Disclaimer: Nothing in this blog should be interpreted as a substitute for professional advice from an attorney practicing in your community. Only local counsel can appreciate the business and legal environment under which a construction contract is drafted, negotiated and executed. Gary W. Moselle represents Craftsman Book Company, publisher of Construction Contract Writer.

Disclaimer: Nothing in this blog should be interpreted as a substitute for professional advice from an attorney practicing in your community. Only local counsel can appreciate the business and legal environment under which a construction contract is drafted, negotiated and executed. Gary W. Moselle represents Craftsman Book Company, publisher of Construction Contract Writer.

Get Two Signatures on that Contract

Last June I described a solar job that fell off the rails. Leonard signed the agreement as owner. Wife Rhonda didn’t. That left the solar contractor with half a contract. Under New Jersey law, Rhonda wasn’t bound by the contract’s arbitration clause. That made enforcement a true headache – half arbitration, half lawsuit.

Black Letter Law  

If two adults reside in a home, assume both are owners. A signed agreement by one owner doesn’t bind the other. Without signatures from all owners, you’re at a big disadvantage if there’s a dispute. How do you identify each “owner”? Easy. Your county recorder’s web site lists the owner of every property in the county. When in doubt, check the recorder’s site.

Texas puts another spin on this rule of two signatures. Witness Rock Solid Building v. Pounds, decided July 24, 2024.

Robert and Camille Pounds contracted with Rock Solid to install stucco and stone cladding on their new Travis, Texas home. As it turns out, the Pounds didn’t like Rock Solid’s work and refused to pay the contract price. Rock Solid filed a mechanic’s lien on the property.

In most states, a mechanic’s lien attaches to the property being improved no matter who the owner may be, even if there’s no written contract. That’s what Rock Solid wanted. It’s easy to understand why. Camile hadn’t signed the contract! Under Texas Property Code § 53.254(c), to “fix a lien on a homestead,” written contract must be signed by both spouses.

Did the Pounds have a homestead? In most states, an owner has to file a notice of homestead to have protection of the homestead law. The Pounds didn’t declare a homestead on their new home until more than a year after the Rock Solid agreement was signed.

Texas is famous for its homestead law. Every urban home on 10 acres or less can be protected as a homestead. Texas Property Code § 41.007(a) requires a special notice in every contract for building or remodeling a homestead. Failure to include this notice is a deceptive practice and invalidates any mechanics lien.

Were the Pounds protected by Texas homestead law? Remember, they didn’t declare a homestead until a year after contracting with Rock Solid. And they hadn’t moved in when the contract was signed.

Decision of the Texas Court

  1.  In Texas, filing for a homestead is not necessary.
  2.  It’s enough to show intent to claim a homestead eventually.
  3.  Property intended to become a homestead is legally a homestead from the day of acquisition.
  4.  An owner may establish a homestead even before he or she takes up occupancy.

An Expensive Lesson for Rock Solid

They lost the balance claimed on the contract and had to reimburse $9,523.25 in Pounds’ attorney’s fees.

Suggestion: Next time, use a good contract form. Get signatures from all owners. Construction Contract Writer drafts agreements that include all required notices and disclosures, no matter the site or type of job. The trial version is free.

Construction Contract Writer Contract

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Get Two Signatures on that Contract Last June I described a solar job that fell off the rails. Leonard signed the agreement as owner. Wife Rhonda didn’t. That left the solar contractor with half a contract. Under New Jersey law, Rhonda wasn’t bound by the contract’s arbitration clause. That made enforcement a true headache – half arbitration, […]

Three-Day Right to Cancel

All home improvement jobs require the federal 3-day notice of the right to cancel. Each owner has to receive two copies of the form “Notice of Right to Cancel Under Regulation Z”. Once that form is delivered, it’s good professional practice to either:

The federal right to cancel form is very clear:

You may use any written statement that is signed and dated by you and states your intention to cancel, or you may use this notice by dating and signing below.

Notice the word “written” in the federal form. The best way to cancel under Reg Z: Fill out the federal form and drop it in the mail. An email message is probably just as good. But a phone call doesn’t qualify. Cancellation has to be in writing under Reg Z.

Pennsylvania home improvement contracts require a second notice of the right to cancel. That’s Pennsylvania’s Home Improvement Consumer Protection Act (HICPA). Pennsylvania law doesn’t require a rescission form. But every PA home improvement contract needs the following language:

This contract includes a three-day right of rescission: An individual signing a home improvement contract . . . shall be permitted to rescind the contract without penalty regardless of where the contract was signed, within three business days of the date of signing.

You don’t see the word “written” anywhere in the HICPA disclosure. Is an oral cancellation enough in Pennsylvania? Some Pennsylvania contractors don’t think so. They simply ignore phone calls from customers trying to cancel. If no written cancellation is in the contractors’ office within three days of signing, they start work. No refunds. An owner trying to stop the job after three days is in breach of contract.

