Construction Law Advice to Homeowners

By: Ben Robinson

Some of the most frustrated clients we encounter in our construction law practice are homeowners.  Whether you are building a new home from the ground up or remodeling an existing home, you are making a major investment in your family’s present and future quality of life and financial security.  This is very personal!  It matters to you that all work is done timely and properly.  Unfortunately, many times a contractor’s work is late, incomplete, or substandard.

Here are some tips for avoiding, or surviving, a bad experience in home construction or remodeling.

 

1) Read and negotiate your contract before signing it. Most contractors and homebuilders will come to you with a form contract that they present to every client.  They may or may not have gotten their own legal advice about what should be included in that document.  They may or may not be able to explain the terms to you.  It is up to you to understand what you are signing.

An ounce of prevention is worth a pound of cure.  Pay an attorney to look over the document (or to prepare it) and to make suggested revisions that express your priorities, cover your concerns, and protect your interests.

Furthermore, if things ever “go sideways” between you and your contractor, the recourse may depend largely upon the terms of your agreement.  So, get ahead of this and make the investment in a contract that you can feel confident signing.

 

2) In the same vein of prevention, investigate your contractor or builder before entering a contract. In Alabama, almost anyone who is performing largescale work for you must be licensed by the Licensing Board for General Contractors or the Home Builders Licensure Board.  Licensing is supposed to protect the public, and licensing statuses are public information.  You might be surprised to learn that the person or business you have been talking to is not currently licensed, or that they have had past or present disciplinary issues with these regulatory boards.  An attorney can also help you investigate whether the contractor has been involved in prior litigation with clients.

 

3) Depending on the size of your investment in the project and your financial ability, consider engaging a knowledgeable third-party project supervisor to monitor the progress of the work and to act as your advocate when issues arise. Builders and contractors are more likely to do their best work when someone else is watching vigilantly.  Don’t simply rely on local inspectors to find errors, but local inspectors can also be a valuable resource for you, depending on the location of your construction.

A recurring impediment for our clients (both owners and contractors) is the expense of correcting faulty workmanship or defects.  Defects often manifest after they are physically hidden by finishes.  When the defects become known, builders and contractors usually want to make the “fix” for as little cost as possible.  If an issue is caught and addressed early, making things right is often far less expensive than discovering issues later.

 

4) Make sure your homebuilder or contractor has general liability insurance in effect at all times for your construction. Not every issue that may arise from a bad home construction will be covered by this insurance, but it is a starting point if you discover a defect.

There should also be a separate builder’s risk insurance policy in place.  Your contract will state whether this policy is your responsibility or your contractor’s.

 

5) For long term projects, require your contractor to provide monthly account statements for all the costs of the project, and review the statements as they are presented. Ask questions.  Satisfy yourself that you received the material and labor accounted for and that you only paid for it once.  You should not pay for the cost of work or materials that are incurred to correct any construction mistakes.

 

6) Prepare yourself mentally, emotionally, and financially for at least some complications with subcontractor scheduling, weather, material supply, unforeseen and excess costs, and other common issues. There will be issues to arise that neither you nor your contractor expected.  Maybe you foresaw these and have contract provisions about these risks; maybe you didn’t.  Often, the issues I am describing are no one’s “fault.”  It is likely that you and the contractor will both have to absorb some of the shocks for the job progress to continue to completion.  Be reasonably flexible and understanding.

Relatedly, we have seen clients enter financing agreements with banks at interest rates under the assumption that their home construction will complete by a certain date, and that their loan will become a permanent mortgage at that time.  What happens when construction is not completed on time, for whatever reason, and the permanent loan cannot close?  Can you afford the future loan payment at a higher interest rate?  Take this possibility into consideration and avoid maxing out your budget on your future loan payments.

 

7) Finally, if you have unresolved conflict with your contractor, consult an experienced local construction attorney sooner rather than later. Be selective about who you engage to help you.  What is the attorney’s reputation for knowledge about construction law?  Do you understand the attorney’s advice and answers to your questions?  Does the attorney have a plan for how to proceed without jeopardizing your investment in your home and without immediately jumping into expensive litigation or arbitration?  Some expense for legal services is unavoidable, but can the attorney help you achieve your goals without you incurring excessive legal costs? Is the attorney upfront with you about the cost of their services and about alternatives for you?

 

If any attorney in our construction law section can assist you, please reach out to me at brobinson@wallacejordan.com or call our firm at 205-870-0555 for a referral.

Ben Robinson has a growing reputation in the legal community for his work as an experienced litigator in the areas of construction, personal injury, commercial and employment litigation. He has been named to the Best Lawyers “Ones to Watch” and Super Lawyers “Rising Stars” lists and serves on the Alabama Supreme Court’s Standing Committee on the Alabama Rules of Civil Procedure. He is admitted to practice in all federal district courts in Alabama, as well as the Eleventh Circuit Court of Appeals.

No representation is made that the quality of legal services to be performed is greater than the quality of legal services to be performed by other lawyers.