Tip #256: Handshakes and Headaches
It’s springtime, and that means home repair and remodeling season will soon be in full swing — and, you’ll be dealing with contractors at your rental property.
Despite expertise in their trades, most contractors have a tendency to do one thing poorly — write contracts.
Often, the contract is simply the bid, probably from a tear-off pad they’ve been using for years. Many strive to keep that document to one page so it’s easy to handle when dealing with customers. Sometimes the contract was taken from another business or off the Internet.
You may not want to incur the added expense of hiring an attorney to review what seems like a simple contract, especially if you have many to deal with. But if you decide to proceed without legal advice, be sure to keep some basic contract rules in mind:
1. Make sure everything you discussed is mentioned in the contract before you sign it. Don’t settle for a handshake agreement — people forget what they promised. For example, if they advertised a warranty, make sure it’s detailed in the agreement.
2. If you don’t understand something in the contract, don’t sign it.
3. The price is usually the central term of a contract. If it is not included, or if it is to be determined at a later date, shy away from signing. An alternative is to have a cap on any increase over the estimated price that can occur without an additional, written amendment.
4. Change orders are the most common reason for legal disputes with contractors, and not coincidentally, for price overruns. Make sure there is a stated policy for changes, preferably that they be made in writing, and that any additional fees must be disclosed at that time.
Before you hire a contractor, make sure you’ve check them out thoroughly, including previous client references. Many online rating websites provide this feedback. Some landlords mistakenly believe that they can simply withhold payment if the contractor doesn’t finish the work to their satisfaction. Contractors, no matter how talented or how difficult usually will be able to collect for any work performed on your property. It’s worth the extra time to make sure you are working with the right one before you seal the deal.
See last week’s Landlord Quick Tip.
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