Contracting? Cover Your Bases.

Dealing with subcontractors: Homeowners often learn that although they have been paying the contractor, the subcontractors who are working on the job are not being paid. The AIA said, "The revisions also allow the owner a greater opportunity to learn of contractor/subcontractor payment problems, and address a contractor's failure to pay a subcontractor by allowing the owner to write joint checks."

One of the most common problems that homeowners encounter with contractors is that they pay most, if not all, of the contract sum when the work is far from completed. Some contracts call for a down payment, with the balance due when the work has been finished. Other jobs, especially large ones, have a draw schedule that's part of the contract. This schedule will spell out when additional payments are to be made based on performance of the work.

If an architect is involved, he or she will normally be the gatekeeper for the draws. The contractor submits requests for payments, which must be approved by the architect. However, many homeowners do not use an architect, and thus rely on the contractor's representations as to what was done.

It is critical to keep a portion of the final payment until you -- or your architect or designated initial decision maker -- are satisfied that the work has been done and that all subcontractors have been paid.

It is a good idea to have the general contractor and all subcontractors sign a statement to this effect. You do not want to discover later that the subcontractors have filed mechanic's liens against your property.

Perhaps the most common complaint that arises in renovation projects involves changes to the scope of work. As the job progresses, the homeowner may ask the contractor to add another cabinet or install more electrical outlets. The contractor does the work and, at the end of the job, submits a bill. By that time, because memories are short, the homeowner disputes that the work was ever authorized.

All change orders should be in writing, spelling out the work to be done and any additional cost. Both the homeowner and the contractor must sign this document.

Contractors are notoriously lax about this, which is why there are so many disputes.

Contracts should also include a provision on ending the relationship. If you become dissatisfied with the quality of the work or find that the contractor has taken another job and has slowed or stopped work on your project, what can you do?

Most "two-page specials" are silent on this. However, all AIA contracts have clear language that protects the homeowner. Form A105 states: "The Owner may terminate the Contract if the Contractor (1) repeatedly refuses or fails to supply enough properly skilled workers or proper materials; (2) fails to make payments to subcontractors . . .; (3) persistently disregards laws, . . . or (4) is otherwise guilty of substantial breach of . . . the Contract."

If any of these happens, the homeowner, after giving seven days' notice, may terminate the contract and hire another contractor. If the unpaid balance owed to the contractor is more than the cost of finishing the job, the homeowner owes the original contractor the difference. But if the cost to complete the work is more than the original contract price, which is often the case, the homeowner can look to the fired contractor to pay the difference.

It is often easier and faster to enter into a simple two-page contract for the work that you want done. And because many contractors are competent and honest, everything will probably work out.

But an overly simple contract could backfire if there are problems. A judge will honor any binding contract that you have signed, even if it is one-sided in favor of the contractor.

The AIA contract forms are designed to protect you. You may want to tailor those forms to your needs, but they are accepted in the industry and should be used by all homeowners.

The forms can be purchased directly from AIA. See its Web site, http://www.aia.org, or call 800-365-2724.

Benny L. Kass is a Washington lawyer. For a free copy of the booklet "A Guide to Settlement on Your New Home," send a self-addressed stamped envelope to Benny L. Kass, 1050 17th St. NW, Suite 1100, Washington, D.C. 20036. Readers may also send questions to him at that address or contact him through his Web site, http://www.kmklawyers.com.