Questions Contractors Should Ask Homeowners Before Construction
Contractors commonly work with individual homeowners on their home construction projects. However, when dealing with someone that does not have experience working with construction professionals, it is especially important to make sure everyone is on the same page. Further, just as a homeowner will vet the potential contractors, the contractor should also ask homeowners a few questions. The answers to these questions can be the main factors in deciding if taking on the specific project is actually worth it or not. Additionally, asking these questions before the project begins will help you avoid payment and legal problems as the project move forward. Below are a few of the most important questions contractors should ask homeowners before agreeing to work on their projects.
Have They Ever had a Remolding or Construction Project Done
The first question you should ask a homeowner is whether or not they have experience with construction projects. If the homeowners have never been a part of a project, you will likely have to explain the process to them. Explaining to the homeowners what the construction process will look like is important as they may otherwise have unrealistic expectations.
If the homeowners are receptive to your comments and their expectations are reasonable, it would likely be smart to move forward with the project. However, if the homeowners discuss doing some of the work themselves to save money, you will have a more difficult time moving through this project smoothly.
Additionally, if the homeowners say that they have worked with contractors on previous home improvement projects, it may be worth contacting their previous contractors to see if there were any payment issues. Additionally, ask the general contractor what the homeowner was like to work for and if there were any issues with the customers in general.
Is There a Mortgage on the Property
The next question to ask a homeowner is if they have a mortgage on their property. The reason for this is that if you ever experience payment issues, certain states require you to send certain documents to the mortgage holder. Even if your state does not require this information, involving the mortgage lender can help pressure the homeowner to pay you. It is important to get the lender’s information before the project begins as a homeowner will likely not give this information up if a dispute does occur.
Further, depending on the mechanic’s lien rules in your state, the mortgage lender may have priority over your claim in the event that you do bring forth a lien. Similar to the situation above, you should get the necessary information before you start working on the project.
How are They Paying for the Renovation
In most cases, payment disputes occur because the homeowners do not have a viable source for project funds. Thus, asking about how the homeowners will be funding the construction—and who is holding these funds—can help the contractor avoid potential issues before they even occur.
Some types of financing are obvious. These most commonly include 203k and government loans. However, if the homeowner’s family is supposedly funding the project, it may be a good idea to steer clear of the project. The reason for this is that issues within families could occur at any time and if an issue does occur, you may not receive payment. Similarly, if the homeowners are utilizing a home equity line of credit, you would need to determine and verify how much funds the homeowners actually have. This is important as a simple material order change could put the project over budget. In these or similar scenarios, a time and materials contract might be a good idea so that if the homeowners do not have sufficient funds, you will be able to receive payment at some point.
Do They Have Existing Design or Drawing Plans for the Project
Many homeowners begin a project with a clear idea of what they want the final product to look like. However, as the project begins to come together, they may make small or large changes. This can be very problematic as it is almost impossible to prepare an accurate estimate for project costs if the materials and time necessary to complete the project are constantly changing, thus, increasing the likelihood that a payment dispute occurs.
To avoid these issues, the more detailed project plans you can get from the homeowner, the better. Additionally, the chance of project plans changing decreases if the homeowners are working with an architect or design professional.
Can They Give you a Credit Report
When dealing with a project that requires you to do all the work before receiving payment, you have the ability to set credit terms. This includes setting late payment policies and incurred interest rates. One important note is to include the interest rates from the materials that you already purchased.
While obtaining a credit report may not be necessary for each project, if you are working on a large project or with a new customer, it may be a good idea to ask for this report. If the homeowner has good credit, creating a document stating the penalties for late payments will likely be enough to keep payments on schedule. However, if the customer has a history of collection or payment problems, you may want to increase your price for the project to make up for the increased risk.
Do They Know About Mechanics Lien
Asking a homeowner about mechanics liens is important as it will tell you if they understand the consequences of not paying you. If the homeowner knows the risk of not paying, they are much more likely to make payments on time. However, with owners that do not know about liens, it is very important for you to set clear expectations.
Further, educating the homeowner about mechanics liens can help ensure that you receive payments on time. While you do not want to scare your customer off, you should make it clear what your rights are under mechanics liens. Further, state how they can avoid a mechanics lien and open the door for conversation if they feel they may have a difficult time paying you at any point.
To get honest answers and really leverage the answers to these questions, you must ask them during the initial step of the construction project. While you do not want to ask for a credit report before discussing the project or being offered the project, find out answers to these questions before submitting a quote.
While a bad credit report or a customer who does not have an understanding of mechanics liens does not mean that you will have a bad project, if you feel that there is some risk associated with this project, you can increase the price for the project to match the increased risk. With over 20 years of experience, Antonoplos & Associates construction attorneys can help construction company owners, contractors, subcontractors, material suppliers, architects, and designers with a wide range of services before, during, and after a construction project in DC, Maryland, and Virginia.
Contact Our DC Law Office for More Information
Finally, for more on questions contractors should ask homeowners before construction, contact us at 202-803-5676. You can also directly schedule a consultation with one of our skilled attorneys. Additionally, for general information regarding construction law, check out our blog.