Homeowner's Mistakes
As a construction lawyer who has not only practiced construction law for over 20 years, but also has been in the homeowner’s position and have made my own mistakes, there is a very specific trend of top mistakes that are being repeated by homeowners (and even contractors) time and time again. I wanted to take a moment to go through the top 10 mistakes that I see:
- Homeowners have oral representations from contractors, that they rely on, that are not included in a written contract. They should be…
- Homeowners tend to have a “I want it now attitude” but, of course, they want a great deal as well. Many homeowners do not understand the market right now enough to know that any contractor that can come and do work at the moment’s notice is not someone you would want to do the work. Additionally, homeowners do not have an accurate grasp of just how much it costs in materials to get the work done. Prior to COVID, many of the cost were going up due to supply chain issues. Now, add that no one can get the proper help and, if they can, it’s costing them substantially more than what they paid for labor previously. As of right now, one should anticipate the cost of a project to be at least 30% more compared to 4 years ago.
- Let me start by saying that there are some very good contractors out there but, similar to my own profession, there’s always a few bad apples that ruin the bunch. That being said, this is a “buyer beware” state. Oftentimes, I see contractors being tricky with the bids and their clients are not sophisticated enough in bidding, costs, and exclusions to catch what is missing. For example, a homeowner gets three bids but they have widely varying prices. Why do you think that is? They are not comparing apples to apples.
- Homeowners always pick the lowest quote – enough said.
- Homeowners always feel that flat fees are better because they know the total upfront. A great contractor is the one that will provide you a complete bid on a cost-plus basis. If the homeowner is going to enter a flat fee contract, it is best for the homeowner to pay and provide the Builder with all appliances, light fixtures, cabinet hardware, flooring, plumbing fixtures and the type of items that you have to physically select on your own, it is much more difficult for a home builder or a remodeler to fudge the numbers if they have all the information prior to the bid.
- Homeowners spend more time looking for a groomer for Fido than looking into the background of the person that is going to be responsible for what typically can be a person’s largest asset. The mistake is that they fail to perform an extensive background check on the Builder. This is something that we frequently help clients with but, unfortunately, it’s typically after everything has gone bad. This background check should include the identity of all previous entities that the Builder has used, any lawsuits it has been involved in, any judgments it has ever had against it, how often does it have to sue its clients, does its subcontractors frequently file mechanic’s liens, what do their reviews say, does it have a brick and mortar address somewhere, how long has it been around the metroplex and, if it had any social media, are the photos the company’s own work or are they stolen or purchased images.
I had a client a few years ago that had a not-so-great contractor experience. So, when he got around to opening a new location, he hired me to research the potential contractor he had found. We found not only that the contractor had formed multiple new companies over the years, but also that he was in two or three current lawsuits and had a sizable number of liens that had been filed on his projects for non-payment.
- Homeowners often either don’t have written contracts with terms or they sign substantial contracts without understanding the ramifications of the terms. For instance, there are some contracts that are completely one-sided on behalf of the Builder. Other times, what you are really being given is a bid and asked to sign it. While a bid can be considered a contract, it certainly does not give you enough information to understand the rights and obligations of the parties pursuant to the contract.
- Many homeowners do not understand that the laws have changed and that it is literally illegal for a contractor to waive or build your deductible into your quote. Oftentimes, clients think that they are being hoodwinked into something that is just untrue, so they go looking for a contractor that will waive the deductible. While it may seem great that a contractor is willing to look the other way, what keeps them from using other illegal methods of construction? I mean, for instance, who needs a permit anyway??
- Let’s just start by saying that everyone has different experiences with different companies. Have you ever referred out someone that you thought did a good job only to have the person you referred them to complain they were the worst ever? I certainly have. It is almost to the point that I hate to give referrals. One thing that I have noticed is that no one is going to give you a reference that was unhappy. One job is not the same as another. It may not have the same scope or the same conditions. Someone might tell you the contractor did a great job for them, only to find out that they painted a few rooms as opposed to remodeling an entire bathroom for you. So, take recommendations with a grain of salt. One thing I typically recommend is that you ask for a recommendation of the last “bathroom” that they did which was similar to yours. Or ask them to give you a list of two current projects they have going where you can talk to them. Most of all, do not let them pick the references. Give them specific guidelines as to what you are wanting.
- The number one mistake from really both sides of the project is improper payments towards the contract. While a down payment is understandable, as there is substantial work that goes in on the front end of a project, a homeowner should never wait until the end of the project to get a bill from their contractor. That’s kind of like going to Nordstrom and never looking at the prices until they’ve rung you up and swipe your credit card.Likewise, the contract should be split up into draw payments which are based on the percentage of completion or project stages. Never ever do you pay more than what you agreed to in the contract simply because you’re being begged for more money. I have one set of sweet homeowners that paid out $120k on a $135k project. An entire floor of their house was not even worked on and what was complete had substantial flaws. I can hear many of you thinking that person is at fault. I can assure you this happens quite frequently and that many homeowners feel helpless and cannot deny a contractor’s request for additional funds because, ultimately, they feel that the contractor has them over a barrel and they know how hard it would be to start over.
Perhaps after reading this post, you can understand why so many construction projects go wrong. These are not simple matters. Contractors know construction, not necessarily how to bid correctly or even know contracts in general. I think many will agree that it is hard to imagine a project that is able to be completed without encountering any of these issues.
