Contractor Issues in Ohio - An Overview on Avoiding Potential ProblemsSome of the most common disputes and types of lawsuits that the attorneys at Harris & Engler deal with are between homeowners and contractors. Home repairs and remodels are expensive and the stakes are high when you are dealing with a potential screw up. There are generally two instances where a homeowner is hiring a contractor: (1) with homeowners insurance after an event triggering a homeowners insurance claim; or (2) on the homeowner's own dime for something that needs fixed or improved around the house.
Whether homeowners insurance is involved or not makes for a completely different experience on the part of the homeowner. When a homeowner hires a contractor on their own dime, the process is a bit more straightforward and there are usually less people involved.
Tips for a Homeowner Hiring a ContractorThe simplest thing to keep in mind when hiring a contractor is to hire a contractor that is "licensed, bonded, and insured." If you hire a contractor that is not properly qualified and that contractor screws something up with your home, such as, removes a load bearing wall that collapses the roof, then that screw up is not likely to be covered by your homeowners insurance. So the only place that you can look to for the money to fix the roof is the contractor themselves. If that contractor is not properly bonded or insured then that means that they've got no money to fix the roof and you will have to pay for it youself.
In Ohio, in order to do plumbing or electrical work you must have a valid license to and be registered with the county or smaller municipality. In Columbus, the city requires general contractors to have a license to do work in the city limits, as well as licenses for plumbers and electricians. Some contractors have mutliple licenses. Some contractors have no licenses, but do the work anyways. There is case law that supports that unlicensed contractor work (where a license is required) constitutes fraud. As a practical matter, it can be relatively expensive and somewhat difficult for contractor to get proper licensure and post a bond with the City of Columbus. For homeowners, this is actually a good thing. If a contractor does not have the resources to post a bond and get licensed with the City of Columbus, then they will not have the resources to fix the hole in your roof if they remove the wrong support beam. Homeowners can save themselves a lot of pain and heartache by simply getting a licensed, bonded, and insured contractor.
Things A Homeowner Should Keep in Mind Before a Home Construction ContractThe City of Columbus and certain other municipalities around Ohio require a permit before starting any residential construction or remodeling projects. The City may require inspections during and at the completion of projects in order to make sure that things were done in accordance with applicable housing and building codes. One thing to keep in mind is that housing and building codes are always being updated and always being improved as the years go on. When a homeowner does a construction or remodeling project it must be completed in accordance with current housing and building codes. So if you have a house that was built in the 1950's, then whatever construction you do has to be done in accordance with today's standards, not 1950's standards. This can sometimes make construction, especially electrical work, on older homes more expensive.
Another thing to keep in mind as a homeowner is that you want a written contract and you want a written estimate. A lot of contractors seem to forget about the initial contract for the engagement of their services, so this seems to be pretty common but it can also be a red flag. In order to best protect yourself as a homeowner it is best to have a written contract.
Second, you should always have a written estimate for the work you intend to be done. That estimate should accurately reflect getting all the work done you intend to have done with the quality of materials that you intend. If the estimate does not reflect this, then get it corrected. Also keep in mind that it is common for estimates in price to be exceeded, but this should also be documented. If you change your mind about one aspect of the project and want something else (which could change the cost), then get it documented. The best way to do this is in an email. If you have a phone or in person conversation about it, then follow up that conversation with an email that says something to the extent of "just to confirm our earlier conversation, I agreed to do x ..." As a homeowner, your primary means of communication should be through email. If your contractor does everything over the phone, then follow everything up with an email. If your contractor does not use email, then demand a hard copy writing. The point is, an attorney can much more easily help you in case things go wrong if you have a good paper trail.
Dealing With Contractors When You Have a Homeowners Insurance ClaimMost of the time when you have to file a claim with your homeowners insurance company it is the result of some bad and unfortunate event. Most of the time the homeowner is pretty frazzled and does not know what to do, does not know what their insurance company is supposed to do, and does not know who is supposed to find the contractors and what they are supposed to do. The attorneys at Harris & Engler have dealt with these situations before and can help you through the process.
First, your relationship with your insurance company is wholly governed by contract - your insurance policy. What is a covered claim and what is excluded is governed by your contract. Whether things are supposed to be replaced like new or at a fair market value is controlled by your contract. However, contracts are written words that are subject to interpretation. Your insurance company might interpret things in a way that is favorable to the company, but the law in Ohio requires that where there is any ambiguity in the language of the contract, then it must be interpreted in favor of the homeowner (interpreted against the drafter). If things get to the point to where you think something should be covered under the insurance policy and the insurance company does not think it should be covered, then that is the time to get an attorney involved.
Second, the homeowner is in charge of picking the contractors. The insurance company's obligation is to pay for the things that it is required to pay for under the insurance policy. The homeowner's obligation is to find the contractors to fix the things that need to be fixed. Part of what the contractor will do is prepare an estimate and submit it to the insurance adjuster. The adjuster will have the obligation to approve or disprove the proposed scope of work and then cut the checks in order to pay for those things. The homeowner is in the best position when those checks are written to the homeowner and then the homeowner pays the contractor in portions as the work is completed.
The Payment ConundrumOne thing to keep in mind is that if you have a mortgage, which is likely, then your mortgage company may also be involved in the process and they may send their own people out to look at the property, see what needs to be done, and see that it gets done. Your mortgage company has a security interest in your home and it is in their interest that their investment (your home) is protected. Your insurance company may have an obligation to write all checks jointly payable to you and your mortgage company. Your mortgage company may have some stipulations in place before those funds are released. There are many more parties involved in a home construction issue when there is a homeowners insurance claim involved. However, the thing that the homeowner should keep in mind is that they are ultimately the ones responsible for seeing that what needs to be done gets done.
In the case of payment to contractors, a homeowner never wants to make payment in full until the work is done in full. If there are still things that need to be done, then there is no incentive for the contractor to finish those things if they've already been paid in full. It is customary for the contractor to be paid in stages, at certain percentage thresholds of completion. If a contractor needs to purchase materials, then they obviously will need that money up front to purchase the materials. However, each stage of work should be completed fully before that stage is paid for fully.
In most cases where there is a mortgage and a homeowners insurance claim, then payment works like this: the contractor prepares an estimate for services and provides it to the homeowners insurance adjuster for approval of the funds, the insurance adjuster approves the funds and writes a check jointly payable to the homeowner and the mortgage company. Most of the time the mortgage company will have some control and stake over the process, but every situation is unique. Generally, a homeowner should keep in mind that it is their house and homeowners should keep in mind that they are in control of the process. The homeowner should oversee the estimate to make sure that it accurately reflects what should be done, the homeowner should make sure that the payment is disbursed from the insurance company, that the necessary permits have been obtained for the construction to be able to take place, that the mortgage company is aware of the process and that they are signing off on the checks and making sure that the contractor is doing what needs to be done in order to properly fix the house, and the homeowner needs to check up on all the work and make sure that payment is issued in accordance with stages of completion of the project and that the project is moving forward in a timely and efficient manner.