Remodeling projects are a big investment; your contract is the best tool if something goes wrong

BALTIMORE - A remodeling contract is a big investment and the best tool you can have if something goes wrong is a good contract. But many customers don't pay enough attention to contract terms and don't negotiate for better ones.

"An Angie's List poll found 16 percent of respondents don't fully read contracts before signing it. It's not a contractor's job to protect your interests, that's your job," says Angie Hicks.

A recent Angie's List survey of 500 contractors nationwide found out their priority list for contract provisions.
· 70 percent of the contractors never include provisions that tie payment to completion.
· 45 percent don't include termination clauses that allow either party to walk away without penalty should the contract be violated.
· 24 percent don't even require contracts before they start on a project.

"What you'll find is the contract can help or hurt you so it's important to read it in its entirety and don't be afraid to negotiate terms. A good contractor is going to be willing to negotiate reasonable items and if they are not, look for a different contractor," says Hicks.

Here are nine contract terms designed to protect you:

1. Job description: Spell out the project and the responsible parties' roles (e.g. homeowner will provide payment, access to the home, name those authorized to sign and amend contract etc… contractor will provide necessary tools, materials, expertise.)
2. Start and completion dates: Set dates to give a framework of time the project should take. Be prepared to amend completion for good cause, but don't accept unreasonable, unnecessary delays.
3. Payment terms: Tie payment dates to job completion. Expect to put at least 30 percent down, but hold back at least 10 percent until the job is completed to your satisfaction.
4. Penalties for missed completion dates: Give yourself options to deduct or delay payment if completion dates are missed to encourage the contractor to meet your time frame.
5. Procedure for work orders/changes to initial agreement: Outline a process to follow for project changes or additions (i.e. require written sign-off on changes sought by the owners or the contractors so you don't have to accept unauthorized changes.) Be prepared for change orders, though. Large-scale projects often uncover hidden problems that must be addressed before work can continue. It's also not uncommon for homeowners to change their mind and deviate from the original project plans.
6. Detailed outline of costs and materials: Require an itemized list of materials, labor and any other costs you will incur. If you want specific materials and brands, spell them out or agree to rely on your contractor to find the right materials. Include warranty information as appropriate.
7. Proof of licensure, insurance and bonding: Find out what trade licenses your community requires and don't hire anyone who fails to meet them. If something goes wrong you may be forfeiting state or local enforcement assistance if you hire someone who isn't licensed. Ask for proof of insurance and bonding to protect you from liability for property or job-related injuries.
8. Termination clause: Spell out reasons the homeowner or contractor can leave the job without penalty (e.g. if the homeowner doesn't pay him or her or if the job drags on without reasonable explanation for delay, poor quality work or failure to adequately communicate.)
9. Lien waiver: Ask the contractor to provide a lien waiver to protect you from liability should the contractor fail to pay his or her subcontractors who worked on your project.

If you still run into problems, here are some things to keep in mind. First, review your contract and determine if it's been violated. Let your contractor know you're unhappy with the way things are going and express your concerns. Ask them for specific actions to fix the situation and amend the contract to reflect any necessary changes.

After that, follow up with a letter. Keep records of all written correspondence in addition to receipts, canceled checks and credit card statements. If a business requests documents, send a copy. Never send the original. Keep a log of all conversations, including the date and time of the call, what was said and whom you spoke with.

Call the Angie's List Complaint Resolution Service if needed. The service is offered to every member.

And report suspected unethical or illegal behavior to the proper authorities. Take pictures of work you think is shoddy or below the quality you expected.