DIY Construction Contracts
Posted March 12, 2024 in Uncategorized
If you are a builder, general contractor, plumber, electrician, HVAC professional, architect, or engineer, you probably have developed contracts for your business over the years.
In general, many newer construction businesses work off of generic estimates that they make the customer sign, rely on verbal agreement, or pull a sample contract off the internet. This is “do it yourself” or DIY contracting. It works, until you have your first customer dispute.
As construction businesses grow in success, size, and volume, they typically begin to experience more disputes with the homeowners or commercial developers that they serve. It becomes untenable to continue to DIY and piecemeal contracts together – as untenable as it is to handle all customer disputes in-house.
If any of this rings true for your construction business, we recommend you read on, or just give us a call at 720-441-3328. Volpe Law LLC is here to help.
The danger of DIY contracts
We have numerous small and mid-sized construction business owners call in each month with either a nonpayment dispute with a homeowner or general contractor, or construction defect allegations. Often it will take being stiffed out of $50,000 in payment before the business realizes it needs legal counsel.
The first thing we will look at is your contract. All too frequently, we find out that construction businesses are still using handshake deals or flimsy internet contracts. Ambiguity in payment terms and scope issues often leads to some uncertainty in how the nonpayment dispute will go.
Many of our clients want to know how to achieve absolute and efficient success in the dispute without court intervention in these cases. The unfortunate answer is, because you do not have a solid contract in place to protect your business and enumerate clear responsibilities and requirements, there is a reduced likelihood of achieving a cost-effective settlement result outside of court. Sure, a written agreement is not necessary, but it does go a long way to saving you on litigation costs in the future. Clear terms and conditions can help your lawyers more quickly and effectively argue with the opposing party to concede to payment and resolution without the need for court.
Avoid sketchy mechanics liens
There is also a time when many construction businesses will begin investing in legal counsel to handle mechanics liens appropriately. Mechanics liens are a great way to help your business get paid for the work you put into someone’s property. But, the requirements are very rigid. It will be more difficult to prove what you are owed, and for what amount you are claiming a lien on someone’s property, if you do not have a quality written contract in place. Do not overstate your mechanics lien. You will want to tighten up your written contracts and record-keeping so that when you are faced with nonpayment, you are ready to both assert your lien and defend it with evidence when the other party’s attorney reaches out and threatens you with litigation.
Finally, as mechanics liens go, be prepared for construction defect or workmanship complaints from the owing party. It is typical that when someone is not paying you, they will fight back with workmanship or warranty claims as a way to avoid payment. Sometimes, these defect claims are legitimate, sometimes, they are not. No matter what happens, you will want to hire legal counsel to deal with the dispute so you can spend your time running your business and bringing in work instead of fighting with a homeowner.
Invest in Your Business’ Future
As your business grows, you will be looking for ways to invest in its future, mitigate increasing risks, and set yourself up for success. The right time to invest a couple thousand dollars into quality legal counsel is as soon as your business can afford it. An ounce of prevention is worth a pound of cure. Therefore, if the up-front investment of putting solid contracts into place saves you from having to suffer through litigation that would have cost your business six figures in legal fees, it is clearly worth it.
The other benefit to having a lawyer draft contracts for you is building a relationship with a legal team you can trust. When something happens in the future, you’ll already know a lawyer you can call to inquire whether it makes sense or is necessary to put down another retainer and get representation. We frequently have repeat calls from clients for various issues that arise. We pride ourselves in being a resource for our clients. If we can help, we will; if we can’t, we work with our client to find a law firm that specializes in whatever unique issue is at stake.
Conclusion
If you are a construction business, licensed trade, or licensed design professional and need legal counsel, whether it be startup advice, contract review, or litigation/trial representation, Call Us or complete our Contact Form to request a free consultation.
DISCLAIMER
The information contained on this website is provided for informational purposes only. It is not legal advice and should not be construed as providing legal advice on any subject matter. Laws frequently change and therefore this content is not necessarily up to date, nor comprehensive. Contact us or another attorney with any legal questions specific to your matter. You may request a consultation by completing our consultation request form.