When building a new home or having work done on an existing one, homeowners need to be aware of their rights and responsibilities to protect themselves during a construction project. Following are some key points that homeowners should keep in mind.
Contract
Make sure you have a written contract with your contractor that includes details such as the scope of work, timeline, payment schedule, materials to be used, and any warranties or guarantees. Some states have specific requirements for construction work on residences. For example, Maine’s Home Construction Contracts Act has a number of provisions to protect the homeowner.
Permits
Check your contract as to who is responsible, and ensure that all necessary permits have been obtained for the construction project. This includes building permits, zoning permits, and any other permits required by local authorities.
Insurance
Insurance can be crucial if anything goes wrong. Verify that your contractor has insurance coverage, including liability insurance, builders risk insurance, and workers’ compensation insurance. This protects you in case of accidents or damages during the construction project. Note, however, that in most instances insurance excludes defective work by the contractor.
Change Orders
For any changes in the scope of work, materials, or costs, make sure you have, and stick to, a change order process with the contractor.
Documentation
Keep detailed records of all communication, contracts, change orders, payments, and any other relevant documents related to the construction project.
Progress Payments
Make payments to the contractor based on the progress of the work and according to the payment schedule outlined in the contract. Avoid making large upfront payments. Some state laws, such as Maine’s Home Construction Contract Act, limit the amount of deposits to one-third of the full contract price. Also, the homeowner should be aware of any state law prompt payment acts, and their requirements.
Mechanic’s Liens
You should understand mechanic’s liens and how they can affect your property. A mechanic’s lien is a claim against a property by a contractor or subcontractor who has not been paid for work done on the property – a powerful tool for the contractor or subcontractor. Moreover, make sure your contractor is paying its subs.
Inspections
Have a regular schedule of inspections during the construction process to ensure that the work is being done correctly and according to the plans and specifications.
Dispute Resolution
Check your contract for how disputes that may arise during the construction project are resolved. The contract should call for mediation, arbitration, or legal action – each a different process with their own pros and cons.
Completion and Final Payment
Do not make the final payment to the contractor until all work has been completed to your satisfaction and any necessary inspections or approvals have been obtained. To avoid problems down the road, if you do not make payments under a contract, document with specificity the reasons you withheld payment.
Though these steps do not cover everything, homeowners can protect themselves and their investment during a construction project by considering the above issues. If you encounter any issues or have questions, it is advisable to consult with a construction law attorney for guidance. Attorneys in Perkins Thompson’s Construction Law practice regularly advise homeowners on legal issues arising during construction projects.
