Written Contracts in the Renovation Industry

The home renovation industry is enormous.  There are innumerable contractors.  Some are good, some are not so good, and some are outright awful.  You need only watch a few episodes of local hero Holmes on Homes to see the ugly.

There are endless stories of contractors submitting quotes and then hammering the homeowners with “extras”.  As a result, the courts have taken a very hard line with contractors who claim extras.

Many contractors use standard form quotes and contracts.  Most of those forms say that there is no amendment to the contract unless it is signed by both parties.  That is usually thought to be for the contractor’s benefit. 

(Those contractors who do not do written quotes:  beware.  You may think that not giving an estimate gives you more flexibility and frees you from the 10% leeway of the Consumer Protection Act.  In theory, that may be correct, but the reality is that you will have a harder time collecting your money.)

The reality of the renovation industry is that the homeowner invariably requests changes as the job progresses.  However, many contractors forget their own contract requires the change to be in writing. 

What happens is that the contractor makes the changes that the owner requests and ultimately issues an invoice, including extras.  Often, the parties have not discussed the cost of the changes or it was a brief conversation where the contractor says something like “Oh, that’ll be about five hundred bucks.”  The parties either forget the conversation (conveniently?) or they disagree on what the extras should cost.

The reality in the courts is that, in cases where there is a written contract or quote, despite the contractor doing the work, at the request of the homeowner, the contractor will likely not be paid for extras which were not agreed to in writing. 

The result is that, in addition to rogue contractors, there are now rogue homeowners who know how the system works and seek to get the contractor to undertake extras with the intent of never paying for them.

What’s a contractor to do?  It’s so easy, yet it is so rare.

I recommend that any contractor carry a wad of “change orders” in their truck.  Any time that the owner wants a change, the contractor would estimate the change, do a change order with the cost of the change set out and get the owner’s signature on the change order. 

I think that the owner will appreciate the professional manner that the contractor deals with the requests for extras.  The owner, knowing the actual cost, may decide not to go ahead with it, but at least there will be no dispute as to the cost.  (I have only ever known one person who was unhappy about knowing what a service was going to cost.)

For the homeowner, the change order is good, in that they know what that will have to pay for the extra.  The contractor will be happy, as there will no longer be any dispute as to what the owner agreed to pay.