HOME IMPROVEMENT LEGAL TIPS
In today’s economy, with so many homes “Under water”, many are choosing to “fix up the old place” and hold out for a while. Organizations like Lowes and Home Depot are doing well or so we hear (For the record, I have not seen either of their “P & L”s). But not all of us are “Do it yourselfer” and often we must hire someone to perform repairs and facelifts.
Home improvement construction contracts are among the top consumer complaints in the country and owner/builder projects are fraught with problems. Here are some basic rules to remember:
First, any contracting job or repair that costs more than $500.00 must be done by a licensed contractor. Ask for a written bid and a written contract. Usually, a state licensed contractor will have his or her licensed printed or displayed on the form.
Most of us who are not lawyers know that the laborers you pick up in the local Home Depot parking lot are not licensed contractors. Some of them are pretty handy and will give you a fair day’s work for a fair day’s pay. In the alternative, the handy man driving around in that old pick-up truck who seems to be able to build or fix anything for one third of what you might pay a licensed contractor looks like a much less costly alternative. So what are the down sides?
Well, first there are the usual horror stories of the guys who you agree to pay to work all day, who do nothing but drink beer, liter your property with empty beer cans and sit on their butts and then threaten to beat the crap out of you if you don’t pay them in full. If you hire a contractor, negotiate a price, and put it in writing, the lazy laborer is the contractor’s problem. The little known legal doctrine of “Toughshitski” fits into this slot very nicely.
Another problem is the fact that a home owner who hires unlicensed persons to perform work on his or her property may be responsible to the state and federal government to pay for withholding taxes, Social Security taxes, unemployment and disability insurance, making employment compensation contributions and obtaining workers compensation benefits. Most day laborers are not going to go running off to the authorities to report you. They are more likely to get Hugo, the local undocumented arm bender to negotiate a resolution. If, however, a local code enforcement or city building official happens to drive by and notices work proceeding, he or she might do some checking and find out if you have a building permit. Many cities will require you to use a licensed contractor and may ask the contactor to show proof of workers compensation insurance or that the contractor’s employees are on the payroll and are being paid minimum wage. If you are an owner/builder, they will require you to use licensed subcontractors or show proof of workers compensation insurance or that the contractor’s employees are on the payroll and are being paid minimum wage.
Failure to have worker’s compensation coverage is not a matter to be taken lightly. Any construction work is risky and people can get injured. If a day laborer falls off your roof or of a ladder or falls into a hole or gets hit in the head with a concrete block or . . . . , chances are that person is going to file a claim against you. Personal injury claims can even occur if you ask your brother in law to help you build a fence or put some wall board up in your garage. If he crushes his hand with a hammer or saws his thumb off, you are probably going to be facing a serious personal injury claim. Before taking on such a project, a homeowner may want to run some “What if” scenarios past your insurance agent to see if you have sufficient coverage.
There are some real advantages to using a state licensed contractor. Generally, California state licensed contractors generally must have four years of journey- level experience in their trade, have passed a trade and contractor law license exam, and have undergone a professional background investigation. In California, contractors who have applied for or changed their license since 2005, must go through a criminal background check as well. Most licensing boards in California are pretty sticky about licensing a person who has a criminal background.
One more point about city building departments. Most people considered them horrible pains in the rear and nothing but a local municipality’s way extracting money from you even when the economy was good. Now they are the devil incarnate. In their defense, however, I recall a case in which I was involved as a lawyer years ago, where the manager of a local business, in an effort to “Throw some business his way” had hired a friend from his church to perform what appeared to be a simple interior remodel – you know – knocking down a few walls here and there and making two or three offices into five or six. The contractor never went to the city to obtain a building permit and consequently, the city never inspected the plans. The contractor was under qualified and never saw that he was taking down a load bearing wall. A city inspector would have seen it and instructed the contractor to have the plans approved by an engineer and have the job supervised by an engineer. The consequences were disastrous. The mezzanine, which was filled with business records, came crashing down on the contractor, his employee as well as about fifty of the business’s employees. No one was happy except the lawyers. Municipal employees may seem to be intrusive, but they can serve to avoid disasters.
Also remember that the law on home improvement contracts as well as service and repair contracts offer some specific protections for a consumer. The maximum that a home improvement contractor may request as a down payment is either $1,000.00 or ten percent, whichever is less, unless the contractor has a blanket performance and payment bond on file with the California State Licensing Board.
In today’s world of internet, twittering, Droids and laptops, it’s hard to imagine that a consumer cannot check out a contractor in minutes. The California State Licensing Board has a web site and one can look up contractors by their license number or business name. If a contractor appears to be uncooperative or gets hostile with your efforts to “Do a little research”, maybe it’s time to move on to another one.
Charles Farano practices civil and real estate litigation, family law and criminal defense in Southern California. He is a former city prosecutor and is certified by the National Board of Trial Advocates. He can be reached at cfarano@faranolaw.com
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