Pennsylvania’s HICPA is tough. If the work is more than $500, the contract has to include a long list of notices and disclosures:

Is oral cancellation enough in Pennsylvania?

If a contractor has to put all these notices in writing, isn’t it fair to require written notice of cancellation from an owner? What’s good for the goose should be good for the gander.

That isn’t how the court saw it. Commonwealth v. Gillece Services, decided earlier this month. The court ruled that no writing is required to cancel. A contractor must cancel and make a refund “regardless of the medium used by the customer to provide actual notice of cancellation.” The result: A phone call can cancel the job under Pennsylvania law even if not under federal law.

The court’s decision makes sense to me. Would you start work after an owner calls to cancel the job? I don’t recommend that. It’s asking for trouble – legal trouble.

Three-day notice of the right to cancelTo stay out of legal trouble in any state and on any type of job, work under a good contract. The best contract drafting tool I know is Construction Contract Writer. The trial version is free.

Three-Day Right to Cancel All home improvement jobs require the federal 3-day notice of the right to cancel. Each owner has to receive two copies of the form “Notice of Right to Cancel Under Regulation Z”. Once that form is delivered, it’s good professional practice to either: Delay the start of work until three days […]

arbitrate your construction dispute Many times I’ve recommended inserting an arbitration clause in your construction contracts. Why? It’s conventional wisdom:

Of course, there are exceptions. One happened last month, in New Jersey. Here are the details. (more…)

Many times I’ve recommended inserting an arbitration clause in your construction contracts. Why? It’s conventional wisdom: Vendors usually win in arbitration. Arbitration typically costs far less than a court case. Courts won’t touch a dispute if the contract requires arbitration. Most arbitration awards are final, not subject to court review. Of course, there are exceptions. […]

Most residential solar contractors offer good contracts. Like banks and auto dealers, their model contracts are drafted by attorney specialists. That’s good because most residential solar jobs have a complication — commercial financing. That’s part of the sales pitch. Savings on the customer’s electric bill might cover most of the monthly finance charge. For PV (photo voltaic) contractors, the primary sales tool is a detailed summary of expected electrical output and monthly savings. Projections like these are developed by highly-qualified electrical engineers. So what could go wrong? (more…)

Most residential solar contractors offer good contracts. Like banks and auto dealers, their model contracts are drafted by attorney specialists. That’s good because most residential solar jobs have a complication — commercial financing. That’s part of the sales pitch. Savings on the customer’s electric bill might cover most of the monthly finance charge. For PV […]

Are You Ready for the 2024 Storm Season? The National Weather Service expects an active hurricane season in 2024, including tornadoes, flooding, hailstorms and 4 to 7 major hurricanes. FEMA advises: “individuals and communities need to be prepared today.” For residential contractors, that means you should be getting ready to do storm damage repair work.

Storm repair is different. It’s usually urgent. Top priority may be a temporary cover-up to restore habitability. Most jobs include roofing, siding and window repair. Payment is often guaranteed by an insurance carrier. A licensed adjuster may be involved. If you haven’t drafted a contract for storm damage repair, there’s plenty to learn.

Twenty-one states regulate storm repair work – and require a contract with specific notices and disclosures. AL, AZ, CO, GA, IL, IN, KY, LA, MI, MO, MS, NE, NY, OK, SC, SD, TN, TX, UT, WI, WV. Storm repair law is different in each of these states. But all require a written contract that: (more…)

Are You Ready for the 2024 Storm Season? The National Weather Service expects an active hurricane season in 2024, including tornadoes, flooding, hailstorms and 4 to 7 major hurricanes. FEMA advises: “individuals and communities need to be prepared today.” For residential contractors, that means you should be getting ready to do storm damage repair work. […]

Ty and Carissa Schott planned to add a pool in the back yard of their Allegheny County Pennsylvania home. Country Pools bid $53,160 for the work and got the job. The Schotts advanced $26,580 as a deposit. To get their backyard ready for the pool, the Schotts paid separate contractors over $20,000 to install a retaining wall and perimeter fence.

Before signing the contract, the Schotts asked Country Pools whether permits were required from their municipality, Franklin Park Borough. Country Pools suggested that “no permits would be necessary until installation of the swimming pool.” After completion of the retaining wall, the Schotts applied for their permits. Surprise! Franklin Park’s zoning regulations prohibit construction of their swimming pool. The Schotts applied for a zoning variance. No luck. Application denied. The Schotts weren’t going to get their pool.

The Schotts demanded a full refund, including money spent on the retaining wall, fence and permit fees. County Pools refunded $20,429 but refused to refund the remaining $6,151.

