The Importance of Documentation

Over the past few months, I have worked with the California State Contractors License Board (CSLB) investigating several complaints against contractors performing home improvement work. All of the cases involved work not performed to industry standards, and most also involved substantial portions of work not being completed, and the fact that the contractor was paid more money than what he or she was entitled to.

The problem with complaints involving a contractor’s work is that the consumer is the one who often winds up investing a lot of additional time and money in trying to resolve the complaints. What I found interesting is that in each of the cases I worked on, the contract and description of the work to be performed between the homeowner and the contractor were poorly written and vague. This one fact substantially compromised the homeowner’s ability to justify their claims their claims against the contractor, and their ability to receive an appropriate judgment.

Unfortunately, most consumers do not realize the importance of proper documentation when dealing with a home improvement contractor. Documentation is critical if a job is to be completed as planned, and at the agreed upon price. Without it, resolving disputes can be a long and drawn out battle. It can take months, and sometimes years to settle most construction related disputes. To make matters worse, homeowners often spend more than the cost of the remodeling job in trying to settle a dispute with a contractor.

The very first thing a homeowner should do when considering to hire a contractor is to verify that the contractor is properly licensed and carries general liability and workman’s comp insurance. This can be done by contacting the CSLB at their website, www.cslb.gov, or by calling them at 1-800-321-2752. This sounds simple, but I am amazed at how many homeowners fail to do this, and wind up contracting with someone who is not licensed or qualified.

Once you have verified that the contractor is appropriately licensed for the type of job you want done, the next step is to establish a contract that clearly describes the work to be performed and the terms of payment. The contract should state an approximate starting and completion date. It should also describe the order in which the job will proceed, and who will be responsible for the selection and payment of the material.

In one of the cases I investigated, the contractor was hired to install a hydro-massage tub and the contract did not specify a specific brand or model of tub. The contractor went ahead and bought a new (ordinary) tub and installed a hydro-massage kit that hangs over the edge of the tub to circulate the water. Yet the contractor charged the client for a complete packaged unit where the motor and pump were below the tub, and the water jets are molded into the sides. The homeowner was shocked to see this, and had a difficult time in trying to prove the installation was not what she had ordered because there was no documentation specifying the type of tub.

Almost every home improvement job involves changes to the contract. This could be in the form of additional work being performed, or changes to materials or fixtures being used. A good contract has language stating that change orders will be in writing, will indicate how much will be charged, and how the change order will be paid for. Never allow a change to be made on a job assuming “it can be worked out later”.

In addition to clearly stating what work is to be performed, a good contract also states how and when payments will be made to ensure that the contractor is only paid for the work that is completed. Remember, a contractor can only charge a down payment of $1,000.00 or 10% of the contract price (whichever is less) before any work is actually performed. Once the contractor delivers either material or labor to the job, he or she is entitled to receive compensation.

Therefore it is wise to establish exactly when payments will be made. Usually payments are tied to the completion of major portions of the job, or when a substantial amount of material is delivered to a jobsite. For example, on a bedroom addition it is common to make a payment after the foundation is poured and after the rough framing, plumbing, and electrical are installed. There could also be a payment made at the delivery of the sheetrock and floor coverings, and then one final payment once all the work is completed.

The contract should also state that the work is to be done with permits. This is where many homeowners get into trouble. Contractors will sometimes tell the homeowner that permits will add to the cost of the job, are not really necessary, or are not required. Without permits, the municipal building department cannot inspect the work to verify that it meets minimum health and safety requirements, and this may expose the homeowner to future liabilities. It is always best to have the contractor obtain the permits.

Finally, the most important thing a person can do is to check references and visit similar jobs that their contractor has performed. More often than not, a reference can give you information that will help you with your decision on whether or not to hire. Also, seeing the actual work a contractor has completed will prevent any misconceptions as to the level of skill and professionalism he or she may possess.

Take the time to investigate a contractor’s license, establish a written contract clearly describing the work to be performed, and record any agreements or changes that occur after the contract is signed. It will be your best defense in ensuring that your home improvement job is successful.

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