MIAMI – In this Call Christina Conversation web exclusive, real estate and construction attorney Ray Robinson breaks down what you should know before entering into a contract.
"When somebody is considering signing a contract for construction of a home or other building, they need to consider, number one, what is the price and how is that going to be paid throughout the course of the contract. The other thing is, what is the scope of work that the contractor's is actually going to perform, and that should all be well defined in the contract itself.
"The other item that needs to be addressed is what is the quality level that the contractor is going to have to live up to. So those are the three primary concerns.
"And then the fourth concern also is the time in which the project is going to get done. That's essential because in many cases, it has been my experience in thirty-three plus years of handling construction issues that time is one of the major issues and a lot of contracts don't address that. And so we get to a situation where a project that should have taken six months to a year is now taking a year and a half, two years, three years...and since there's no time component there the owner -- it's very difficult for the owner to then really have something in the contract to point to to say, "you should have had this job done by now.
"The other thing that happens during construction projects is disputes or issues over the payment issue. From an owner's standpoint, an owner wants to get certain things from a contractor whenever there's an installment payment being made. One is an affidavit from the contractor, the general contractor with whom they have a contract with. They need to get an affidavit from the contractor that everybody, all of the sub-contractors and suppliers have been paid. Also under Florida law there's something called a 'Notice to Owner.' Those who are, we call them 'sub-contractors' and 'suppliers,' whom the owner doesn't have a relationship with, but they are supplying labor services materials to the job, a 'Notice to Owner' and that kind of implies what the title is and that is a notice to the owner that, 'Hey, we're out here, we don't have a contract with you but we're supplying labor services and materials to your job. And you need to be sure that we get paid when you pay the contractor, otherwise we have a right lien the property.'
"OK, so that's the other thing that the owner needs to be sure to do, and that is to keep track of the notices' to owner, actually make a log of those, and then every time the owner gets ready to pay the contractor and installment payment, be sure that the contractor is getting, not only the contractor is giving a waiver or a release of lien, but he's also getting them form all of his subs and suppliers. Well you're entitled to withhold the payment if you don't get it, and that's what the statute says even though the contract doesn't necessarily say that. But then we go back to the contract and that is--one of the things in the contract is when payments are scheduled to be made in accordance with the contract, then the contract should also specify that those are documents that the contractor has to deliver to the owner in order for the owner to have to make payment.
"So until the contractor delivers those items set forth in the contract, the owner's no obligated to make payment. And it's not just the "notices' to owner" or the waivers or releases of lien's, it could be proof of insurance to be sure the contractor still has his insurance in effect, to be sure. For example, that for the work's that been done, that all that work has been inspected and passed inspection. So you don't get near the end of the job and you find out that a lot of the work that you paid for hasn't been inspected and maybe won't even pass inspection at that point, and now of course you've paid the contractor well over, you know, sum in excess of what the value of the work is in place. And so that is one of the reasons you go back to the contract.
"A couple of other suggestions for owners would be, when you're thinking of hiring a contractor, is to get references, and that is to ask the contractor, not only just for references because obviously the contractor is going to give you references for people that have been happy with his work, but ask the contractor, 'Tell me your last five or six jobs.' Whether you're going to get a reference form them or not, just ask the contractor to provide you with your last five or six jobs, and then you can contact those people and see how satisfied they were."