Sample contract for home renovations. Stock photo by Getty Images
Construction and home-renovation horror stories abound, but there are ways to protect yourself and hold a bad builder accountable.
Anytime you’re hiring a contractor, it’s first vital to create a contract. At the bare minimum, such a contract should include:
- A detailed list of all the work being done;
- Information on any subcontractors being hired;
- Total project cost including taxes;
- The start and end dates;
- Responsibility for cleanup;
- Names and address of the contractor and homeowner.
Once these responsibilities are clearly spelled out, it’s easier to hold a contractor accountable. You can sue for breach of contract if they don’t carry out the job as agreed.
Sometimes, however, it’s not as cut-and-dried as it may seem. A contractor isn’t necessarily legally liable, even if they didn’t build to your specifications.
Generally, you can sue for demonstrably shoddy construction, misrepresentation or fraud. The latter two could apply if the builder lies or deceives you about the quality or method of construction in order to hide cheap materials or sloppy work.
To calculate an award for any kind of building deficiencies, courts will consider two things:
- Diminution of market value (in other words, does the construction reduce the value of your home?)
- Cost of repairs
Courts will award repair costs if two conditions are met:
- The costs are reasonable under the circumstances;
- The owner has, or clearly intends to repair the work.
Courts tend to award the lesser amount — whether the repair cost or amount of diminution — unless repairs are necessary to allow the owner to have full use and enjoyment of the property.
Owner-contractor lawsuits are common, and can help illustrate how courts evaluate these disputes:
Royal Paving v. Marshall: In this case, a contractor was supposed to repair and extend some paved asphalt, but extended it in the wrong place, causing drainage problems. However, the judge said the error was slight enough that it didn’t cause diminution of the property and also said that, since 18 months had elapsed, it was clear the homeowner had no intention of repairing it himself.
Strata Corp. NW 1714 v. Winkler: a contractor installed a too-thin concrete floor, which began cracking. The business owners sought repair costs to have the work done entirely from scratch, asking for $170,000 (the entire building had only cost $200,000 to construct). The court disagreed, saying the cracks could simply be patched and waterproofed at the far more reasonable cost of $12,000.
Royal Paving v. Marshall
Strata Corporation NW 1714 v. Winkler