THE CONSTRUCTION PROCESS
Permit, Plans and Specifications
Your contract should call for the work to be performed in accordance with all applicable building codes. Keep in mind that building codes only set minimum safety standards for construction; they do not protect you against poor quality work.
When a government agency issues a permit for a home, it will inspect the work when it has reached a certain stage and/or when it is completed to make sure it complies with the permitted plans and the various codes and regulations. The contractor is responsible for arranging these inspections.
When a project is completed, the building department will make a final inspection. Make sure that you also make a final inspection, or "walk-through," with your contractor to be certain there is nothing you or the contractor have overlooked.
Keep a Job File
You should keep a file of all papers relating to your project. It should include:
- The contract and any change orders.
- Plans and specifications.
- Bills and invoices.
- Cancelled checks.
- Lien releases from subcontractors and material suppliers.
- Letters, notes, and correspondence with your contractor.
It is also a good idea to keep a record or each subcontractor who works on your project, the work performed, and length of time on the job.
Preliminary Lien Notices
Shortly after your job commences you will probably receive preliminary lien notices from subcontractors and material suppliers.
Don't panic! This does not mean that a lien has been filed against your property. The law requires you to be furnished with these notices to alert you thatthose persons have worked on or have supplied materials for your job and may have lien rights.
The law provides that anyone who furnishes labor or materials to your home can record a "Claim of Lien" or "Mechanic's Lien" against your home if they are not paid. Even if you have paid your general contractor in accordance with the contract, if he/she fails to pay any subcontractor or materials supplier who performed work or supplied materials in connection with your project, you still run the risk of having a Mechanic's Lien filed againstyour home and foreclosed. This risk is greatly reduced by protecting yourself with a contract bond and/or use of a funding control company, but it is never entirely eliminated.
Some Things To Consider
Plan your project carefully.
Shop around before hiring a contractor.
Get at least three written bids on your project.
Provide contractors with accurate plans of drawings that will enable them to determine the scope of the work and the costs.
Check with the Contractors State License Board to see if a contractor is properly licensed.
Check out contractors with your local building department, trade associations, consumer protection agency, and the Better Business Bureau.
Visit projects the contractor has completed
Ask your contractor to furnish a completion or contract bond.
Consult with more than one lending institution regarding the type of loan to obtain.
Make sure your contract provides for a retention.
Make sure everything you and your contractor have agreed to is included in your contract.
Ask your contractor about inconveniences that may occur and plan accordingly.
Keep a job file.
Make sure you receive lien releases from subcontractors and material suppliers.
Make frequent inspections of the work, including a final walk-through.
Consult an attorney if a mechanics lien is filed against your property.
Try first to negotiate with the contractor if problems or disagreements occur.
Hire an unlicensed contractor.
Hire a contractor without first shopping around.
Act as an owner/builder unless you are very experienced in construction.
Sign anything until you completely understand it and agree to the terms.
Make agreements with subcontractors or workers without consulting the prime contractor.
Ever pay cash, without proper receipt
Make a down payment without checking with your lender or the Contractors State License Board to make sure it does not exceed the legal limit.
Hesitate to ask questions of the contractor.
Let your payments get ahead of the contractor's completed work.
Make final payment until you are satisfied with the job.