QI signed a contract with a general contractor last September. The contractor was going to remodel the back of my house for a fixed price of $125,000. For six months, everything seemed to go well, the work appeared to be of good quality and the various crews were working continuously. Then, about four months ago, things changed. The contractor no longer returned my calls (nor those of my architect), and no work has been done on my house since last May.
I am left with unfinished plumbing, electrical and interior carpentry work. I sent the contractor a certified letter (which he received) demanding that he call me, but he never did.
To make matters worse, I have paid him for work not done. I believe he has been paid about 75 percent of the contract price, but he has done less than 60 percent of the contract work.
What recourse do I have?
AAs real estate prices rise, many homeowners decide to improve their current houses rather than buy new ones. As a result, it is now difficult to get a good contractor who can start working immediately on your job.
You really have only two alternatives: Sue the contractor, or recognize that you made a serious mistake and find another contractor who will finish your job, even if it costs you a lot more money.
There are a number of steps that you should take before you sign a contract with a home-improvement contractor.
* Try to get at least two bids for your job, especially if it will involve a considerable amount of money. That is not easy in today's market. Do not jump at the lowest bid; there are too many unscrupulous contractors who will bid low, knowing full well that they will not be able to finish the job and break even, let alone make a profit. Indeed, that may be why your contractor has been ignoring you.
* Check references. If a contractor gives you names of other homeowners for whom he worked, call them. Try to inspect the work that the contractor did for these people. Keep in mind, however, that the contractor will give you the names of only friendly, happy customers. (I know that your name will not be given as a reference by your contractor.)
* Contact private and government agencies. Call the Better Business Bureau to determine if there have been any complaints against a prospective contractor. Check with the local consumer protection agency. Is your contractor licensed as a home improvement contractor? Many states, and the District, require that home improvement contractors be licensed.
* Do not sign a one- or two-page contract, especially if the job will cost more than $10,000. The American Institute of Architects (www.aia.org or 800-242-3837) has a number of good contract forms, and you should insist that your contractor use one of them.
Any home improvement contract should include:
* When the work will begin and when will it be completed. Many homeowners will offer a bonus for early completion and will impose a daily late fee if the job is not completed by a certain date.
* Payment schedule, also known as a draw schedule. Your contract must spell out how the contractor will be paid. For example, at the beginning of the job, you will pay X percent (usually 10 or 15 percent) of the total contract price. That will enable the contractor to buy the materials necessary to start working on your house. When a portion of the work has been completed, the contractor will get another check.
* Final payment. I always recommend that a portion of the total contract price be withheld until the work is finished. I prefer 15 percent, but it should be at least 10 percent.
* Termination. The contract should contain language giving you the right to terminate the contract if the contractor is not performing. Generally, the homeowner will be required to send the contractor a letter, advising that if the work does not resume (or if certain items are not completed) by a certain date -- usually 10 or 15 days from the date of the letter -- the contract will be terminated. At that time, the homeowner is free to find another contractor to complete the job, and charge the original contractor for costs above the original contract price.
Now, let's get back to your question. You should immediately send another letter to your contractor, terminating the contract. Find another contractor (using the steps discussed above) and get bids. You will need these bids should you decide to file suit.
Once you have the bids, you have to make a business decision: Is it really worth suing the former contractor? Litigation is expensive, time-consuming and uncertain. And even if you obtain a judgment against the contractor, you may not be able to collect. Devious contractors know how to protect their assets.
Finally, you should determine whether your contractor has a valid license. Many states have very strong laws dealing with unlicensed contractors. For example, in the District, if you have given your contractor at least $300 upfront and the contractor does not have a license, you are entitled to a full refund of all of the money you paid him -- even if he has completed the job and you are satisfied with the work.
But once again, collecting on a judgment is often more difficult than winning one from a judge.
You have had a serious and costly lesson. I hope you will protect yourself in the future.
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, Suite 1100, 1050 17th St. NW, Washington, D.C. 20036. Readers may also send questions to him at that address.