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:
- name of contractor, business address, and phone number
(not beeper)
- work the contractor is responsible for doing
- what work (if any) the homeowner or other contractor is
responsible for doing
- who is responsible for obtaining necessary building
permits and inspections
- when this work will be done (start and estimated
completion dates)
- how much the homeowner will pay the contractor for the
work
- when payments are to be made to the contractor
- the contractor must have Workers' Compensation
insurance
- the contractor should provide his/her business license
number
- 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.
