Regardless of whether you’re going to build a 25,000-square-foot office building or complete a kitchen remodel, much of the law regarding building contractors remains the same. Yes, there are some specific rules for residential real estate work but there’s no reason not to apply much of the same logic to commercial projects.
Get at least three bids for the work from licensed contractors. Don’t sign with anyone without doing that.
Before you as the consumer (whether residential or commercial) sign on the dotted line, you must do your due diligence about the contractor you’re about to hire.
This includes things such as making sure that the contractor is actually licensed, bonded and insured. The contractor can provide you with evidence on these points, but you should also check the State Contractors License Board website (https://www.cslb.ca.gov/). This has a wealth of information such as whether the license is current, who is listed as being some of the more important personnel with the contractor, which insurance company is providing workers’ compensation insurance, and an overall history on the contractor. You can also contact the board by telephone and get some more information such as complaints and lawsuits on the contractor.
If the contractor checks out (obviously if he/she does not, then walk away from them), then you want to talk to some of their current and former customers. When you ask for the list, make sure it is complete. You want to talk with both those who have great things to say about the contractor and those who have had poor experiences with them. You should talk with at least three customers. Ask about whether they showed up on time, completed the work on schedule, met the budget and their overall satisfaction with the work done. And, then perhaps the most important question, would they hire the contractor again.
Then you want to make sure that you, the owner of the project where the work is going to be done, are added as an additional insured on the contractor’s general liability and worker’s compensation insurance. And, no, that one-page Certificate of Insurance does not make you an additional insured. You must get an endorsement from both insurance companies which specifically state that you have been added. If you don’t do this and one of the workers gets hurt on the job, you could be held personally responsible for all of his medical bills and lost wages.
Do not accept excuses – demand this.
Also, make sure you that you go through the same process and get the same endorsements and information on all subcontractors.
Don’t sign a contract without reading it. This seems pretty basic but many people skip reading it all together or merely skim the document to make sure the price is correct. There’s a lot more to be concerned about. What’s the down payment? When are further payments due? How are requests for additional work or change orders handled? Who is the representative from the contractor who has authority to make decisions? How much of a holdback do you get? When does work start (both the general work as well as the day-to-day schedule) and when will it be completed? What happens if it’s not completed on time? There are many more areas but this gets you started.
Also, check the State Contractors License Board website for rules and regulations on residential jobs. This is important. For instance, did you know that the down payment in home improvement contracts can be no more than $1000 or 10 percent of the job, whichever is less? There’s more good information there on putting together and understanding construction contracts.
When you get ready to pay the contractor, make sure you get a full lien release from the contractor and all of his subcontractors. If the check is being used to pay a subcontractor or supplier, either make it a two-party check (made payable to the contractor and his sub or supplier) or pay the sub/supplier directly.
There are a number of other things you can do, such as checking with your trusty construction attorney and notifying your insurance company about the upcoming job, but even doing these things will reduce the risk of things turning unpleasant on what should be a joyful and exciting project.
Carl Kanowsky of Kanowsky & Associates is an attorney in the Santa Clarita Valley. He may be reached by email at [email protected] Mr. Kanowsky’s column represents his own views, and not necessarily those of The Signal. Nothing contained herein shall be or is intended to be construed as providing legal advice.