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Home Improvement and Resolving Contract Disputes: An Interview with Keith Turner of Turner Law Firm

By Keith Turner

Tell us a little bit about your company and the services you offer.

Keith Turner has been practicing law for 23 years and he opened his own firm in 2007 to provide his clients with excellent, cost-effective legal representation. Keith's law practice is civil litigation involving business, real estate and insurance issues. He is one of the leading experts in view rights and neighbor vs. neighbor disputes. Other types of real estate related matters often handled by Keith's law firm include real estate broker claims (prosecuting and defending), real estate purchase disputes (including rescission and specific performance), construction and remodeling disputes, easements/encroachment, landlord-tenant, mold claims and title claims.

What is one of the most common contractor disputes you've seen in the Southern California area?

The most common contractor related disputes are construction defects, abandonment/payment disputes and mechanics' liens. Abandonment is when the contractor does not finish the project. Residential construction is difficult - especially remodeling - and the older the home the more potential surprises. Surprises can be very expensive. Part of the difficulty is the personal nature of building or remodeling one's home. Everyone what theirs to be unique.

How can homeowners help prevent this from happening to them when they are remodeling/building or hiring a contractor?

The most important thing that a homeowner can do is check the contractor's references. Many good contractors simply do not advertise and rely on only referrals for their business. Also check the contractor's status with the Contractors State License Board. Finally, it is sometimes warranted to research whether lawsuits by other property owners have been filed against the contractor.

The next most important thing is the have a proper written construction contract. California law requires a detailed written contract for any all home improvement projects over $500. A "home improvement" includes the repairing, remodeling, altering, converting or modernization of, or adding to, residential property, including driveways, swimming pools, terraces, patios, landscaping, fences, porches, garages, fallout shelters, basements, and other improvements adjacent to a dwelling house. Such home improvement contracts must be in writing and meet 25 separate requirements (including nine notices and four rights to cancel).

The contract should clearly specify the scope of work, with as much detail as possible, i.e., size, color, who will be doing what work, amounts of materials provided, manufacturer model number, etc. Do not leave important features or materials, such as specific counter tops, tiles or appliances open to further negotiation.

The contract should clearly specify the work completion and payment schedule. For home improvement contracts, the down payment cannot be more than $1,000 or 10 percent of the contract price (whichever is less) for a home improvement job or swimming pool, excluding finance charges. There are no exceptions for special-order materials. The contract should clearly provide a sufficient hold-back for the final payment to ensure that the work is properly done, all final building permits have been issued, and all sub-contractors and workers were paid and have released their mechanic lien rights. Ideally, the contract should provide that the architect or a professional inspector should approve the final payment. However, these are just some of the provisions that a contract should contain.

Other provisions concern making sure the contractor has proper insurance, and sometimes adding the homeowner to his/her policy; delay penalties if the contractor does not finish on time; provision requiring the contractor to maintain the job site; and warranties regarding the workmanship and materials provided.

Real estate construction and remodeling can be complicated. Even the most experienced contractors often encounter unforeseen issues. A good contract will allocate that risk to the extent possible on the contractor. Having an experienced real estate attorney review the contract before it is signed is a usually a good investment. If the contractor resists, that is not a good sign.

Also for home improvement contracts, unless the contract is negotiated at the contractor's place of business, homeowners generally have three days to cancel the contract after it is signed. So it may not be too late to have an attorney review it before the homeowner's losses their cancellation rights.

A contract for totally new construction is a separate beast. Of course that should be in writing. In light of amount of the money at issue, having a new construction contract reviewed by an experienced real estate attorney is basic common sense. Don't rely on a contractor's "standard" form.

Finally, as contractor Clay Mitchell recommends: Having a "middle man" between the homeowner and contractor takes out a lot of the pressure on both sides. For larger projects it is an added expense that may be warranted if the homeowner does not have time or expertise to efficiently manage the project.

When can a contractor add additional charges to a signed contract?

The specific statutory provisions for home improvement contracts require signed change order for any additional work, the law sometimes provides that an oral modification of the contract for extra work may be enforceable when the contractor has performed the extra work pursuant to the oral promise of the owner to pay for the work. For instance, an email by the owner authorizing or agreeing to extra work can sometimes substitute for the lack of a signed change order. Nonetheless, property owners should insist that the original contract clearly provides that only signed change orders are enforceable.

What should people do before making their final payment?

Many things. First, carefully inspect the work, or better, have a professional property inspector. Next, make sure all liens and stop notice rights have been released by using the statutory forms. Furthermore, make sure that final permits or certificates of occupancy have been issued so the project is fully permitted.

What advice would you give homeowners who have never worked with a professional contractor before?

Obtain and contact several references from trusted sources. Make sure that the person you are dealing is actually the licensed contractor, and not a friend or family member who is borrowing the contractor's license. Check the contractor's standing with the Contractors State License Board. Confirm the contractor's insurance is current.

Most important is the property owner to educate himself or herself on construction process, including obtaining multiple bids and reviewing the various articles on the Contractors State License Board's website.

What's the best way for people to get in contact with you and your company?

By email or phone to arrange an appointment. Our initial consultation fee is refunded if we are retained.

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