While not always the case, be prepared for the contractor to file a counter claim if you ultimately decide to sue them. We see this most often in cases of alleged deficiencies. The homeowner sues for the costs to fix and/or finish the job and the contractor counter sues for the amount left owing on the contract. It is then left to the judge to determine who is owed how much and why. Only after such a determination can the claim or counterclaim be properly disposed of.
Where situations warrant, a good contractor will properly explore the prospective job site in advance of making a quote or a contract. Often in these cases, the contractor does not look for more money. However, some contractors, through accident or design, end up looking for more money part way through the project. Absent some exceptional circumstances, the contract price put forwarded by the contractor would still apply.
Where we most often see requests for more money are from contractors who were not properly vetted and satisfied all the criteria in our checklist. Often these are small contractor operations who do not have a lot of money on hand and are either poor at quoting for projects or else are not able to execute them well. In either event, they find themselves short on money and therefore without the means to finish the project. This puts the homeowner in a difficult position.
If the work is generally of good quality and the additional amount requested is within 10% of the contract price then the homeowner may wish to pay it. (It should be repeated that under the Consumer Protection Act a contractor may increase their price by up to 10% of a quoted price.)
If, however, very little work has been done and the contractor is looking for the balance of the contract price then this can be harder to determine how to address the situation. The contractor has already been exposed to have cash flow issues and there is no guarantee that further payments will result in further work. In fact, we have seen situations where the contractor took additional monies and then disappeared altogether. One potential way to manage such a request is to agree to pay for any materials or subtrades directly. For example, if the work involves a delivery of tiles then the homeowner could pay the supplier directly as opposed to paying the contractor.
If, however, the request is excessive and the homeowner will not acquiesce to it then this will could create a situation where the contractor ends up being in breach of the contract.
There is a saying that good fences make for good neighbours. We also say that good contracts make for good business relationships. In order to avoid any confusion or ill will it is highly recommended that any changes to the project be properly discussed, negotiated and committed to writing by way of a change order. Too often we see situations where a contractor demands payment at the end of a project for changes made by the homeowner and the prices are far more than what the homeowner anticipated. A dispute ensues and litigation sometimes follows.
Technically speaking, the contractor should be putting forward written change orders as they occur and if this is not happening the homeowner should request it or, perhaps, undertake it themselves
Sometimes the work of the contractor is not of good quality and it is discovered either by the homeowner themself, by a building inspector or a third party. This can create a difficult situation. If the work is being reviewed by a municipal inspector then specific deficiencies may be identified and their remediation monitored and reviewed by the same inspector. However, in situations where there is no such inspection (and not all work requires municipal inspections) then a homeowner may need to call in another contractor or a specialist.
If the contractor’s work is found to be deficient then technically the contractor has the first to remedy it unless the deficiency is of such an extreme nature that it constitutes a material breach of the contract. If it is not a material breach and the contractor can and does remedy the deficiency then all is well and good. It is only in situations where the contractor refuses to remedy the deficiency or it is a material breach that serious problems arise.
In situations where it is not a material breach and the contractor refuses to remedy it then this should be documented in writing. Specifically, the deficiency should be identified and a deadline for remediation should be set failing which another contractor will be hired to undertake the work and any extra costs will be borne by the initial contractor.
In situations of a material breach the problem should be identified and explained by way of another contractor, expert or engineer and a demand for any additional costs made (or at least have the contractor put on notice for them if they are not readily known at the time).
One of the leading types of home renovation complaints is the contractor has abandoned the job after receiving a significant amount of money and doing very little work. Too often in such cases we are confronted with a situation where very little is known about the contractor (e.g. a first name and a cell phone only). If there is a written contract and the building renovator has missed the deadline to complete it then the homeowner may wish to put the contractor on notice of the default and afford them the opportunity to return to the job site to finish the work. This is not necessarily required, however, as failure to complete a project on time may be considered a material breach by the court. From a pragmatic aspect, however, and if one is looking to avoid litigation, then it may be a prudent course of action.
If the contractor has indeed left, or has neglected to return after being the afforded the opportunity to do so, then the home owner is well within their rights to hire another contractor to finish the job. Before doing that, however, and in possible anticipation of having it sue the original contractor, the homeowner should obtain three quotes from other contractors to finish the project. This is because the court needs to be satisfied that the costs of completion that are incurred are actually reasonable.
Any amounts spent over and above the original contract price to finish the job would then become the responsibility of the original contractor. For example, if a homeowner entered into a contract for a $50,000 renovation with a $30,000 deposit and the contractor then abandoned the project mid-way through then the contractor would be responsible for any costs over and above the $50,000 to finish the job. Consequently, if the homeowner had to hire another contractor to finish the job for a further $30,000 then the homeowners total expenses are $60,000 which is $10,000 more than the initial contract price. The initial contractor could then be sued for this amount since the homeowner is entitled to be put into the same position as they would be had the initial contract been competed as agreed.