Q: I read your article on how to hire a contractor and thought it was very good, but two items that were not brought up were permits and inspections.
Often, the homeowner doesn’t factor in the cost of pulling permits, and hasn’t decided who will be available to meet the inspector. The inspector may have corrections that the homeowner doesn’t understand, or needs access to areas that require ladders or tools that the homeowner may not have.
It should also be pointed out that while the contractor may be done with the job, and the homeowner is happy, there could be code issues at a final inspection that require the contractor’s attention, which is often difficult to get once they have been paid in full.
I always advise homeowners to wait until the permit card is signed off and final, before considering the job as finished.
A: Thanks for your insightful information. We think your suggestions are quite good and will help all homeowners considering renovation projects next year.
Finding a good contractor only means you now have vetted the person that’s going to do the work for you at your home. That’s a good start, but you still need to follow through on items such as the ones in your letter that will protect you during the course of your home renovation, repair or construction.
When a homeowner plans for a home renovation, construction, or major repair project, he or she should definitely have a budget in mind for the project. That budget should include all anticipated costs as well as the costs for the permit fee from the local municipality. In some places, those permit fees are downright cheap. The homeowner might find himself paying a flat fee of $25 for the permit. However, in other places, the permit fee might be a percentage of the costs of construction. That cost can mount quickly. If, for example, a local municipality charges 2 or 3 percent on the construction cost for a $100,000 project, you might have to budget $2,000 or $3,000 just for permit fees.
During the construction process, the homeowner should still be involved in making sure that the job is completed properly. In larger renovations and construction projects, you might need an architect or a project coordinator to assist with technical issues.
As the construction progresses, the homeowner must make payments to the contractor, subcontractors and the suppliers and he or she must make sure that the payments mirror the budget. That is to say, if the budget has a certain amount to be paid for the roofing material, the payment should be very close to that amount. The homeowner needs to have a basic (or preferably quite sophisticated) understanding of how much things cost and keep tabs of the hours that trades have worked on the project.
If the homeowner has this understanding, it will be easier to identify where things can and do go wrong. If a bill comes in from an unknown source, for an unidentified or unidentifiable project, it should be questioned and not just paid outright. If the homeowner makes all of his payments to the contractor, and doesn’t ask for proof of payment, the homeowner runs the risk that the contractor might fail to pay one of the subcontractors or suppliers, and they will come knocking on the door.
In just about every state, contractors, subcontractors and suppliers have the right to lienA Lien is an encumbrance against the property, which may be voluntary or involuntary. There are many different kinds of liens, including a tax lien (for unpaid federal, state, or real estate taxes), a judgment lien (for monetary judgments by a court of law), a mortgageA Mortgage is a document granting a lien on a home in exchange for financing granted by a lender. The mortgage is the means by which the lender secures the loan and has the ability to foreclose on the home. lien (when you take out a mortgage), and a mechanic's lien (for work done by a contractor on the property that has not been paid for). For a lien to be attached to the property's title, it must usually be filed or recorded with a local county government office. a home when they are not paid – even when the contractor received the payment. For this reason, homeowners need to make sure that all contractors, subcontractors and suppliers are actually paid during the course of the project whether directly by the owner or by the contractor.
To verify these payments, the homeowner should receive a lien waiverA Waiver is the surrender or relinquishment of a particular right, claim, or privilege. document from each supplier, subcontractor and contractor. The lien waiver given to the owner generally states that the subcontractor or supplier received a sum of money and the subcontractor or supplier waives any lien for that amount against the home.
Finally, homeowners shouldn’t make the final payment to the contractor until the work is complete and the municipality has signed off on the work. In some municipalities that signoff comes in the form of a certificate of occupancy. In some it might be a final sign off on the work permit and in others, the local municipality may issue a document that evidences the completion of the work and signoffs from not only the building department but also from the other departments that may have inspected the work site during the construction period.
Once the municipality has signed off, it’s somewhat safe to say the work has been completed. However, in most cases, on larger projects the homeowner should know that the contractor might still need to come back to the home to complete “punch-list” items – that is some final items that still need to be completed or fixed. These items may be minor, but still require the contractor to come back even after the municipality says the job is done and even when you can say the job has been substantially completed.
Thanks for your comment.