I’ve represented a number of people in lawsuits against their builders. Several years ago, one of my clients and I half-joked that we were going to write a book together about avoiding bad contractors.
We never got around to writing the book, but I do want to share some of the tips. Because while tragedies oftentimes bring out the best in people looking to help others, they also bring out the worst in people — those that want to take advantage of the situation.
Here are some of my tips.
1. RESEARCH YOUR POTENTIAL BUILDER. First, ask for recommendations from those you know and trust. Once you get those recommendations, research the options. Do the traditional research by asking for references & checking up on those references. But also go that extra step and look online to see what reviews or complaints your builder might have out there. Given the large investment you’re about to make, it may make sense to even pay a little for services such as Angie’s List.
2. MAKE SURE YOU UNDERSTAND THE CONTRACT. Contracts are confusing, and the construction contract will likely be for more than $100,000.00. That’s a lot of money. Make sure you understand whether you’re entering into a flat fee contract or a cost-plus contract. Make sure you understand the scope of the work that is included in the contract (as opposed to what might be upgrades or additional charges). Make sure you understand the warranty that the builder may be offering. A little work up-front can prevent huge problems later.
3. DON’T PAY THE CONTRACTOR TOO MUCH UP-FRONT. We sometimes see cases where the profit in the job is in the earlier part of the construction so the builder, satisfied with those early profits, walks off the job. You need to make sure that the negotiated payments provide an incentive for the contractor to stay on the job.
4. MAKE SURE THE CONTRACTOR IS PAYING THE SUBCONTRACTORS. Under Texas law, if the contractor doesn’t pay the subcontractors, the subcontractors can put a lien on your house. You can minimize the risk of that happening by requiring the contractor to provide you lien releases from the subcontractors with each draw request. Lien releases are formal documents from the subcontractors saying that they have been paid through various points of the project.
5. CONSIDER HIRING AN INSPECTOR TO COME INSPECT THE CONSTRUCTION PROCESS. This is an extra cost, but it’s worth it to make sure the house is being built properly. Again, it is worth paying someone to make sure that the framing is done right, that the windows and other penetrations to the home are flashed properly, etc because those types of defects can cause a lot of damage and be expensive to repair later on down the road.
These aren’t all the tips, certainly, but if you follow these instructions, I think it’s a little less likely that you’ll be taken advantage of or be the victim of shoddy workmanship.
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