This is article 5 in the series of how to find a good service provider. To catch up on previous articles, you can go to https://www.lofthomeservices.com/blogs/ to find the previous articles about looking for red flags and doing your research.
In this article, we will discuss the importance of having a contract before starting any project, and also what to look for in a contract.
Please note that I am not a lawyer or allowed to give legal advice. You should check with your lawyer about any legal matters. This is a layman’s understanding of a contract and its benefits to both a service provider and someone receiving service.
The main consideration in having a contract is that you always have something to reference back to. Simply put, humans are fallible and people can forget things or misunderstand each other very easily and most of the time, when you see someone upset about an experience with a service provider, it is due to expectations that weren’t met. Sometimes this is due to someone not being upfront about what to expect but sometimes this is due to needing clearer communication in the process. A contract is an opportunity for both parties to see clearly in black and white if they are both on the same page.
I take pride in listening and making sure I understand what a customer needs. and yet, there have been times when I have had a conversation with a customer about a project they wanted to have done, made sure I had a clear understanding of what they needed and then sent over the contract to them and they would get back to me with, “I noticed the contract didn’t mention _____. Either I had forgotten they had mentioned something or they had forgotten to mention it but the contract gave the opportunity to ensure we were going to deliver on their expectations.
The minimum that a contract should have in order to give an opportunity for both parties to see if they are on the same page are
1) The date
2) The contractors information
3) The home owners information
4) A clear description of the service to be performed
5) Start and completion dates
6) A total price
7) Payment terms
8) A signature of all parties involved.
With the above information, you should be able to cover the basics and always have something to refer back to if any misunderstanding arises.
In addition to this, there is The Home Improvement Consumer Protection Act (HICPA). This has been adopted by many states, Pennsylvania included, it dictates many requirements for a relationship between contractor and homeowner. One of the points they dictate is the requirements for a contract in order to be compliant with HICPA rules and regulations.
Why this matters is that it gives you an additional level of peace of mind if you receive a contract that is HICPA compliant to know that a service provider takes the way they provide service seriously.
Some additions to a HICPA compliant contract over what I mentioned above are:
1) All contracts, estimates, proposals must include the contractor registration number
2) Contracts must state the names, addresses (not PO box), and telephone numbers of all contractors and subcontractors known at the time of signing
3) Contracts must be the complete agreement between owner and contractor, and contain all required notices (see below)
4) Contracts must include an itemized description of the work to be performed, the materials to be used and a set of specifications that cannot be changed without a written change order signed by the owner and the contractor.
5) For a time and materials contract, the contract must:
a) State the the contract is based on a time on material agreement
b) Have an initial cost estimate in writing to the owner before any performance of the home improvement commences. AND
c) The dollar value of the initial cost estimate for the services to be performed under the time and materials provision.
d) That the cost of the services to be performed under the time and materials provision may not exceed 10% above the dollar value indicated in the initial cost estimate and a statement saying that it can not increase over this amount without a written change order.
6) Contract must include the amount of any down payment plus any amount advanced for the purchase of special order materials. The amount of the down payment and the cost of the special order materials must be listed separately.
7) Contract must indicate the current amount of insurance carried, and agree to maintain liability insurance covering personal injury in an amount not less than $50,000 and insurance covering property damage caused by the work of a home improvement contractor in an amount not less than $50,000
8) Contract must include the Bureau of Consumer Protection telephone number, 1-888-520-6680.
9) Contract must include a notice of the right of rescission—stating that the homeowner is permitted to rescind the contract without penalty within three business days of the date of signing
10) Contracts should indicate if a permit is required and who is responsible for obtaining the permit and any necessary inspections.
This enhanced HICPA compliant contract was made to protect homeowners, as well as contractors, from any misunderstandings by giving additional factors for what a contract needs to have in order to be a good contract with additional factors (especially on time and material projects) to protect everyone and help avoid misunderstandings and disappointments.
I did get some flack on my last article for letting homeowners know “too much”, potentially causing more friction and harm to service providers. To this I will say, “If someone’s main purpose in engaging a service provider is to be a pain, complain and get irate, they will do this with this information or without it and I am likely not changing anything for them by giving more information.” These articles are meant for those who feel lost or scared in engaging with a service provider, or want to improve their experience with a service provider they already have. The information given is to guide and provide confidence for those who require a service. Knowledge is power!
To put this into perspective, there are PLENTY good, honest and reliable providers that would welcome and appreciate someone asking for a contract or insurance information. Remember, contracts protect BOTH parties. You don’t necessarily need to let go of a service provider you are happy with just because they don’t have something recommended in one of these articles.
Having a curious and honest conversation asking if they can help you out with an insurance certificate or a written contract and seeing how they react is a great idea. If they want to continually get better you will be helping them as well. When I first started, I did everything over text message. I personally wanted to have something to refer back to myself but still had plenty of room to improve with providing a clear contract and it was partially my customers requests that helped me improve.