Five Things to Help Avoid Disputes with Contractors

December 6th, 2013 - Bryan L. Page

The Washington Department of Labor & Industries has a great step-by-step homeowner’s guide to hiring a contractor. Every homeowner should review this guide before hiring a contractor to help avoid disputes with a contractor. Below is a list of some important things a homeowner can do to decrease the likelihood of a dispute arising with a contractor.

Verify Contractor Registration

Verify that the contractor is registered with the Department of Labor & Industries and is properly bonded and insured, and check whether any claims have been filed against the contractor. This can all be found online at L & I’s website.

Written Contract

Get a written contract with the contractor. The contract should include important terms like the price, payment terms, the specific work to be done, the timeframe the work is to be done, warranties, and processes for change orders. Also decide whether the contract should include an attorney fee provision. In Washington, the general rule is each side bears their own attorney fees in a lawsuit unless the parties agree otherwise or a statute grants them. We often see homeowners with valid claims against contractors that are not economical to pursue because the cost to do so exceeds any recovery that may be obtained. An attorney fee clause in a contract can change that dynamic.

Advancing Money

Do not pay large amounts of money up front. It is best to pay for work as it is completed. Do not pay for work that has not been completed. If paying the contractor in advance for materials, make the check payable to both the contractor and the material supplier. This type of “two party check” can help avoid lien disputes down the road if the contractor does not pay for the supplies.

Make Changes in Writing

Put any changes to the original agreement in writing. If the cost of the project is changed, get that change in writing. If the work to be done is changed in any way, also get that in writing along with how the change will affect the final price. Verbal contracts and amendments can lead to confusion and therefore be difficult to prove and enforce later on.

Lien Releases from Subcontractors

If the contractor has hired subcontractors to complete any major part of the work, demand lien releases from those subcontractors. Final payment on a project should not be made to the contractor until these lien releases have been paid. If you are worried the contractor will not pay subcontractors or suppliers, makes checks payable to both the contractor and the subcontractor or supplier. This can help avoid subcontractors and suppliers from filing liens against your property if the contractor fails to pay them. If the work is being financed by a lending institution like a bank or credit union, discuss with the loan officer how the lender will make sure subcontractors and suppliers are getting paid.

Disclaimer: This article and blog are intended to inform the reader of general legal principles applicable to the subject area. They are not intended to provide legal advice regarding specific problems or circumstances. Readers should consult with competent counsel with regard to specific situations.

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