Before Installation Begins . . . Sign a Contract
What kinds of things should a contract include?
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Introduction - Name, address, phone number, social security number and date the contract is in effect. Is the contractor’s business a partnership, sole proprietorship or corporation? You want to make sure it lists the installer as an independent contractor, not your employee. This is done so that you are not responsible if the contractor injures someone.
Start and End Dates - A schedule of what will be done when is very important. Most likely, a contractor will not begin until after your “Right of Rescission” has safely passed. The “Right of Rescission gives you the right to cancel a contract within three days of signing provided it was solicited at some other place than the contractor’s place of business.
Scope of Work - A detailed description of the job allowing for change orders or extras should be provided. Should include an exact list of materials to be used, with brand names of materials and exact measurements for your project.
Material Description - The order numbers and brand names of agreed-to products should be listed.
Permits, Licenses, and Zoning - The contractor should obtain any necessary permits and assure all zoning regulations and building codes.
Cleanup Policy - Will there be a trash container in your yard? Will the contractor clean up each day?
Damage - The contract should state that the contractor is responsible for any damage that may occur to your property while on the job .
Storage - The contract should specify where equipment and materials will be kept. Make sure your homeowner’s policy covers any damage to materials from fire or accidents.
Change Orders - When additional work needs to be done along the way, having it down on paper is the best way to avoid a misunderstanding. A change order allows you to amend a contract easily. Signed by both contractor and homeowner the change order specifies any additional material/labor costs and the change in the schedule.
Warranties - The contract should provide all warranties from manufacturers for materials used on the job.
Financing Contingency - The contract should have a contingency clause stating that the contract is not binding if unable to secure financing on acceptable terms.
Suppliers and Subcontractors - Names, addresses, telephone numbers and social security numbers of all subcontractors and suppliers working for the contractor should be provided with proof in writing that they have been paid in full.
Payment Schedule - Be wary of contractors who want all their money up-front. The reasonable solution is to pay them 15% of the cost at the start of the job, 15% at the end of the job, the remained in phases while job is underway. If the contractor needs to buy supplies up-front, 50% may be necessary in order for them to get started.
Dispute Resolution - Explanation of how disputes will be resolved should be clearly stated. Mediation and arbitration are quick and inexpensive resolutions to a dispute, compared to going through the legal system.
Did you know about the FTC’s “Cooling Off Rule”?
If the contract was signed in your home or somewhere other than the contractor’s office, homeowners have 72 hours to back out of the agreement. The “Right of Rescission” Notice must be separate from the contract and shouldn’t be buried deep in the agreement. The transaction must be identified in the notice and the date the rescission expires must be clearly stated.Keeping a Paper Trail is a Good Defense for a Possible Contract Violation
If a contract is violated, it is important to have a conversation with the contractor right away but make sure you document it all in writing. Make a copy of your notes and send it to the contractor then have a lawyer follow-up with a letter asking for the contractor to do the work as agreed or if they can’t get the work done, agree to pay for someone else to do it.