All business owners should prepare for and know how to identify and manage disagreements. As the leader of the company, you have the responsibility to prevent and minimize risk and loss on a job. Take action before a situation escalates to give yourself the best chance of avoiding a legal dispute.
Devastating losses and conflict have the potential to occur on even the most organized and planned out projects. Unfortunately, when a homeowner isn’t happy with the results, the owner often sues the contractors. See proactive steps that can be applied to any disagreement if you want to avoid a legal dispute in the future.
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Do Your Homework & Build Trust
Litigation is costly, so it’s important to do your research and get your documents in order ahead of all business agreements. Know the laws and abide by them. Following the rules isn’t only ethical, but it’s also how you avoid ugly legal disputes.
Have your contract drafted by a lawyer who has experience in drafting construction contracts. Make sure your written contract contains all of the required statements, disclosures and statutory requirements. As required by the Contractors State License Board, it even needs to be in the correct size font. Follow the rules and do your due diligence, so you can approach a new customer with confidence. It’s easier to do this when you’re delivering quality work backed by the law.
Open, clear communication will not only help you build trust and avoid disputes, but you’re also likely to generate loyal customers with this tactic. First impressions, sharing details and following up when you say you will are all ways to get the process started and headed in the right direction.
Don’t start any project without a written contract. Show the homeowner you care about them and take pride in your business by avoiding any confusion or gray areas. If you’re sneaky, sloppy or uniformed, it’s likely to backfire and create more problems. Build a relationship with your customer and put them at ease that they have nothing to worry about while working with you.
Be Proactive & Upfront About Any Issues
If something unexpected arises, reach out to the homeowner and talk to them like a real person. Speak clearly and approach the conversation by not only outlining the problem, but also offering up proposed solutions or remedies.
Avoid homeowners who are only interested in the lowest price, but expect materials that cost more. It’s okay to steer clear of customers who aren’t a good fit for your business. Saying no to the wrong clients before you dive into a project with them may cost you some money upfront, but it could save you a lot in the long run.
Don’t provide any additional labor or materials without a written change order signed by both you and the homeowner. The same goes for the customer. Most should know not to ask the contractor to do extra work until they have a written change order prepared by the service provider and signed by them.
You’ve heard it before, but it’s extremely important when conducting business to not assume anything. Create a paper trail from the very beginning of your estimate to the final product. The homeowner will likely be doing the same on their end, or at least should be. With each billing statement from the contractor, they’ll most likely be requesting back-up documentation, including proof of payment to subcontractors.
Be Responsive & Seek Legal Counsel
It’s necessary to review and respond to all claim and dispute resolution procedures and deadlines to advance claims for additional work and costs. Avoiding these notices will only make the situation worse for you. Experts advise, even if there are ongoing settlement discussions or efforts to resolve claims or disputes, to not deviate from the contract’s deadlines or neglect claims procedures. Regardless of the outcome, these contract terms will remain in force (Construction Business Owner).
Since you’re a business owner or contractor, and not necessarily a legal expert, it’s encouraged you seek counsel for advice if you’re in a sticky situation. A lawyer will be able to identify and categorize the issues and suggest the best course of action for you and your company. It’s strongly advised that contractors or builders try to resolve a contract dispute through mediation or negotiation first. If alternative methods don’t work, then litigation may be necessary as a last resort.
No one wishes for conflict and disagreements, but when business, the law, money and emotions mix, it happens. Make sure you’re fully informed and prepared for whatever complicated circumstances come at you. Most importantly, avoid a legal dispute by taking a proactive and professional approach with the help of these suggestions.
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