The best way to avoid dealing with a problem contractor is to sign a contract prior to hiring them and to have a real estate attorney review it. This way, the real estate lawyer can put clauses into the contract that protect you if the contractor you hire turns out to be bad one.
If you have already signed a bad contract and the builder is using it to justify poor practices you should seek out reputable legal advice. A bad contract that is not justifiable in the court of the law isn’t worth a dime, so if you failed to have the contract reviewed by an attorney before you signed it, it may still be beneficial for you to have it reviewed after the fact. It’s also possible for you to sue a contract maker if the terms aren’t quite appropriate according to the contract or real estate law in your state.
Misconceptions of Property Owners
Many property owners get in a bind because they believe that if a problem contractor doesn’t do the job right that they can refuse to pay them. This misconception leads to unnecessary liens against their property, which can cause you major headaches and undue stress.
Contractors, subcontractors, mechanics, suppliers of materials, and professionals such as surveyors, engineers and architects are actually entitled to file a lien against a property if they have not been paid for their services or supplies. It is possible for you to pay the general contractor in full and still have liens filed against your property if you find yourself working with a problem contractor.
This causes the need to worry about a problem contractor who doesn’t pay their bills or their subcontractors. If they purchase supplies on credit for the project that they are completing for you, or if they contract part of the work to subcontractors and they don’t pay them, the suppliers or subcontractors can file a lien against your property, and in some states this can occur without you being notified.
It’s imperative that the contract require lien releases from material providers and subcontractors as well as a clause that somewhat protects the property owner from such liens. It’s also imperative that you make sure that the contractor is licensed, bonded and insured. A real estate attorney can provide such guidance to you to keep you from making costly mistakes by hiring a problem contractor.
Why it’s worth it to hire an attorney in the contract phase
In some types of transactions, you can read a contract and if it makes sense you may feel comfortable signing it; however, when it comes to real estate and hiring a contractor, the stakes are usually high. The costs of an attorney are far less than the loss that could occur if you hire a problem contractor or sign a bad contract.
There are a lot of laws that apply to real estate contracts, under which contractor contracts fall. These laws exist because the stakes are high and there are many problem contractors who have taken advantage of their clients over the years by presenting bad contracts, not living up to their agreements, and not paying their bills.
If you are financing the costs of building a house or home improvements, both real estate law and credit laws apply. The laws can be complex so it is best to have instant access to an attorney that specializes in such transactions. If you have consulted an attorney in this phase of contracting, they will be up to date and ready to answer any questions if you think that the work is not going as planned. Early detection of a problem contractor is certainly better than finding out down the line that you signed a bad contract, that the contractor is a problem contractor, or that you will have to sue a contract maker.
The practices of problem contractors are the reason that finance companies require documentation from a builder during the process and sometimes refuse to provide advances on a construction loan. This can be irritating to you because problem contractors often blame delays on the finance company, when actually the finance company is protecting their interests as well as yours. For instance, the bank or finance company may require receipts, contracts with subcontractors and releases from material suppliers and subcontractors, as well as inspections before releasing funds to the contractor. Such practices are taken on in order to protect the finance company and the property owner from the unethical practices of problem contractors.
If you already hired the contractor(s)
If you didn’t consult with an attorney before hiring a contractor or contractors, there is still hope! Just about any event that led you to believe that you contracted with a problem contractor is worthy of a consultation with an attorney who is experienced in contractor dispute legal services. Regardless of what the contract says, there may be some laws that exist that can protect your interests when dealing with a problem contractor. There may even be laws that will void a bad contract if you are dealing with a problem contractor. You will never know if you don’t ask a lawyer who specializes in real estate law.
It is best to get a lawyer by your side from the beginning, but it is never too late to hire a lawyer to protect your interests. Don’t think that you have to deal with a problem contractor throughout the project until the end and then hire an attorney to sue a contract breaker or the other party of a bad contract. Relief might be just around the corner. If an attorney is involved, a lot of problem contractors mend their ways. If they don’t, it is possible to legally get out of the contract and to be reimbursed for damages and delays.