I’m a homeowner in the middle of the process of bidding out a large addition/renovation. 2 Story rear addition to an older home, Kitchen remodel, new roof. Total Cost ~$150K. We are in the Chicago Suburbs.
We have talked to several contractors and have found one we seem to be able to work with. References check out, license checks out, insurance checks out. We visited several of his ongoing projects.
The problem I am having is with his contract. The other builder’s we talked to had long multi page contracts detailing all the responsibilities of each party. This guy has only a 3 paragraph “contract” at the bottom of his standard quote form. Basically it talks about contractor not being responsible for delays caused by acts of God or other events beyond his control. A few sentences about change orders. One sentence about insurance.
Obviously this guy is a better contractor than businessman. I think he’s been in business for just a few years. Should the lack of a real contract be a red flag??
I would like to approach him about coming up with a more detailed contract before I sign, but not sure how to go about it. Would it be prudent to hire my own attorney to draw up a contract? What would you do in my shoes? I guess I’m afraid of doing such a large project with such a weak contract.
Any Advice is appreciated.
Mike K
Amateur Home Remodeler in Aurora, Illinois
Replies
Mike,
As long as his contract clearly states the scope of the work to be done. Details the types and specifications of products to be used and who's responsible for what.
I don't see the problem, why make things complicated, you've checked him out pretty good and everything seemed ok.If you still have concerns talk to him about them.
Vince Carbone
Mike, this is kind of a back doorway answer.
I believe last months issue of the Journal of Light Construction had an article on "breaking contracts", and another on how one contractor uses a quotation/contract form like you describe.
You may want to search http://www.jlconline.com for some background information on types of construction contracts, and how they may work for (or against) you.
That is not to say the people at this site can't give great advice, they can. JLC does, however have a business and legal article in their publication every issue. FHB. I think is moving that way a little, but has not published any substantive articles yet, IMHO.
As your project moves along, stay in touch with us. We are always interested and willing to help where we can.
Dave
In my opinion, lack of a detailed contract can mean any of several things and you can't really draw any concluusions from his use of a very limited contract.
Discussion
Contracts basically do 2 things directly: they spell out who is supposed to do what and when, and they spell out what happens when problems arise.
A well drafted contract indirectly gets the parties to think about all of the things that can happen and to agree up front what happens if "x, y, and/or z."
That way, fights can be avoided when stuff does happen.
For example: you mentioned that his contract has a force majuere clause.
So what happens if the 3 prone 2 slotted blivets go on back order, and they are absolutely essential for anything more on the project to get done. Work stops, of course, and he isn't liable for the consequences.
He'll probably start on another project rather than sit on his thumb.
And what happens when the blivets come in? Are you at the back of the line, work-schedule wise?
Suggestion
Sit down with him; find out why he uses such a limited contract. Maybe he hates lawyers. (Hard to believe, of course <G>) Maybe he hasn't been bitten yet. Maybe he's been doing this for years and he is such a reasonable guy that problems get worked out to everyone's satisfaction.
Maybe a "letter agreement" (a low key alternative name for a contract) is the way to go.
If he doesn't like lawyers, use your own to review the terms but keep him in the background.
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Sojourners: Christians for Justice and Peace
mike... i use a one-page contract / Proposal... with sometimes an attached Scope of Work... and sometimes an attached Payment Schedule
my contract defines the scope, apx start & duration... addresses insurance, exclusions, on-site facilities, payments, right of recission, liens, and arbitration...
sometimes a long, wordy contract becomes a license for an opposing lawyer to take it apart.....
if you don't like his contract , offer to have your lawyer draw one up... see if you can find common ground... beware, though.... courts usually interpret ambiguities against the creator of the contractMike Smith Rhode Island : Design / Build / Repair / Restore
My opinion is that more detail is needed. At a minimum, you need to cover:
The more that you address in writing the less there will be to argue about.
A great book for you is the Journal of Light Construction Contractor's Legal Kit, about $75. Check jlconline.com for that...
