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Published: 08 March 2018

Contractor Issues in Ohio - An Overview on Avoiding Potential Problems

Some 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 Contractor 

The 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 Contract

The 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 Claim

Most 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 Conundrum

One 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.

Contractor Dispute Attorneys

The attorneys at Harris & Engler help homeowners with contractor disputes and lawsuits.  The law firm of Harris & Engler is located in Columbus, Ohio, and its attorney help homeowners in Franklin County, Delaware County, and throughout Central Ohio.  If you're having a dispute with your contractor or your homeowners insurance company an attorney at Harris & Engler may be able to give you helpful advise about the situation.  The attorneys at Harris & Engler deal with these kind of situations at all stages: in the very beginning or once things have already boiled over to a lawsuit.  You can call an attorney at Harris & Engler today by calling (614) 610-9988.

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Published: 24 March 2015

Purchasing a Home Together When One of Your Has Bad Credit

If you want to purchase a home by yourself, and you have bad credit, it is not impossible but generally you will have to pay more money for it.  This means that you will have to put down a sizeable down payment and pay a higher interest rate.  If you are purchasing a home with your significant other, who has better credit than you, then there are other considerations you should make.  

Two of You Want to Purchase a Home, One of You has Bad Credit

If you want to purchase a home with your significant other, and only one of you has good credit, then there are a number of things you should consider in structuring the purchase.

Should You Have One or Both of You on the Mortgage and Deed?

If the person with bad credit is at risk for defaulting on any of their financial obligations, then it is a bad idea to have that person listed on the deed.  It is also a bad idea to have someone on the deed and not the mortgage.

If you and your bad-credit significant other can only obtain financing by both co-signing a mortgage loan, then the discussion ends there and you should co-sign the purchase.

If one of you has good enough credit to obtain financing on their own, then there are a few considerations as to the merits of having the bad-credit partner co-sign on the loan and be on the deed.

Generally, it is a bad idea to have someone who has a high liability risk or a high risk of default on the deed to property.  It is always a bad idea to have someone on the deed who is not also liable on the mortgage.  You want to protect the house, and creditors can attach a lien on real property for unpaid debt obligations and subsequently foreclose on the property to collect the amount owed.

If only one person in the relationship is on the mortgage and deed to the house, then essentially the other person will be just paying the rent.  If the person with bad credit is OK with just paying rent, then that can be the end of it.  However, there are a few things to think about in order to determine if this is truly fair to both parties.

Are You Creating a Landlord-Tenant Relationship?

If one person to the relationship does not have the credit to obtain mortgage financing, and in turn is not listed on the deed, and they move into the house, then by law a tenancy will be created.  Therefore, the person in the relationship who obtained the mortgage financing and is listed on the deed would technically have the duties and obligations of a landlord.  This brings on an entirely new set of issues for the relationship, namely, what are the duties and obligations of a landlord and should you make a lease agreement?  These questions are only applicable to unmarried couples because married couples have an entirely different set of legal obligations to each other and a lease agreement would be nullified as between married persons.  

For unmarried couples, you should ask yourselves the following questions in order to determine how you should proceed in the home buying process:

1. Will the person not on the deed contribute an amount equal to the person listed on the deed to mortgage payments?
2. Will the person not listed on the deed contribute to the payment of property taxes?
3. Will the person not listed on the deed contribute monetarily to the cost of home improvements?
4. Will the person not on the deed contribute to the purchase of major appliances (such as a stove, refrigerator, and washer/dryer)?
5. Will the person not on the deed contribute, by their labor, to home improvements?  (For example, installation of a deck, finishing the basement).

If you only answered yes to #1 and #2, then you may as well treat the party not on the deed as a tenant and consider their payments to be rent payments.  Although it may not be the most fun conversation to have about your relationship, you may want to consider creating (and both of you signing) a lease agreement.  

