How to Build or Remodel Your Home Without the Headaches
by: Mark A. Slack, Esq.
Did you know…You could be required to pay a subcontractor even though you had already paid your contractor for the same labor, services, and materials.
That’s because a subcontractor or supplier who worked on your home can place a valid lien on it, even though you paid your contractor in full and your contractor gave you a final release of lien.
In fact, you could be obligated to pay thousands of dollars in fees from attorneys hired by the subcontractor or supplier who records a valid lien against your residence. If you are told that you do not need an attorney when building your new home or remodeling your existing home, think again.
Failure to seek competent legal advice before signing any construction agreement could cost you tens of thousands of dollars and severely limit your legal defenses to claims brought against you in court by your contractor, subcontractors, suppliers, labors or any material man who provided labor, services, and materials to improve your property.
There are certain important documents which you should be aware of when building your new home or remodeling your existing home. Once you have entered into a construction agreement with your contractor, legal advice regarding the following documents is essential to a successful and satisfactory building experience.
Before you sign a legal agreement (“Contract”) to build or remodel a home, be sure it includes the following items to help reduce the risk of problems that could lead to a lawsuit later:
Detailed plans or outline of the work and who will be responsible for each duty,
A “punch list” of defects and omissions (like cracked walls and missing light fixtures). Be sure to list a reasonable timeline to fix the problems, like 30 days.
A guarantee from the builder that all work will be free of defects for at least one year. You could request a service warranty or insurance plan be paid for by the builder.
A detailed list, with manufacturer names and styles, of items that are to be installed in the home.
In most instances, permits are applied for by the owner through a duly and properly licensed contractor. If your builder asks you to pull your own permit, or is using another contractor to pull the permit, this may be an indication that your builder is not properly licensed, is not financially sound, and that he/she is willing to bend the rules and should be considered a red flag. Make sure the contractor that pulls the permit is the same contractor who signed your contract.
Most, but not all work requires a permit or a license. For a list of items that do not require a permit in Collier County, refer to Collier County Ordinance 2012-14. If you are building within the City of Naples, refer to the City of Naples website.
If you fail to obtain a permit, you may be required to remove the unpermitted work, pay substantial fines, obtain a permit and start all over again. The lack of knowledge on your part as to the necessity of a permit is not an excuse. So, it is important that you obtain legal advice as to what type of construction requires a permit if you are unclear.
Notice of Commencement
A Notice of Commencement (“NC”) is a notice that is signed by the owner and recorded in the public records office. This document must be signed by the owner. Do not let a builder sign it for you. The notice of commencement must contain:
- The Permit Number,
- The Parcel ID,
- Legal Description of the real property where the home is being constructed or remodeled,
- Description of the improvement,
- Name of owner and address,
- Name of owner’s agent, attorney, or other representative and address,
- Name of bank, if applicable.
The purpose of the notice of commencement it to provide accurate information to any supplier, vendor, material man or subcontractor that will be working on your home pursuant to an oral or written contract with your builder, so that those persons or entities may provide service and written notice to you that they are working on your home and that they expect to be paid.
Your failure to record a notice to owner with accurate information could result in a subcontractor sending its notice to a wrong address, in which case you may have no knowledge of their existence and therefore not request an appropriate release before paying your contractor, you could pay twice for the same labor, services, and materials, if the contractor fails to pay that particular subcontractor.
Failure to record a notice of commencement will severely limit your legal defense in the event you are sued by a subcontractor, material man or supplier in the event your contractor does not pay them in a timely manner.
Notice to Owner
If a subcontractor, supplier or materialman, provides labor, services or materials for the construction of your home, or the remodeling of your existing home, they must send you a notice to owner (“NTO”) within 45 days of the date they start working on your job in order for them to preserve their lien rights in the event they are not paid by the contractor.
If you fail to sign and record an NC or record an NTO with an incorrect address, then the subcontractor may be excused from this requirement. If you receive an NTO from a subcontractor, you must obtain a release from that subcontractor before making any additional payments to your builder. If you do not, you may be required to pay that subcontractor directly even if you already provided money to your builder for the work provided by that contractor.
Contact WWM&R before the construction process begins to help you avoid any legal issues that might surface before, during or after your home project.
WWM&R partner, Mark A. Slack, Esq., heads up the firm’s real estate and construction litigation team. He is uniquely versed in construction lien law