us your suggestions for future articles.

 
 

Get It In Writing: Top 10 Contract Essentials
Avoid Risks from “Handshake Deals” – By Attorney Karen M. Riggio

As a contractor, you need to protect yourself against collection risks. If project expectations are not clearly defined, it may create a situation where the homeowner fails to pay you after services are performed.

When you have a written contract, the potential for misunderstandings between you and your homeowner client is drastically reduced; you are in a much better position to demand timely payment for your services, once the work is performed.

Risks with Handshake Deals

Some contractors choose “handshake deals” with homeowners. When there is a misunderstanding, what happens when the homeowner refuses to pay? If you and your client cannot agree on matters, you may have considerable difficulty taking action to protect your interests.

If you choose to take the homeowner to court, (which may be your only option), not having a written contract can cause problems. If you are a home improvement contractor, you will not be able to collect in court without a written contract that complies with the CT Home Improvement Act. It is likely that you and the homeowner will have different opinions on what your "deal" was. The judge will have to decide who to believe or determine what seems fair, given the circumstances. Either way, the final result may not be to your liking. Having a written contract cannot prevent all problems from occurring, but it can make them less likely, easier and far less expensive to resolve.

Top 10 Contract Essentials

The contract needs to fully define what you and the homeowner have agreed to. The level of detail that should be included in a contract will vary with the size and complexity of the project. For a new home building or renovation project, the contract should include details of the design, material and product specifications, the project schedule, costs, and payment arrangements. For simpler home repair jobs, less detail may be needed, but it should still provide a clear warranty on the work – specifically what is covered and for how long. Attorney Riggio provides these top 10 contract essentials:

  1. name of contractor, business address, and phone number (not beeper)

  2. work the contractor is responsible for doing

  3. what work (if any) the homeowner or other contractor is responsible for doing

  4. who is responsible for obtaining necessary building permits and inspections

  5. when this work will be done (start and estimated completion dates)

  6. how much the homeowner will pay the contractor for the work

  7. when payments are to be made to the contractor

  8. the contractor must have Workers' Compensation insurance

  9. the contractor should provide his/her business license number

  10. a 3 day right of recession clause (this Connecticut law is part of the Home Improvement Act that provides consumers an opportunity to change their minds without any cost).

A detailed written contract between you and the homeowner is essential, whether you are doing a simple home repair, major renovation, or even building a custom home. If you get involved in a handshake "cash deal without a written contract, problems are more likely to occur and will be much harder to resolve.

 
 


Since 1983, Attorney Karen M. Riggio has helped thousands of clients create clear and concise written agreements and avoid potential business disputes. Her practice concentrates in business and commercial law, and provides experienced legal counsel in contracts, debt collection, dispute resolution, and real estate. For more information, call 203-968-8715 or visit www.kmriggio.com.


© 2005 Law Offices of Karen M. Riggio, LLC
Concentrating on Business and Commercial Law
Connecticut • New York

 
 

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Law Offices of Karen M. Riggio | 20 Sherwood Road | Stamford | CT | 06905