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Home Improvement Contracts – Part III

Construction & Contractor Disputes

This is the third of my home remodel blog article series about how to protect yourself when contracting for a remodeling of your home. To review my previous articles, click on the following articles titled; “Home Remodel Contracts – First Things First” and “Home Remodel Contracts.”

As mentioned in my earlier articles, California law requires a written contract between you and your contractor for any work that cost more than $500.  In this article, I discuss a few more details pertaining to deposits, written contracts, and liability insurance that  you should be aware of as well.

Deposit 

Under California law, the deposit that can charged can be no more than 10% of the purchase price up to a maximum of $1,000.  Thus, do not pay more than $1,000 for your deposit.

Written Contract

The written contract must have an approximate start date and an estimated date of completion.  The contract must contain: (1) the price, (2) a schedule of progress payments, (3) a list of the contract documents (including things such as the architect’s plans), and the contractor’s address and license number.

The contract is also required to provide for a way to approve and pay for changes, called change orders.  There should be language about how to keep your project free of liens from not only the contractor, but from the subcontractors and material suppliers.  You should make it a requirement of your contract that you get periodic lien releases every time you make a payment and final lien releases when the project is completed.

Liability Insurance

You should require that your contractor provide liability insurance and that it has the legally required workers’ compensation insurance.

Finally, remember that it is illegal in California for a contractor to bill you for work that has not been done or material that has not yet been delivered.

These are some general tips so that you know what the issues are and generally what your rights are, but this is not legal advice and not a substitute for a qualified legal review of your contract prior to signing.  It is always better to make sure you are protected beforehand, than to have to deal with litigation afterward.

Every situation is unique and if you have not remodeled before, I strongly recommend that you contact Brewer Offord & Pedersen LLP to review your contract before you sign on the dotted line.

If you have any further questions don’t hesitate to give us a call at 650.327.2900, or visit our website at www.BrewerFirm.com. If you like our articles show your support by “liking” us on Facebook where you can view Brewer Firm updates and enter into our Brewer Firm Giveaways.

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