When I have a job involving that much money I have a bigger contract just for the reasons you mention-- most people want to see a more substantial piece of paper. But a lot of the paper is a longer scope of work. I find that if my contract is too detailed people become afraid. If you are concerned ,have a third party draw up a contract that is fair to both parties.
By the way, I also have a clause that allows for delays caused by acts of God, earthquakes, hurricanes, and Elvis sightings.
I do so much work with a hand shake, it leaves the contractor just as vulnerable as the owner. After 35 years I think I maybe lost $20,000.00 to bad costumers, which is not bad. It is not the money but being ripped off that hurt.
Anyway, some contractors do not need a lot of paper work, if you need it then make up a contract that you both feel comfortable with.
I think you need to tell him how you feel about his contract and dont be vague about it. Tell him what things bother you. That kind of feed-back is important to someone who makes his living trying to put his prospects at ease.
I do a lot of work on a handshake and when I do put it writing I try to include as much pertinent information as I can remember at the time. Some things slip through the cracks. If my customer has any concerns I'll redo my contract. With todays word processing it only takes a minute
Good luck
"I guess I'm afraid of doing such a large project with such a weak contract."
What exactly is it you are looking for?
More/detailed material specs ... or more legal-ese?
maybe more to the point ... who shouldn't be trusting who?
U don't trust him or he shouldn't trust you?
who should the more wordy contract protect? and from what?
"Should the lack of a real contract be a red flag??"
and just because it's short ... why isn't it real?
I'm curious what's missing.
Jeff
Buck Construction
Artistry in Carpentry
Pgh, PA
It's not a matter of trust; it's a matter of defining expectations.
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Sojourners: Christians for Justice and Peace
Jeff,I do trust this contractor. It's just want to have avoid any misunderstanding between myself and the builder. It seems to me that such a limited contract creates the opportunity for some misunderstanding. It seems to me a reasonable contract can protect both parties. Win/Win?Mike K
Amateur Home Remodeler in Aurora, Illinois
again I ask ....
what are you questioning?
"It's just want to have avoid any misunderstanding between myself and the builder"
Tells me and your builder absolutely nothing.
I'm not trying to get on your case here ... just clarify.
And you need to clarify what U want in the contract before you talk with the contractor.
Specific materials?
Specific installation methods?
Start and stop times?
His brand of coffee?
I read what U wrote to Piffen. That's a start. But ... like Mike S said ... even with that written out ... it's still not .... written?
I do remodeling. Usually on older houses. Matching existing is the main goal.
I simply state ... "match existing as close as possible".
And again ... that should tell U my intention ... but who's to say what's close and what's not?
That's why I disagree with all the lawyers that say get a 500 page contract.
If 500 pages is good .. not not really protect yourself with 600? 750? 1,000?
It all comes down to trust. No contract will protect you from a hack that just can't do the work. Or protect a contractor from a labor stealing HO that knows how to work the system.
Maybe the guy has a short contract because he's good and knows his work will stand tall in any court of law?
Maybe the guy with the long contract thinks he's got something to be nervous about? Or maybe his brother in law is a lawyer .. who knows?
Just make a list of what U want ... and talk to the guy about it. As far as I'm concerned ... and I have done this in the past ... a coupla set of initials at the bottom of your list is good enough for me!
btw .... most good small contractors won't work with an AIA contract. Don't make that the litmus test.
I'd rather talk and walk someone thru their list of concerns than type it all up ahead of time guessing at what they're really thinking.
Jeff Buck Construction
Artistry in Carpentry
Pgh, PA
Thanks, Jeff.
Part of my concern is that I had talked with other builders and they all had a fancy contract.
I will take your advice and just make a simple list of my concerns to talk to the builder about.
I'll stop back in from time to time and let you know how the addition is going, maybe post a few photos.Mike K
Amateur Home Remodeler in Aurora, Illinois
just remember ...
the contract helps kep everyone on the same page ...
usually a "detailed" contract will cover lotsa legal stuff too ...
if the "legal stuff" isn't part of your main concerns ...
just make a detailed list and talk/walk thru it.
I like customers that ask lotsa questions .... very seldom do we get to show how much we know! There's usually a reason certain things are done, and in what order .... I love to show that I'm not just making this stuff up as I go along!
