Protecting Residential Contractor Legal Rights BEFORE the Project Begins
Too often, residential contractors (general, subs and trades) call my office inquiring about their legal rights after a problem has occurred. More likely than not, the contractor calling has already performed most of the work or finished the project entirely. Regardless of whether the issue is failure to pay, alleged defects, delay or change orders, the conversations I have with these potential clients typically begins—and ends—with what happened before the project even started. Time after time, the contractor realizes they waived their best legal options before the work began.
A residential contractor’s best chance to successfully navigate legal problems is to anticipate the most common issues before they manifest—in essence, be prepared. This article outlines four steps any residential contractor can take to protect their legal rights and options before the work begins.
1. Have a Written Contract for the Specific Project
Contractors may be hesitant to negotiate a written contract, either because they already have a ‘boiler-plate’ contract (or some provisions on the bottom of a bid/proposal), they do not feel they have bargaining power with the owner or GC, or they do not know where to begin.
However, a written contract does not need to be long, complicated, or demanding. The most useful contracts (1) represent the actual work to be performed, (2) are understood by all parties, and (3) are followed (or amended when things change).
A good start is to simply write down the agreement—write down all the items discussed over phone calls, meetings, and text messages regarding the scope of work and price. If there is something unique about the project and you discussed a plan to address it, write it down. If the project is especially custom, and you expect changes, write down how the changes will be ordered and paid for. If the winter season is arriving in the Pacific Northwest, and delays are a possibility, write down your plan for delay costs. If circumstance change halfway through the project, and the initial deal no longer makes sense, modify the original contract in writing.
Finally, make sure all parties have copies of the signed contract.
2. Attorney’s Fees
Everyone has heard the stories of contractors performing work, only to have the owner or GC withhold the last payment because they know the cost of a lawsuit is greater than the final payment itself. Unfortunately, these stories can be all-too-true. Attorney’s fees—even when you are on the right side of the law—are not a guarantee in Washington. Contractors can maintain the option (and leverage) of litigation by including an attorney’s fees provision in their contract.
3. Lien Notices and Timing Under RCW 60.54 et seq.
Recording a lien against the residential property for unpaid labor, materials, supplies, and equipment can be a useful tool against withheld payment. However, in Washington, there are numerous requirements for when a contractor can file and foreclose on a lien, and, depending on the project, the contractor may need to provide lien notices at the outset. If such requirements are not followed, the lien may be frivolous—and the contractor may be liable for the owner’s attorney’s fees.
It is worth spending a little time becoming familiar with the timing requirements and what pre-lien notices are required for your trade and typical projects.
4. Alleged Defect Notice Under RCW 64.50 et seq.
In Washington, residential homeowners can bring a defective construction lawsuit against a contractor for up to six years after the work is performed. While the Washington Construction Defect Claim statutes are a useful avenue for homeowner recovery, they can also be useful for contractors by requiring the homeowner to first provide the contractor notice, an opportunity to inspect, and an opportunity to offer a cure before the homeowner initiates a lawsuit. However, a homeowner may not be required to offer pre-litigation notice if the contractor did not first provide notice of their right to offer a cure “upon entering into a contract” with the homeowner.
The prudent course for contractors is to understand whether they need to provide notice before the project begins and, if they do, how to provide such notice.
The lawyers at Beresford Booth have a wealth of experience assisting with residential contractor’s legal rights. Please contact Beresford Booth at info@beresfordlaw.com or by phone at (425) 776-4100, and we can help you prepare in advance of your next project.
