Double Original Contract after Bid

[ramsy]

Read an interesting article over the weekend titled My home renovation nightmare, which describes a contractor delaying work, and withholding CofO, to double the original contract. The article fails to mention change orders after the original bid.

 

[mtnelect]

Read an interesting article over the weekend titled My home renovation nightmare, which describes a contractor delaying work, and withholding CofO, to double the original contract. The article fails to mention change orders after the original bid.

Now, watch the movie the "Money Pit" ...

 

[letgomywago]

Now, watch the movie the "Money Pit" ...

I wish people would watch that before deciding to do a not needed home renovation

 

[jaggedben]

I guess I don't know how it is in other states, but in California a contractor simply can't charge you for more than is in a contract. Change orders have to be agreed to in writing. Wr also can't charge more than $1000 for a deposit on residential project. A complaint to the CSLB goes a long way. People need to know their rights, read what they're signing, and understand that a contract is exactly that. Any contractor who bills for work not done or beyond the contract and change orders should not get paid.

 

[ramsy]

don't know how it is in other states

The article presumes contract law is consistent between states, and quotes an attorney who modifies contracts for the owner's benefit.

Not sure if contractors should agree to the suggested "right to terminate for convenience" clause, which allows the homeowner to fire their contractor at any time without cause.

Seems to me giving owners a MagnaCarta to be fickle would make final payment more difficult for honest contractors.

 

[ramsy]

A complaint to the CSLB goes a long way.

Another problem I had with this article, was the presumption that that licensed contractors with building permits are the norm.

Nothing avoids property tax assessors, building permits, and licensed contractors more than house flippers, real estate sales, mortgage brokers, and its system of home inspectors, appraisers, and realtors.

Most remodel contracts are unenforceable, because the contractors are not licensed, much less able to pass inspections.

License boards lack funding resources to go after unlicensed ghosts that disappear with peoples deposits, abandon projects when AHJ's are called, and void property insurance policies, with structures riddled with construction defects.

The fact that qualified licensed and competitive bids can't match low-ball hacks destroying properties in remodel markets, begs for a mechanism to bid low, and make up the difference later.

Owners already exploited by the real-estate industry, need to be protected from themselves.

Demanding building permits is one thing that removes hacks that can't pass inspection. Demanding all safety devices is another, especially smokes & CO alarms installed per listing, which hacks can't do correctly.

 

[jaggedben]

The article presumes contract law is consistent between states, and quotes an attorney who modifies contracts for the owner's benefit.

Whereas a good article would explain that these things vary from state to state and advise contacting the licensing agency at least to know one's rights in that state as a consumer.

Not sure if contractors should agree to the suggested "right to terminate for convenience" clause, which allows the homeowner to fire their contractor at any time without cause.

Seems to me giving owners a MagnaCarta to be fickle would make final payment more difficult for honest contractors.

I have no problem with a 'right to terminate clause' that simply lets a homeowner not complete the contract. Of course, I would never sign a clause that gave the owner the right not to pay for work already done and materials delivered. But otherwise, to me such a clause would be meaningless, it's pretty much already that way by default. You can't really force a client to finish a project if they don't want to, and you have no real reason to if they can't pay. It's why we front-load our payments (after deposit) so that the client has an incentive to finish the project with us. The article's author seems to assume that they were stuck with their contractor, and that seems to be the whole problem. Honestly, it's a terrible article, it doesn't give practical good advice about anything. Why did you post it?

 

[ramsy]

Honestly, it's a terrible article, it doesn't give practical good advice about anything. Why did you post it?

Thanks for sharing your insight. Sometimes the forum needs some fresh blood to feed the pack.

 

[sparky1118]

I guess I don't know how it is in other states, but in California a contractor simply can't charge you for more than is in a contract. Change orders have to be agreed to in writing. Wr also can't charge more than $1000 for a deposit on residential project. A complaint to the CSLB goes a long way. People need to know their rights, read what they're signing, and understand that a contract is exactly that. Any contractor who bills for work not done or beyond the contract and change orders should not get paid.

Wait so if you are about to say start a new build and the house is say 10,000 sqft you cannot receive more than $1,000 deposit?


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[jaggedben]

Wait so if you are about to say start a new build and the house is say 10,000 sqft you cannot receive more than $1,000 deposit?

If it's a dwelling and the landowner intends to live in the house, then for a construction contract... Yes.

Note this limitation does not apply to architecture or design and permitting work. So an architect who designs and permits such a project can get paid for that work before construction starts. Or, if you as a contractor actually have gotten the permit yourself can arguably get paid for that. But if you are the B contractor and the architect got the permit and your contract is only to build it, then you couldn't collect more than $1000 without breaking ground or delivering materials.

I think for most new builds the developer owns the land and sells it once built and/or there is some other layer of legality that makes the point moot.

The $1000 hasn't been adjusted for inflation for decades, so yes, it's also too low.

 

[ramsy]

Wait so if you are about to say start a new build and the house is say 10,000 sqft you cannot receive more than $1,000 deposit?

That's correct.

Strange rules give savvy consumers a red flag for illegal contractors who don't care.

Economists call similar tricks a barrier to market entry.

The traditional barriers with licensing, skills, experience, and code knowledge are not enforceable without permits.

 

[ramsy]

The $1000 hasn't been adjusted for inflation for decades, so yes, it's also too low.

Thanks for showing us how experienced contractors can work with the rules.

California's B&P 7048 is the $500 minor work exception for unlicensed contractors, which also hasn't changed in years.

I believe it also gives consumers a simple way to identify hacks & vermin, who get caught in the sticky paper.