Jeff
Buck Construction
Artistry in Carpentry
Pgh, PA
There is absolutely nothing that will save you from grief with a dishonest incompetent sub trade or contractor. All the lawyers and paper in the world will not bring you satisfaction or get the job done. They might protect your money so you can pay them their fees but the amount of time and anxiety/worry you put into it is simply not worth it.The only thing is honesty everything else is a PITA. Ask his other customers how honest he is, that and how good he is at what he does.I am not saying you should not have some paper work but use your best judgement, ask yourself some questions like is this contractor trustworthy? When you go buy a car you do not have the dealer sign a twenty page contact, you trust them, unless it is a Ford. If It is a Ford, and their rat vehicles, then you don't buy there.I hope you or anyone else on this site do not drive Fords. I would not want to offend anyone.
>>That's why I disagree with all the lawyers that say get a 500 page contract.Huh? All? 500 page?>>If 500 pages is good .. not not really protect yourself with 600? 750? 1,000?So you make something up, and then try to show how what you made up is foolish?What's your point?I think your first msg showed your basic take on this. You see it as a trust or don't trust thing.
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Sojourners: Christians for Justice and Peace
"Huh? All?
500 page?"
yes Bob.
All.
and ... 500 pages.
each and every lawyer on the face of the earth now recommends a full 500 page contract for each and every transaction.
they started it about a month after U stopped being a lawyer. Otherwise, I'm sure U would have gotten the memo.
Thanks for your concern.
Jeff Buck Construction
Artistry in Carpentry
Pgh, PA
>>each and every lawyer on the face of the earth now recommends a full 500 page contract for each and every transaction.>>they started it about a month after U stopped being a lawyer. Otherwise, I'm sure U would have gotten the memo.>>Thanks for your concern.Concern?Nah, I'm just trying to point out how stupid it is to make something up and then criticize it.I guess the message didn't get through.
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Sojourners: Christians for Justice and Peace
"I guess the message didn't get through."
You'll have that around U, Bob.
Jeff Buck Construction
Artistry in Carpentry
Pgh, PA
Bob, to me you are are walking contradiction, you more or less call people stupid then you advertise as a Christian for peace and justice. It is neither Christian, peaceful or fair to call someone 'stupid'.What is up? please explain bro.
>>Bob, to me you are are walking contradiction, you more or less call people stupid then you advertise as a Christian for peace and justice. It is neither Christian, peaceful or fair to call someone 'stupid'.>>What is up? please explain bro.I call 'em as I see 'em.This is something Buck does regularly; he makes up an exaggerated situation and then criticizes what he has made up.You haven't been around very long; stick around. Buck is a unique presence here.So far as I know, Jesus was never hesitant to confront stupidity.I don't recall that he used the word, but if you think about it, you'll recall a big chunk of his ministry was letting the disciples know how they had missed the boat on some issue or another.
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Sojourners: Christians for Justice and Peace
Thanks for the reply Bob I do want to give you are hard time and I appreciate your answer. I don't agree with you scripture wise but that is your opinion. If Buck "makes up exaggerated situations and then criticizes what he has made up," then this is hilarious maybe he is the "walking contradiction", 'sometime fact sometime fiction' by the way.Regards, DWT
each and every lawyer on the face of the earth now recommends a full 500 page contract for each and every transaction.
not me. I like 1 page contracts. I just charge for 500. For every complex problem, there is a solution that is clear, simple, and wrong.
-H.L. Mencken
You probably don't want my advice, since my contract isn't any longer.
Are You buying an addition, or a piece of paper?
Welcome to the
Taunton University of Knowledge FHB Campus at Breaktime.
where ...
Excellence is its own reward!
Well...The fact that I'm financing the cost of the addition reduces my risk. The contractor has to play by the lender's rules as far as inspection and dispersement goes. The lender will not release the draw until the required work is completed.One of my concerns is in the details of the addition. I want to make sure the exterior makes the existing house as much as possible. I guess I just need to communicate this to the builder (he is doing the construction drawings). I suppose a thorough review of plans and specs is the best way to avoid any misunderstandings.Mike K
Amateur Home Remodeler in Aurora, Illinois
Just a thought...
