Part 1 focuses on arguably the most important phase of any construction project: pre-construction. Before any shovel hits the ground, owners should keep in mind the following:
Contractor Background Information
Interviews & References
While not required by any law or regulation, it is good practice to interview at least three or more contractors before beginning a home renovation or remodel.
Use the contractor interview to obtain candid responses regarding the contractor’s prior project experiences, their current workload (other than your project); their license, insurance, and registration status; and a list of references. If a contractor hesitates to provide you with any requested information upfront – walk away.
Use the contractor’s references to obtain information regarding the contractor’s past work product, punctuality, cleanliness, and overall integrity. If possible, check the contractor’s website, social media, the Better Business Bureau, etc., to locate unbiased reviews and recommendations of the contractor’s work.
License and Registration Please
Depending on the size of your project, your contractor may need to register as a Home Improvement Contractor (HIC) and/or obtain a Construction Supervisor License (CSL) from the Commonwealth of Massachusetts. Ask prospective contractors for all their licenses, registrations, and insurance information upfront. It is a good idea to independently verify this information, if provided, via the links below[1].
The Massachusetts Home Improvement Contractor Law: Does Your Project Apply?
M.G.L. c. 142A governs residential contracting on an existing one-to-four-unit owner-occupied residential property where the total contract price is greater than $1,000[2]. The purpose of Chapter 142A is to protect homeowners from shoddy, incompetent, and even fraudulent contractor work.
Many homeowners and contractors typically proceed with an extensive project using bare-bones contracts, purchase orders, or the dreaded “handshake agreement.” You should not. Under Chapter 142A all agreements must be in writing and including the following:
- Agreement. The complete agreement between the homeowner and the contractor and a description of any other documents incorporated into the agreement.
- Party Information. The full names, address, social security numbers, and registration numbers of the contractors, the name of any salesperson who solicited the contract, and date of execution of the contract.
- Dates. The date on which the work under the contract is scheduled to begin and the date on which the work is scheduled to be substantially completed.
- Description of Work. A detailed description of the work to be done and the materials to be used.
- Total Price. The total amount to be paid for the work performed under the contract.
- Payment Schedule. A time schedule of payments to be made under the contract, including the amount of the payment and all finance charges.
- Signatures. The signatures of all parties to the contract.
- Notice. A clear notice in the contract:
- that all contractors and subcontractors must be registered and that any inquiries in this regard should be directed to the director;
- of the registration number of the contractor or subcontractor;
- of the homeowner’s three-day cancellation rights under M.G.L. c. 93, § 48, M.G.L. c. 255D, § 14, or M.G.L. c. 140D, § 10, as applicable;
- of all warranties and the owner’s rights under M.G.L. c. 142A
- of the words “Do not sign this contract if there are any blank spaces,” printed directly above the space for the signature, in 10 point font or larger; of any lien or security interest on the residence as a consequence of the contract.
- Other. Any other matters upon which the homeowner and contractor may lawfully agree.
- Massachusetts law and regulations. Any other provision required by applicable law.
Contract Clauses
Keep in mind that the list in the preceding section contains only the required contract terms under Chapter 142A. Parties are free to contract on almost anything they deem necessary within the law. Watch out for the following clauses when reviewing your contract:
Lien Waiver
If your contractor hires a subcontractor or obtains materials from a supplier and a payment dispute between the two parties arises, the owed party has the right to place a lien on your property, called a mechanic’s lien. Make sure your contract includes a provision regarding lien waivers to protect you from these liens. Think of a lien waiver as a receipt that shows the contractor paid its subcontractors and/or suppliers for all materials and labor used on your home.
Acceleration Clauses:
Under Chapter 142A, no contract may contain an acceleration clause under which a contractor may declare part or all of the balance due and payable. A contractor can, however, after judging a homeowner to be financially insecure, require that the balance be deposited in a joint escrow account, requiring the signature of both the contractor and homeowner for withdrawal.
If your project does not fall under Chapter 142A, beware of unfavorable acceleration clauses that could require full contract payment at the contractor’s discretion.
Termination Clauses
Your contract should include a section regarding termination to protect your rights in the event a contractor is performing poorly or not performing at all. Improperly terminating a contract can expose you to legal claims for payment from the contractor or eliminate your right to recover any money paid to the contractor.
Dispute Resolution Clauses
Although you may not anticipate a dispute with a contractor before construction even begins, it is important to preserve your rights in the event one arises. Make sure your contract includes a clause regarding what forum (mediation, arbitration, or traditional litigation) any dispute will occur in and what each party’s rights are to choose that forum.
Warranties and Guaranties
Some of the most important contract clauses relate to warranties and guaranties. Pay close attention to what work and materials the warranties cover, the length of the warranty period, any guaranties of work (quality and performance), and how claims made under the warranties will proceed.
Conclusion
If you have any questions about whether your residential renovation, remodel, or construction falls under Chapter 142A, you should consult a construction law attorney to review the contract and offer guidance. Making sure you choose the right contractor and agree to a fair, valid, and enforceable contract will minimize your risk down the line when construction starts, and when construction in finished.
Part 2 of this series will feature homeowner considerations during construction.
Ryan O. Forgione is a construction attorney at the Boston-based law firm of Conn Kavanaugh Rosenthal Peisch & Ford, LLP. He can be reached at rforgione@connkavanaugh.com.
