Avoiding Problems on Your Next Construction Project

If you are planning to hire a contractor in Florida to perform construction work, you must first do your homework.  Many times, owners will hire a contractor without confirming the contractor is properly licensed and without knowing who is actually performing the work.  Below are a few key issues to understand and consider before hiring anyone to perform construction work for you.

1. Is the Contractor Licensed?

While not all construction work in Florida requires a license, arguably any work that involves repairs, alteration, demolition, and/or remodeling to a building or structure requires a license.  Chapter 489, Florida Statutes.  Licensure is required for, among things, electrical, plumbing, and air conditioning work.  Chapter 489, Florida Statutes.  It goes without saying that you should ask the contractor if he or she is licensed to perform the specific work, but do not stop there if the answer is yes.  You should then verify the licensing status by checking with the Florida Department of Business and Professional Regulation.  While visiting that website, you can also check whether the contractor has any complaints filed against it.  There are stiff penalties for contracting without a license, such as criminal penalties and an inability to enforce the terms of the contract.  Section 489.127, Florida Statutes and 489.128.

2. Check References and Look at Other Projects.

When interviewing potential contractors, ask them for the names, addresses and phone numbers of their customers so you can contact them about the work performed.  If you have the ability to contact those persons, do it.  Ask them about what went right and wrong during their project.  If you have the ability to visit the completed projects, do it.

3. Will the Contractor Self Perform or Subcontract the Work?

It is important to know who will actually be performing the construction of your project.  Ask the contractor whether the work will be self-performed (by the contractor’s own employees) or whether the work will be performed by subcontractors.  If by subcontractors, request the names of those subcontractors and attempt to gain information about each.  The more information you can obtain about the people who will be performing the work, the better.

4. Read the Contract.

Prior to entering into any contract for construction, you must read all of it and understand all of its provisions.  Construction contracts are often voluminous and filled with legal terms and provisions that may be detrimental to you.  While all of the key provisions in construction contracts are outside the scope of this post, here are some items to watch for:

           a. Payment

Your goal, from a payment perspective, is to ensure that you only pay once for the work performed in connection with the construction project.  While this seems basic, many times an owner does not get the necessary paperwork from the contractor when making a payment, resulting in subcontractors recording liens on the project.

Prior to making any payments to you contractor, you must know all of the persons performing work and/or supplying materials to the project.  Once you have this list from your contractor, make sure that after each payment to your contractor you obtain lien waivers and releases from both your contractor and all of the subcontractors.   The Florida statutory form lien waivers can be found at Section 713.20, Florida Statutes. Your contract should spell out this process, requiring your contractor to provide such releases during the course of and at the end of the project.  If, during the course of the project, you receive a notice to owner from a subcontractor that was not on the list from your contractor, this should raise a red-flag and you must immediately question the contractor about this discrepancy.   Before making final payment to the contractor, get a contractor’s final payment affidavit from the contractor.  Section 713.06, Florida Statutes.  If the potential contractor balks at any of these requirements, this should raise a red-flag for you.  Experienced contractors understand and appreciate this process.  After all, if the contractor is paying its subcontractors and doing what it is supposed to do, there is nothing to fear.

           b. Insurance

Review the provisions for insurance to make sure the contractor is required to have insurance and that the amounts of insurance are adequate for the size of your project.  Ask the contractor for a copy of the insurance policy and ask to be named as an additional insured on it.

            c. Dispute Resolution

If problems arise on the project, the contract must address how those problems get resolved and who will pay for the cost of resolving the dipute.  Will the problems be resolved in court or in arbitration?  Is mediation required before the parties litigate/arbitrate the claims?   Whatever dispute resolution mechanism you decide to use, ensure the provisions are clear as to who will be resolve the claim and the location/venue of the dispute resolution forum.  In addition, there should be a prevailing party attorneys’ fees provision included in the contract.