One of the most demanding parts of real estate investing is hiring or working with contractors. There’s always a risk when dealing with a bad contractor and possible problems that will arise when renovating or doing some repairs to your property.
Some of them will do a poor quality of work, create more problems, and worse, leave the project unfinished. When these problems arise, you’re better prepared and know how to deal with such issues and resolve them.
Here are the steps in dealing with a bad contractor
First step in dealing with a bad contract is to try to talk with the contractor first.
Whatever worst happened, you should first reach out and talk to your contractor. Most contractors need positive reviews, and rumors are spread rapidly through word-of-the-mouth. Contractors still want your positive feedback and will fix any issues because these may affect their business.
It would help if you talked about all your frustrations and dissatisfaction with the contracts or project and came up with a resolution. You must have backup paperwork for your claims.
You will save money and time if you resolve the issue by simply having a good conversation before involving a lawyer. Nobody wants to be in court, particularly those who have a small business.
Remain calmly during a conversation and back it up with all the necessary documents to prove your claims. And your contractor will be more likely to settle the issues or present deals to straighten the problems.
Second step in dealing with a bad contract is to collect all the evidence.
Collecting all necessary paperwork and evidence is essential in dealing with bad contractors. Upon hiring, you must get copies of the license, insurance, and bonds of the contractor. And most importantly, the clear written contract includes the contractor’s scope of work.
Proper documentation or photos of each project stage and the progress, lacks, and delays.
Moreover, you must also have a record of all communications between you and the contractor. These include phone calls, emails, text messaging, and others. And any specific agreement between you and the contractor should be in writing.
I would not recommend the traditional “handshake agreement” when thousands of dollars are involved.
Lastly, keep all deposits, payments, and materials handed to the contractor.
Third step in dealing with a bad contract is to fire the contractor
Firing the contractor is the most challenging step. Your contractor can claim that the firing is a breach of contract. However, you can prove that the contractor was the first to breach the agreement.
Documentation is the key to proving that your contractor was the one who didn’t comply with the agreement. You must have proper documentation, like photos and images, that can back up your claim. For example, in material specifications, your contractor uses or substitutes inferior materials, or in scheduling, they failed to stick to the set schedule.
You must send a return-receipt letter to your contractor’s business and home address declaring that if the issues are not fixed within a specific period, the contract will be in breach, and it will be terminated.
Moreover, this step will be costly if you have already issued a check and your contractor won’t give a refund.
File a bond insurance claim.
It would help if you worked only with insured contractors, especially on large projects, so that you could file a claim. Contacting the contractor’s insurance company is an excellent way to reclaim the money that you spent. And this is another way that the contractor will finish the work properly.
File a complaint to the State Licensing Board.
In New York City, if the contractor for home improvement will do more than $200 work, they must get a license from the Department of Consumer Affairs or DCA. And if you are not satisfied with your contractor’s job and don’t want to correct the issues, you can file a complaint with the DCA.
The complaint must include a complete description of the problem, name, and address of the licensed contractor. And you must also have the following documents:
- contracts
- photos of the work performed
- guarantees
- warranties
- advertisements
- canceled checks (proof of payment)
The DCA will then investigate your complaint and will try to mediate with your contractor.
File a suit in a small claims court.
One of the pros of taking the case to the small claims court is that you don’t need an attorney to represent you. Small claims court replaces mediation if you have issues with your contractor, including over budget, too long to finish the job, and others.
Filing these claims is easy because you can file a complaint without any attorney through small claims court.
Hire an Attorney
If mediation and small claims court aren’t suitable. Hiring an attorney that knows all the guiding laws about construction and home improvement and can find a weakness in the contract can help you a lot.
However, filing a suit against your contractor is the last option. Considering that it’s time-consuming, expensive, and can get you into countersuits. But if there’s no other option and your contractor brought too much mess, filing a lawsuit and hiring an attorney is the best possible solution.
Post negative reviews.
In case of necessity, the minimum you can do is leave a negative review about the contractor. You can do it on a public website like Angi.com, and another option is on Better Business Bureau. Leaving a negative review won’t make any financial gains but somehow may convince the contractor to fix the issues.
Although it won’t bring your money back, you may help another property owner think several times before hiring them and deal with the same fate you went through.
Final Takeaway
Dealing with contractors is not just like drinking a cup of tea. Having excellent and open communication with your contractor is an essential part of working with them. A harmonious relationship with your contractor can change a lot, like increasing property value by accomplishing an excellent job. It would help if you had thorough research on hiring a contractor and make sure that they are knowledgeable and skillful in handling the job to avoid any problems on both sides.