If some of his references were past clients, couldn't you ask them if they had any problems with the contract? Or, you could ask them how concerns/disputes were addressed.
My contract depends on the size and scope of the job. Usually a page or two.
Good luck!"knowledge without experience is just information." Mark Twain
"The fact that I'm financing the cost of the addition reduces my risk. The contractor has to play by the lender's rules as far as inspection and dispersement goes. The lender will not release the draw until the required work is completed"
The bank's draw policy may influence the contractor's performance, but he can still lien your property if he is not paid for work he does, and it's ultimately your responsibility to pay regardless of your financing arrangements. You may want to reference the draw policy in the contract and payment schedule.
mike... <<<I want to make sure the exterior makes the existing house as much as possible. I guess I just need to communicate this to the builder>>>this "makes ( sic ? ---match)the existing" is a clause that you may be trying to get into the contract... that can be a whole deal-breaker, all by itself.. you and he have to agree what "match existing " is going to really mean.. you may have one concept .. and he , another...
in other words... your contract is not going to save you disagreementlawyers could argue for the next 6 years wether or not something "matched existing"a lot of the techniques we use are designed to "fool the eye" (trompe' l'oile <sic> )into thinking we are matching existing... because if we really have to match it, the cost goes up exponentially.. a one page contract can cover this... as long as it references a "specification" as an attachment...
also.... your dispute handling resolution should be addressed...
mediation... arbitration.... court suit...
i always include an arbitration clause ... for me,no arbitration, no contractMike Smith Rhode Island : Design / Build / Repair / RestoreEdited 4/13/2005 7:10 am ET by Mike Smith
Edited 4/13/2005 7:10 am ET by Mike Smith
The contractor has to play by the lender's rules as far as inspection and dispersement goes. The lender will not release the draw until the required work is completed.
Is your one-page guy on board with this? No up-front money required, period? Never, during the duration of the job? Payment only for completed work? If he is, then that's great. Maybe his one page agreement is all you need.
Mike
get it in writing. trust starts with good communication. Take a look at some of the AIA (American Institute of Architects) contracts. You will be doing your contractor a favor as well as yourself.
Mike:
For whatever it's worth, I've been around 'here' for a long time and can tell you that you have gotten some advice from at least a few first class remodeling contractors that do exactly the type of work you are looking to have done. Not gonna name any names because I don't want to pump any egos... :-)
I do new construction so am not gonna address your Q as such...
If your contractor was licensed in NC, I could assure you that a great deal of the 'good faith/best effort' language is included defacto and enforced by the state. Personally, I like short contracts too. But consider including a plain English addendum to the contract. Make sure the primary contract references your addendum. The addendum should spell out your concerns and wishes.
Good luck,
Joe
Mike,
I read though this entire thread. I like David's advice best
"The only thing is honesty everything else is a PITA. Ask his other customers how honest he is, that and how good he is at what he does."
My dad is a retired attorney. Harvard grad (top of his class) practiced Corporate Law/Real Estate Law down on Wall Street (Donald Trump was one of his many clients)
Anyways, he drew up the first offer for my first attempted Real Estate purchase. It was some twenty pages long, covered pretty much everything. Here in WI most are two at the most, and done by an RA.
Despite the fact that I offered 10% more than another bidder, my offer was rejected, and the seller went with the other guy, who later had his financing fall through (I offered cash).
Lesson learned,.......leagaleeze is no substitute for a relationship. If you set out clear verbal expectations, AND TRUST the guy, that is all you should need.
Jon
>>Lesson learned,.......leagaleeze is no substitute for a relationship. Absolutely. A good contract does not need <I>any</I> (well, hardly any<G>) "legalese" - just a good, clear description of the relationships and whay should happen depending on various events occuring.>>If you set out clear verbal expectations, AND TRUST the guy, that is all you should need.My experience is that "clear verbal expectations" rarely are.And as has been noted, without trust, no type of contract will accomplish anything.The main thing a good contract does is make the parties think about the possible events and plan for them.
