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Avoid Dealing with a Problem Contractor
(and what to do if you didnít)
There are a lot of problem contractors around and it is definitely best to avoid them altogether. Before you even consider signing a contract, be sure to have a real estate attorney review it. They can put in clauses that are aimed at protecting you if the contractor turns out to be a bad one.
If you have already signed a bad contract and the builder is using it to justify their practices (or the lack of it), you definitely need legal advice. You may think that you canít sue a contract builder if they can rationalize what they are doing or make excuses for what they are not doing using the verbiage of the contract that you signed.
A bad contract that is not justifiable in the court of the law isnít worth a dime, so if you failed to have to the contract reviewed by attorney before you signed it, it may be beneficial for you to have it reviewed after the fact. It may be possible for you to sue a contract maker if the terms arenít quite appropriate according to contract law or real estate law.
Misconceptions of Property Owners
Many home owners and other property owners get in a bind because they believe that if a problem contractor doesnít do the job right that they can refuse to pay them. This is a misconception that leads to unnecessary liens against their property, not to mention major headaches and undue stress.
Contractors, subcontractors, mechanics, suppliers of materials, and sometimes professionals such as surveyors, engineers and architects are actually entitled to file a lien against a property if they have not been paid for their services or supplies. It is possible for you to pay the general contractor in full and still to get liens filed against your property if you are working with a problem contractor.
This causes the need to worry about a problem contractor who doesnít pay their bills or their subcontractors. If they purchase supplies on credit for the project that they are completing for you, or if they contract part of the work to subcontractors and they donít pay them, the suppliers or subcontractors can file a lien against your property, in some states without your knowledge.
It is a good idea that the contract requires lien releases from material providers and subcontractors as well as a clause that somewhat protects the property owner from such liens. It is also imperative that you make sure that the contractor is licensed, bonded and insured. A real estate attorney can provide such guidance to you to keep you from making costly mistakes by hiring a problem contractor.
Is It Worth It to Hire an Attorney in the Contract Phase?
Definitely, yes! In some types of transactions, you can read a contract and if it makes sense you may feel comfortable signing it; however, when it comes to real estate and hiring a contractor, the stakes are usually high. The costs of an attorney are far less than the loss that could occur if you hire a problem contractor or sign a bad contract.
There are a lot of laws that apply to real estate contracts, under which contractor contracts fall. These laws exist because the stakes are high and there are many problem contractors who have taken advantage of their clients over the years by presenting bad contracts, not living up to their agreements, and not paying their bills.
If you are financing the costs of building a house or home improvements, both real estate law and credit laws apply. The laws can be confusing to consumers, so it is best to have instant access to an attorney that specializes in such transactions. If you have consulted an attorney in the phase of contracting, they will be up to date and ready to answer any questions if you think that the work is not going as planned. Early detection of a problem contractor is certainly better than finding out down the line that you signed a bad contract, that the contractor is a problem contractor, or that you will have to sue a contract maker.
The practices of problem contractors are the reason that finance companies require documentation from a builder during the process and sometimes refuse to provide advances on a construction loan. This can be irritating to you because problem contractors often blame delays on the finance company, when actually the finance company is protecting their interests as well as yours. For instance, the bank or finance company may require receipts, contracts with subcontractors and releases from material suppliers and subcontractors, as well as inspections before releasing funds to the contractor. Such practices are taken on in order to protect the finance company and the property owner from the unethical practices of problem contractors.
What if I Didnít Consult with an Attorney Before Contracting and I Am Experiencing Problems?
Just about any events that lead you to believe that you contracted with a problem contractor is worthy of a consultation with a real estate attorney. Regardless of what the contract says, there may be some laws that exist that can protect your interests when dealing with a problem contractor. There may even be laws that will void a bad contract if you are dealing with a problem contractor. You will never know if you donít ask a lawyer who specializes in real estate law.
It is best to get a lawyer by your side from the beginning, but it is never too late to hire a lawyer to protect your interests. Donít think that you have to deal with a problem contractor throughout the project until the end and then hire an attorney to sue a contract breaker or the other party of a bad contract. Relief might be just around the corner. If an attorney is involved, a lot of problem contractors mend their ways. If they donít, it is possible to legally get out of the contract and to be reimbursed for damages and delays.