EVEN AS HER HAMPTONS HOUSE WAS BEING TORN apart, Elizabeth Troman (not her real name) tried to stay centered. She taught a daily yoga class, kept up her morning meditation practice and took her two dogs for long strolls along the beach. Of course, as any survivor of a major remodeling job can attest, home renovations have a way of shattering one’s inner peace, especially if, like Troman, you don’t take steps to protect yourself against scurrilous contractors up-front.
By the time her remodeling ordeal was over, Troman had suffered through slow and shockingly bad workmanship, skyrocketing costs, a drug-crazed day laborer who trashed her house and a carpenter who stalked her. “It’s really been the lowest point of my life,” she says of the renovation. “I Still try to look for the good in people, but I’ve become a much more cynical, hardened person.”
Granted, not every remodeling project leads to a major personality change. But there are enough terrifying tales out there that it’s safe to conclude that without the proper legal precautions, a major home renovation can be one of the most wrenching experiences in life. So is it possible to get the job done without getting soaked, or landing in a post-renovation-stress support group?
Due Diligence Is Key Real estate lawyers and other veterans of the home-remodeling wars say yes, but they all emphasize that even when a contractor comes recommended by an architect or decorator, pre-renovation due diligence is crucial (you should carefully examine the qualifications of your architect and decorator as Well). In other words, homeowners need to take responsibility for personally checking out prospective contractors and their work crews before the first nails get hammered in.
“It really requires a lot of gumshoe work,” says consumer advocate Jordan Clark, head of the United Homeowners Association in Washington, D.C. That means not only carefully checking contractors’ references but making a field trip to a handful of other homes they’ve worked on in the area and asking past clients tough questions about how they performed. Did they Work safely and neatly? Did they know local building codes? Did they stick to the construction schedule and stay close to the budget? Did they follow up on small problems or questions after they’d received their final paycheck? He also recommends checking with the local Better Business Bureau, along with a local licensing agency and a trade association (such as the National Association of the Remodeling Industry, at 703-575-1100), to ensure that the contractor is licensed and in good standing. To be extra safe, he says, ask a prospective contractor whether he’s done business under any other company name. “If you pose the right questions, sometimes you can scare the bad ones away,” says Clark.
It’s also important to ask for written proof that the contractor has both full liability insurance and workers’ compensation insurance (confirm with the insurer if you want to be completely certain, and make sure all subcontractors are covered, as well as the contractor’s own crew). And take a close look at your own homeowner’s policy, since if an accident does occur, you’re also likely to be named in a lawsuit. Without the right personal liability coverage, you–not the insurance company–will be footing the bill for a lawyer and possible damages, says New York real estate attorney Scott Schneider.
Get It in Writing After all that due diligence, you’ll no doubt be itching to start remodeling. Before that happens, however, you and your contractor need to write up a precise agreement (which, ideally, should be vetted by an attorney) on all the work that’s going to occur. “Most people get into trouble because they take the word of the contractor,” says Clark. “The more detailed your contract is, the safer you’ll be.” That means spelling out, in excruciating detail, the full scope, timetable and costs of the job, along with the types of materials and brand names of products you want the contractor to use. Do you want bullnose countertops and a granite sink? Now, not several months into the project, is the time to specify exactly what your money will be buying. “You have the leverage before your kitchen is a mess,” says Los Angeles real estate attorney Ken Williams.
Your contract should also spell out a detailed payment plan. The standard practice is to hand over money as the work progresses–divvying up payments into three parts is typical–and Williams and other real estate lawyers strongly advise holding back 10 percent of the total renovation cost until the entire punch list of work items, including cleanup, gets completed. That money will give you “a significant hammer to ensure performance,” says Schneider.
Another item on the to-do list: be sure to obtain a lien waiver from your contractor before paying your final bill. Check with your lawyer, but in some states, subcontractors and suppliers can file a lien against your property if the contractor doesn’t pay them. And what if your new hardwood floor starts buckling or your new granite sink starts to leak? Schneider recommends inserting into your contract a builder’s warranty effective for at least one year. That way, your contractor will be legally bound to fix the problem, and you won’t get stuck with yet another bill.
Happy Endings All these warnings may leave you wondering whether that dream renovation is really worth the risks. Take heart: “You don’t have to be another person telling another renovation horror story,” insists film producer Steve Tisch, who recently completed a top-to-bottom renovation of his Beverly Hills home. He and his wife, Jamie, interviewed a half dozen candidates before settling on Los Angeles contractor Peter McCoy. They also hired an attorney to oversee the contract, and once the work began, they kept close tabs on its progress. “This story has a happy ending,” says Tisch. “We found McCoy to be absolutely terrific.”