December 7, 2013 • By Dennis Beaver
Over the years, this column has helped our readers save great deal of money, especially when we are contacted before they get into trouble.
At times, our advice isn’t followed, and the results are as we warned, but we take no pleasure in predicting another’s misery.
In our last two stories, we told you about Selma readers who we cautioned to stay away from a contractor who they knew was in financial trouble. But, as all attend the same church, our reader’s husband “wanted to help the poor guy.”
Despite our warning, and that of Bakersfield construction attorney Tim Scanlon, their kitchen looks “as if a bomb went off in it, with only the faucet and sink useable. All the cupboards have been removed. The floor is now concrete. We have paid over $10,000 to the contractor who won’t return our calls or finish the job,” Helen told us, crying.
Signs that you are in trouble often start early
“It is often easy to spot an irresponsible or crooked contractor, from day one, if you have done your homework and know your legal protections,” observes Scanlon. Here are the signs that you are headed for trouble:
• The contractor asks for more than the maximum allowable deposit up front — either 10 percent or $1,000 of the contract price, whichever is less. (There is one extremely rare exception, currently involving 12 California contractors.)
• If, for example, in a kitchen remodel, the homeowner is told to order and pay for cabinets or other items to be installed
• The contract lacks a Schedule of Payments;
• The contractor requests advance payments ahead of performance.
“You should be making payments after the scheduled work has been completed, not in advance. So never let payments get ahead of the work,” Scanlon points out.
Robbing Peter to pay Paul — don’t give in!
“Where the work has not kept up with payments you are asked to make,” Scanlon observes, “this is usually a sign that he is robbing Peter to pay Paul. In order to get your work done — to pay for material or his employees — he gets money from someone else, and money from you to pay for his other jobs.
“Contractors get away with it because people are afraid to rock the boat. That’s why a schedule of payments must be a part of the contract, where each payment is based upon completion of the various stages of the project. For example, once the rough-in plumbing is completed, when the framing is done, interior walls, stage by stage, not one huge payment beforehand.
“This must be in the contract, so if you are asked for an advanced payment, politely say:
According to our contract the next payment is due when (x) is done. Of course, when you do that, I will be happy to pay you.
“The contractor may walk away but you still have your money! If you have already paid there is no incentive to continue working on your job!
“Remember, once you allow a contractor to take advantage of you, he will think, ‘Who was I able to get an advance from?’ and will go to that person.
Effective way to protect yourself — hold a retention
“One of the best ways to protect yourself is by holding a retention on the job.” Scanlon recommends, adding that “You will most likely need to write this into the contract, unless a retention clause already appears there.”
“By retaining 5 percent to 10 percent from every payment, there is an incentive for the contractor to properly finish the job within the time established in the contract so that he is paid in full after the job is completed.
“Competent, ethical contractors will not object to having a payment retention clause in the contract as it is common and almost always required for large, commercial jobs. Any objection should be seen as a warning — trouble lies ahead if you deal with this guy,” he feels.
“If things break down, try to get it worked out with the contractor, document the matter and send a letter, an email, showing your desire to resolve the issue. Should that fail, contact the Contractors State License Board immediately. It costs you nothing. They will send out a mediation letter, and this often gets it resolved,” the construction attorney advises.
“Absolutely spend time on the board’s website. It is filled with well-written materials for consumers, providing you with the tools which will keep unfriendly hands out of your pockets.
“A contractor who is aware that you know your rights will be far less inclined to play games and may even decide that you just aren’t worth it! If he does, take it as a compliment,” Scanlon concluded.
Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.