The Schotts filed suit and made three claims: (more…)

Ty and Carissa Schott planned to add a pool in the back yard of their Allegheny County Pennsylvania home. Country Pools bid $53,160 for the work and got the job. The Schotts advanced $26,580 as a deposit. To get their backyard ready for the pool, the Schotts paid separate contractors over $20,000 to install a […]

More on HomeAdvisor (ANGI)

If you’re a residential contractor, you’ve probably been solicited by HomeAdvisor, better known as Angi or Angi’s List. HomeAdvisor was back in the news last week. A federal court certified a class of “service providers” authorized to bring suit against HomeAdvisor. If you’ve paid HomeAdvisor for annual membership or leads in the last 20 years, you may have skin in this game. But don’t expect a windfall from the suit. I’ll explain. (more…)

More on HomeAdvisor (ANGI) If you’re a residential contractor, you’ve probably been solicited by HomeAdvisor, better known as Angi or Angi’s List. HomeAdvisor was back in the news last week. A federal court certified a class of “service providers” authorized to bring suit against HomeAdvisor. If you’ve paid HomeAdvisor for annual membership or leads in […]

Every Contract Every Contract Requires a Meeting of the Minds

Dr. Julie Clark, a Tennessee veterinarian, wanted to fix up her home before selling. After a meeting on site, Dr. Clark selected Jeffrey Givens, a handyman, to do the work.

According to Dr. Clark, she agreed to pay Givens $9,775 for a total of four tasks:

Givens didn’t remember it that way. He remembered bidding $11,575 for the entire job, including work on the driveway and garage floor, painting and replacing handrails on the porch. Dr. Clark admitted asking for a quote on that extra work. But Dr. Clark insisted none of this extra work was authorized.

Dr. Clark hoped the work would be finished in two weeks. But she didn’t specify a deadline or completion date. Givens estimated six-weeks would be needed just for painting the inside of the house. But his understanding was he could take as much time as necessary to do a good job.

Dr. Clark kept detailed notes on their conversation and the bid price. But there was no written contract. You know what’s going to happen next. When the job ran off the rails, Dr. Clark and Givens launched a 7-year court battle. Here’s how it happened. (more…)

Every Contract Requires a Meeting of the Minds Dr. Julie Clark, a Tennessee veterinarian, wanted to fix up her home before selling. After a meeting on site, Dr. Clark selected Jeffrey Givens, a handyman, to do the work. According to Dr. Clark, she agreed to pay Givens $9,775 for a total of four tasks: $8,500 […]

Get Reimbursed for Your Attorney Fees: Dianne Lee bought a new home in Contra Costs County, just east of San Francisco Bay. Her new house didn’t have a pool. And she wanted some exterior improvements. Dianne selected David Cardiff of Advantage Pools Bay Area to do the work: a pool and spa for $88,400, a pavilion with outdoor kitchen, fireplace and landscaping for $143,000.

It didn’t go well. After a dispute, Cardiff stopped work and walked off the job.

Dianne filed suit, claiming Cardiff’s work was defective. The trial court rejected most of Dianne’s claims about the pool but agreed with some of her claims about the pavilion and landscaping. The court also agreed that Cardiff had violated state law by hiring workers as unlicensed independent contractors and not employees. The court ordered Cardiff to refund $238,470 plus contract and tort damages of $236,634. Of that, $35,000 was for defects in the pool.

Dianne won the case. But the court didn’t award reimbursement of her attorney fees. That was a surprise. California Business and Professions Code § 7168 authorizes an award of attorney fees to the “prevailing party” on swimming pool claims. Claims on other types of construction don’t qualify for an award of attorney fees — absent specific language in the contract. Dianne’s contract with Cardiff didn’t say anything about attorney fees.

Dianne appealed the trial court decision, asking for an award of attorney fees. The appellate court had to decide: (more…)

Get Reimbursed for Your Attorney Fees: Dianne Lee bought a new home in Contra Costs County, just east of San Francisco Bay. Her new house didn’t have a pool. And she wanted some exterior improvements. Dianne selected David Cardiff of Advantage Pools Bay Area to do the work: a pool and spa for $88,400, a […]

When a job goes bad, you better have a good contract. That’s a point emphasized many times on these pages.

But a New York case decided last month offers an interesting twist on this theme. When a Syracuse, NY job went south, the contractor claimed the agreement he drafted was void and unenforceable. Let’s see how a New York appellate court handled that. Hint: It cost the contractor plenty. The case is White Knight Construction v. Haugh.

Holly Anne Haugh of Madison County, NY wanted a new custom home. Kenneth Kovalewski of White Knight Construction agreed to build the home Holly Anne wanted. Kenny drafted the agreement, including a “New Home Cost Breakdown” listing both projected and actual expenses. The contract price was $93,287. But it wasn’t that simple. According to the court, Holly Anne and Kenny developed a “romantic relationship” before breaking ground.

This blog is about good and bad construction contracts. I’ll leave other issues to your judgment. (more…)

When a job goes bad, you better have a good contract. That’s a point emphasized many times on these pages. But a New York case decided last month offers an interesting twist on this theme. When a Syracuse, NY job went south, the contractor claimed the agreement he drafted was void and unenforceable. Let’s see […]