Written Contract key to great partnership with contractors

We’ve published tips and recommendations for hiring contractors in the past, but we can’t stress certain points enough. With the building season upon us, here are 10 recommendations to keep in mind.

Recommendation #1: Licensed/Bonded/Insured. It is very important to hire contractors who are licensed, bonded and insured for your home improvement projects. Yes, it may be less expensive to hire your brother-in-law or a neighbor down the street to do the work, but we want to be sure you are protected if the work is not done correctly and that you have all needed permits in place so you aren’t fined or forced to have the work done all over again.

Recommendation #2: Create a Contract. Once you’ve selected such a contractor, make the business relationship clear through a written contract! While we are not attorneys and don’t offer legal advice, think of us as an experienced neighbor who has worked with a few contracts over the years.

In addition to your name and address, a contract should name the construction company, all of its owners, all pertinent addresses, phone numbers and the contractor’s license number, bonding agent, bond amount, as well as his insurance company and the liability coverage amount.

Recommendation #3: Trust but Verify: To verify this information and check for complaints, look up the contractor on the Labor and Industries website: lni.wa.gov/licensing-permits/contractors. Or, you can search Washington State Labor & Industries, and an option for “verify a contractor” appears. You may also want to check with the Better Business Bureau or look at online reviews.

Recommendation #4: Scope of Work: Your contract should contain the complete scope of work and any drawings or other specifications (such as a manufacturer’s installation specifications). If you’re not capable of doing this, there are construction management firms in the area, who can help you. Also, include general conditions of the work site such as the hours available to work, keeping a clean site or even toilet use by workers. Being considerate to your neighbors regarding noise and traffic is important.

Recommendation #5: Price. The contract should clearly state the price agreed upon for the job, including all materials, taxes, fees and permits. If you are working on a cost-plus-materials basis, find out the cost of each worker on the job and if there is a mark-up on materials. You may also want to consider a “Not to Exceed” price if you have budget limitations. No surprises. Understanding the estimated costs and time involved is a benefit to both you and your contractor.

This is also the place to define progressive payments. Using a brief description of the progress required for a payment works well. It should also state that before any payment, the contractor, any sub-contractors and any materials company having delivered materials on your property will each turn in an Unconditional Lien Waiver.

This is a legal document that goes into effect immediately after signing. It states that the contractor has been paid for their work and are giving up their right to file a lien against the property. Sample forms can be found on the Washington Department of Labor and Industry website, or contractors can create their own. The document includes the names of all the parties involved including the lien claimant, property owner, etc., the specific project or job, the payment amount, a clear indication of the waiver’s unconditional nature and a signature and date from the lien claimant.

When it comes to payments, small incremental payments are often better than large payouts and can keep the project on track.

Recommendation #6: Dates. Dates are also important elements to your contract. Time delays may occur, but what do you want to happen when the contractor doesn’t call or show up for a couple weeks or drops off the earth?  Clearly stated conditions for adjustments to time and penalties for not showing up or not finishing the job in the contract period should be written out.

Recommendation #7: Changes. What about other changes to the contract? Your contract should include something like this: “The owner and the contractor expressly agree that no material changes or alterations in the work, price or time shall be made unless in writing and agreed upon by both parties and signed.”

Recommendation #8: Permits. Your contract should also address who will be responsible for applying for and paying for any permits, determining building code requirements and arranging for City or County inspections.

Permits are required for most work done on your property and initially you should be the person to call your local official when writing up what you want done. If you have a designer or architect drawing up a plan, they should be held responsible for knowing and designing with respect for the applicable building codes.

Your contractor is also expected to follow the local building code and certainly to follow any professionally designed plan provided and that has been “plan checked” by the City or County plan checkers, before a building permit is issued. This very important step in the process is often not communicated and causes lots of problems that end up in the courts.

Special Note:  We don’t advise allowing any work to be done until the permit is in a sealed bag and attached to the outside of your house!

Recommendation #9: Observe inspections. You should also be aware of each required inspection and plan to be present when the inspection is done. The building official will clearly mark on the permit card when they want to inspect the work. Pay attention to any notes written on the permit card by the inspector. Attend the inspections whenever possible. Know what is going on; it’s your project.

Recommendation #10: Mixed messages.  Don’t mix oral agreements with written contracts. Write every little change down for everybody to sign and date. If the changes affect costs (adding or subtracting from the contract amount) write the new cost changes down and have everyone sign the change agreement.

The better the contract is written and followed, the less likely there will be problems and disagreements. Long after the work is completed, both parties can bask in a job well done.

 Eric Bjella is the executive director of NeighborWorks of Grays Harbor; a nonprofit organization committed to creating safe and affordable housing opportunities for all residents of Grays Harbor County. For questions about home repair, housing counseling, homebuyer education and financing, call 360-533-7828, listen to the extension picks that will best help you and leave a callback name and number.