Dealing with Contractors
ELIOT WAGONHEIM: The best way to control the risk in dealing with a contractor is to make sure (a) you have everything in writing and (b) what is in the writing is objective.
STEVE MILLSTEIN: This contract is the contract to the most important transaction of your life and you want it to contain every last bit of information that you have thought of with respect to the purchase of this house.
ELIOT WAGONHEIM: To any extent that a contract is vague, it is subject to different interpretations and that is where most homeowners address.
STEVE MILLSTEIN: And you better make sure that you have included every single item into that contract that you want to be able to address at a later date.
ELIOT WAGONHEIM: If it would upset you that there are going to be less than 12 recessed lights in any given room because that is your office and you really need good light for that, make sure that is in the contract, but if you do not care what kind of baseboard it is, then there is no reason to waste a paragraph specifying the exact quality of the vinyl that is going to be around the room.
If there is a certain issue, which would upset you if not done to your expectations, put it in writing.
STEVE MILLSTEIN: Anything that anyone is telling you they should be willing to reduce to writing and include in the contract. If they are not willing to do that, you should be concerned.
ELIOT WAGONHEIM: Every specific that you can put into a contract protects you against a misinterpretation and allows you to hold the contractor to a standard that you expect. Hold money back, do not pay every dollar of every invoice. Have the contract state there is going to be 10% retention, so at the end of the job the consumer is holding 10% ($40,000 of a $400,000 construction project) just to ensure that all of the remaining work is done, that any lingering problems what we call "punch list" issues are taken care of, and that the contractor is prompt not just in doing the first 95%, but in finishing up the project and turning it over to you.