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Remodeling Success Tips, Issue #008 -- Contracts & Lien Waivers
August 30, 2009
Welcome to this months edition of Remodeling Success Tips. In this edition we will be looking at how contracts, lien waivers and other documents can protect your assets during a home remodeling project.
Table of ContentsIssue #008 - August 23, 2009
Construction DocumentationAs important as any step in the remodeling and construction process, keeping accurate records and documentation is crucial to your projects ultimate success.
ContractsOne of the most important documents you can have is a written contract. It is an agreement between the parties about what each is responsible for and at what cost. It also helps to acknowledge what the expectations are.
In many states, you are required to have a written contract for any work done over a specific dollar amount. Many states impose fines or penalties if you do not have one.
The contract should be very specific and fully executed by all parties. Even if not required by that state you live, a well written contract can help avoid disputes down the line.
The project schedule should have a start and end date written into the contract.
A detailed scope (description) of work, schedule and budget should all be included in the contract language. Additionally, information about how change orders, lien waivers and dispute resolutions will be handled should also be included.
Lien WaiversLien waivers are another way for homeowners to protect themselves. Your contract should specifically require the general contractor to secure at a minimum final lien waivers from all subcontractors paid.
Partial lien waivers can also be introduced as part of the contract and create added protection. The general contractor, all subcontractors and major vendors are required to sign a partial lien waiver upon receipt of each payment. If you have a large project or are unfamiliar with the generals operation this may be the best route for your project.
Final lien waivers are the last line of protection. Once a final payment is ready to be made on a purchase order or a subcontract, a final lien waiver should be signed acknowledging not only receipt of the payment itself but that no other monies are due.
In many states, if a subcontractor or vendor is not paid by the general and cannot collect, they have no other means but to file a lien against your property in an attempt to secure their funds.
Protection for Peace of MindAs you can see, properly written contracts and other documentation are very important aspects of the construction process that serve to protect your assets.
In our next newsletter, we will take a look Construction Expectations.
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Until then, Happy Remodeling!
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