Even if you do not sign a lease agreement, an implied in law lease agreement will be created automatically and the person listed on the deed will be held to the duties of the landlord and the person not on the deed will be held to the duties of a tenant.  However, actually creating a lease agreement will force both parties to the relationship to actually be honest each other about each person's rights and obligations with the home.  This will avoid any potential confusion and will help in case of any difficulties later on with the relationship.  A lease agreement can also be drafted by an attorney to provide for specific things that may be beneficial for you and your partner to get in writing with respect to the house.  For instance, you should be aware that only the person/s who are listed on the deed may take a tax deduction for the amount of mortgage interest paid out over the year.  This can amount to a large tax refund for one party depending on the circumstances.  A specifically drafted lease agreement made just for you and your partner could provide for some sort of trade off because only one of you will be able to receive the tax benefit.  

If you answered yes to any of questions #3 - 5, then you should strongly consider a Home Ownership Agreement between yourself and your partner.  A Home Ownership Agreement should be considered when both parties to the relationship will be making significant contributions to the home, but only the party listed on the deed will be the legal owner of the property and any equity that accrues to it.
 

What do you do if one party is making significant improvements to the property but is not listed on the deed?

You can make a contract that provides a way for that person to receive compensation in the event the relationship goes sour.  If only one party is listed on the deed, but both parties are splitting the home's expenses equally, then not only is that party missing out on valuable tax deductions, but they are also missing out on any way to get reimbursed for valuable home improvement projects in the event of a breakup.  This kind of agreement needs to be reached before you purchase a home.

When purchasing a home together as an unmarried couple it is important to plan for the best but prepare for the worst.  There are an infinite number of ways that a Home Ownership Agreement could be drawn up, and truly it should be catered specifically toward you and your partner.

One person may be paying thousands of dollars towards remodeling projects, necessary home repairs, and other things that normally just the landlord would be obligated to do.  It would only be fair for this person to have a way to get their money back if they move out of the house in the event of a breakup.  This could be provided for in a number of different ways.

You could keep a tally of monetary contributions and labor hours spent on home improvement projects.  Then you could provide in a contract that in the event of a breakup, this total is treated as a loan to the person listed on the deed.  Repayment of the loan could be handled in a number of different ways as well.  This will be a touchy subject because in the event of a breakup, not only will one person have to front all of the costs of home ownership by themselves, but they will have a loan repayment in addition to that.  Thus, you could provide that whatever the balance of contributions is, it will be paid back in equal monthly payments over the course of 5 years.  But as a practical matter, people do not want to be legally obligated to deal with their ex for 5 years.

An alternative would exist if there was equity in the house, then the party on the deed could take out a second mortgage and pay back the amount of contributions.  Or, if market forces increased the value of the property, then the Home Ownership Agreement could provide that the home be appraised within a set amount of time after the breakup, the equity determined based off of the appraisal value and split in half, payable through the attainment of a second mortgage.  An additional option would be that one party would get to keep certain collateral upon moving out that would cover the amount of contributions.  The possibilities are expansive, but really what you need is a solution that would actually be workable in the event of a breakup.  

If you are looking to buy a house with your significant other who has bad credit, you should consider your options.  At the very least the two of you should have a practical discussion about what will happen if you break up.  In order to protect everybody if the worst case scenario does happen, you should consult with a lawyer and draft a Home Ownership Agreement that lays out each party's rights and responsibilities with respect to the house if you do break up.  

Contact an Attorney to Purchase a Home as an Unmarried Couple

If you want to talk to an attorney knowledgeable in the unmarried couple rights and Ohio real property law, then contact an attorney at Harris & Engler to discuss how to best structure your purchase of a home.  Call (614) 610-9988 or email This email address is being protected from spambots. You need JavaScript enabled to view it..

 

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Published: 11 March 2015

How to Protect Your Home from Creditors in Ohio

Whether you are planning to purchase a home or already own a home, there are certain things you can do to protect your home from being foreclosed on.  If you are purchasing a home with your spouse, or already own a home with your spouse - then it is in your best interest to keep the home solely in the name of the spouse with the best credit.  If one of you has bad credit and one of you has good credit, then you will want to protect the home from creditors going after the spouse with bad credit.  Once someone defaults on a loan, or otherwise has a debt, a creditor can take that person to court and sue for monetary damages.  If the creditor wins the lawsuit they obtain what is called a certificate of judgment, place a lien on any real estate that you own (jointly or individually), and they can foreclose on the property in order to collect on the judgment.

If you would like assistance in protecting your home from creditors, contact an attorney at Harris & Engler for a consultation by calling (614) 610-9988.