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Sojourners: Christians for Justice and Peace
Edited 4/14/2005 3:12 pm ET by Bob Walker
My experience is that "clear verbal expectations" rarely are.
And as has been noted, without trust, no type of contract will accomplish anything.
The main thing a good contract does is make the parties think about the possible events and plan for them."
Bob,
Perhaps, BUT lots of million dollar deals are done every day with nothing more than a handshake.
My Dad made his living writing "Iron Clad" contracts, and you know what, they are expensive, and turn people off. If you don't think you can't trust somebody, better not to do business with them on something of this scope in the first place.
I've always found it better to let a contractor who has worked for me right upfront let them know that if they work with me, I'll work with them. It all doesn't need to be spelled out on paper.
Jon
Mind if I referee this for a minute. I don't think you and Bob are disagreeing; you're just saying things from different perspectives.
Plenty of million dollar deals are done on a handshake. Not really, but never the first time out of the box. Contracts are appropriate or inappropriate given the situation. Your Dad's work was probably perfect for one type of deal, but not the one you were doing. Plus, he wanted so badly to help that he over helped. On the other hand, contracts are words on paper, and with trust and good will, most problems can be worked out. Most, but not all. Sometimes there is a significant misunderstanding, say about the scope of work, that could have been clarified in a decent writing, but all that trust and kumbaya stuff got in the way of asking hard questions of each other to make sure you were both on the same page. At the end of the day, you have a real problem, and both sides feel that they are absolutely right.
Sooo, all this has to be put into perspective, and trust and comfort level have to be added to the mix, and a good contract, which doesn't necessarily mean long or overly complex, will make clear that both parties are in agreement, have thought the deal through and are ready to commit. Nothing wrong with that, and sometimes clarity is what keeps trust alive.
SHGFor every complex problem, there is a solution that is clear, simple, and wrong.
-H.L. Mencken
a good contract, which doesn't necessarily mean long or overly complex, will make clear that both parties are in agreement, have thought the deal through and are ready to commit. Nothing wrong with that, and sometimes clarity is what keeps trust alive."
SHG,
Well said, and good point about first time business relationships.
My point was simply that you can't put every contingency on paper, if you try, you might wind up on the short end of the stick. What is the phrase? "you can catch more bees with honey......"
Jon
>>Perhaps, BUT lots of million dollar deals are done every day with nothing more than a handshake.Yeap, and so long as everything goes as expected, no problemo.Big if, though>>My Dad made his living writing "Iron Clad" contracts, and you know what, they are expensive, and turn people off. If you don't think you can't trust somebody, better not to do business with them on something of this scope in the first place.I did that too for over 12 years as a int'l banking attorney.I wouldn't advocate the type of agreement we used for, say the 1990 Brazilian Restructuring Agreement (about 30" worth of documentation!) for a residnetial construction contract, but I wouldn't suggest a couple of ideas scribbled on the back of a buisness card in grease crayon, either.And I repeat my point - my belief is that the biggest advantage of a well done contract is to make sure the parties really do understand each other and the expectations of what will happen: in other words, a good contract negotiiation and draft increases mutual trust and reduces the chances of conflict.
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Sojourners: Christians for Justice and Peace
my belief is that the biggest advantage of a well done contract is to make sure the parties really do understand each other and the expectations of what will happen:"
Bob,
I am not disagreeing, just that my point was that a written contract can't take into account every contingency, and even with a one time deal, if you get to know the person you are purchasing services from, a bit of chit chat goes a long way......assuming that person is reasonably honest.
A written contract is not a substitute for honest and ethical behavior. If it were, we'd have no divorce in the country LOL.
Jon
Mike- Some people here seem to feel uncomfortable with contracts. Others have expressed the conclusion well - a well written agreement deals with the important issues for both sides. It makes people think, in advance of what's going to happen. Trust is nice, on the second and third jobs, not on the first. You know what you want, does he? Vice-versa too. I looked at this thread this a.m. and didn't post, but this afternoon, I looked a few stories up from you and saw the thread "HOW DO YOU MOTIVATE YOUR FRAMER?" There's the other side of the coin.