Abode [ Improvements ] Coping with Remodeling January 2007

by Jim Frazier
Images by Russell Byrne

Homeowners often make the choice to remodel or make additions to their residences. Jim provides some directions for the important choices and challenges that they thereby are called upon to face.

There are a number of reasons for adding to a home or remodeling rather than merely buying a better or larger place. In some cases the family is outgrowing the number of available bedrooms. Or perhaps the family simply wants a place to put a pool table. Some people love their current neighborhood and don’t wish to move.

I’m working on one project in which the property owners paid a lot of money for a historic house. They gutted it right down to the framing, completely tore out the 1970s-style kitchen, and are paying a great deal of money to get the building designed to their personal tastes and brought up to the standards of modern building codes.

Before You Begin Work
Before beginning any remodeling project, find a licensed architect to check the feasibility of your ideas. Have him translate your wishes into plans that a contractor can then use in construction.

After the plans are finalized, find a contractor and work with him to create a budget. The set of plans and the contractor’s bid are both required before you are able to make a decision to move ahead.

Your contractor will submit plans to the appropriate Building Department and pull the required building permit.

Here are some ground rules for selecting contractors. One of the best things you can do is use word of mouth. Talk to people who had similar work done in the past.

When you have identified a possible contractor check with the Contractor’s License Board website to see if he is in good standing (www.cslb.ca.gov). Make sure any contractor is insured with Workman’s Comp and General Liability. If you want to be perfectly careful, ask to look at the certificates and then follow up by calling the insurance companies.

Don’t merely ask for references, get these with a timeline. Make sure current references are included in the list.

Make sure the contractor has good communication skills. This is a key factor for any successful addition or remodel. The communication must go both ways: he has to be able to understand exactly what you want; you have to be able to understand what he is telling you.

Under no circumstance should you pay more than ten percent or $1,000, whichever is less, as a down payment. This is the maximum amount of money that can be asked for before starting a job under state law.

Make sure that you have an unconditional lien release on money paid. The subcontractors are required to send by certified mail a preliminary letter notifying you of your rights. Without the protection of an unconditional lien release if your contractor fails to pay the vendors they can go after you and get payment from you even if you paid your contractor for the materials. Get a lien release signed by all the vendors and sub-contractors that your contractor uses.

Another way to protect yourself is to use two-party checks that both the contractor and you are required  to sign for any payments made to sub-contractors. Set this up as a special account through the bank when you take out the construction loan. Or set up a special account yourself.

Make sure you have a comprehensive and understandable contract. If you don’t understand the terms of the contract, seek the advice of an attorney. Make sure that the contract clearly specifies materials, equipment, and finishes.

Be sure the contract includes a start date and a completion date. Specify what liquidated damages will be assessed for work not completed by the specified date with a per-day penalty for overages. Make sure your contractor is aware that he will pay penalties for every day he doesn’t perform.

Be sure the contractor has sufficient employees to complete the job. Also, be sure that he or a supervisor will be on-site at all times. Include this as a requirement in the contract. Ask the contractor to post a performance bond, which is an insurance policy that the bonding company will complete any job he doesn’t finish.

Both sides in every contact should agree to legal arbitration in cases of dispute. This will keep the lawyers from becoming involved in a disagreement since they will burn up your money.

For larger projects the contract should clearly state that payments will be made progressively for stages of completion. And then make sure that each stage is actually completed before you pay.

When the money is due, however, pay the contractor promptly. You want to be careful with your money, but should behave in an ethical manner.

Never get more than three bids for a project. Beyond this you’re simply wasting your time and the contractors’ time.

If hours are important to you, and you don’t want people before seven or after five, make sure they know that. Do you want people working on weekends? If it bothers you, then make sure the contractor knows this prior to project start.

As the Work Proceeds
Before any project begins be sure to store personal effects in a safe place and then insist upon respect for your personal belongings. Come to an understanding with the contractor specifying what you want protected during the construction process, and what areas are off limits.

For remodeling projects, make sure that the contractor erects some kind of protection to prevent the house from becoming inundated with dust and debris. Insist that the contractor clean the project site daily both for safety and aesthetic reasons. Designate a place for materials.

Know, however, that your house is going to be disheveled for a while. Remember that the ends justify the means. You’re adding value to your home.

If smoking bothers you ask that all employees not smoke in the area.

When the process begins, ask the contractor for weekly status meetings, and when your contractor schedules inspections make it a point to be there with the building inspector and the contractor. But don’t bother the contractor when he’s working.

Make sure that you and the contractor work together as a team to achieve your goals. He wants to make money on one hand, you want to get value on the other, but together you are focusing upon the good thing that your are creating as the means for both of you realizing your goals.

Other things
Consider working with a time-and-materials contract if appropriate. This can benefit both the homeowner and contractor in cases when there might be unforeseeable problems. In particular, when you open up an old home and begin to remodel you often find things that nobody expected.

Working time-and-materials eliminates disputes and the necessity for expensive and time-consuming change-orders. The arrangement prevents the contractor from losing his shirt, in some cases, and keeps the homeowner from paying too much in others.

For example, you might tear off old paneling and discover that the joists and studs are in perfect condition and the room remodel will take two days. Or you tear off the paneling and find out that dry rot is everywhere. Now the remodel is going to take two weeks — or maybe six months.

On the other hand, avoid allowances completely. A contractor will specify an allowance for flooring, for example, if the homeowner hasn’t made a decision about materials. However, if the homeowner then chooses a Brazilian Cherry the cost of the project has suddenly escalated.

Contractors are always tempted to low-ball allowances so they can bring the bid in as low as possible. But then if the homeowner selects something even reasonably priced the cost might suddenly shoot up $25 thousand over budget.

I don’t give allowances to my customers. I’ll go with them, if they wish, to home-supply stores. I’ll help them decide what they actually want before I bid the project, but I won’t start the job until they’ve done their homework.

Make your choices upfront. When you attempt to make decisions about design or materials in the middle of a project you generate change-orders. These things can be expensive, plus they must be paid up front and in full.

If you are consulting with a contractor who resists any of these safeguards, take his resistance as a red flag. I like these good contracts that protect my clients. A good contract helps my clients feel comfortable about me and creates trust in my work. That’s a good thing.

People don’t value what they don’t pay for. My clients pay good dollars for good work. It’s an arrangement that makes quality people, at least, feel good about doing business. I believe that we create win/win situations or, ultimately, everyone loses. °