Contracts for independent contractors
Contracts might seem to be a pain, but they can really save your bacon. If you decide to build your own home and do all the work yourself, then the complications are few. However, if you decide to do your own contracting, the legal complications will be many.
The legal aspects scare many budding homeowners away from doing their own contracting. Contracts keep people honest.
General contractors have a complete set of contracts that have to be signed by both the homeowners and the sub-contractors. That way they can keep their fuzzy rumps out of hot water.
Some people go out and get a lawyer to draw up all real estate contracts like land and property deeds, construction loans, final loans, general contractor agreements, sub-contractor agreements, contractor proposals, change order, release of lien, homestead protection, and work orders.
At $500 per hour, that could be several thousands of dollars. It’s probably worth it though because I have seen way too many people being taken advantage of by ruthless contractors.
I have seen many examples of contractors gone bad. Here’s just one example to help explain one of the many ways homeowners need to protect themselves. My friend and his wife were building their new home. They hired a contractor to do all the cement work. The contractor had taken his half of the money set aside that he needed to pay for the cement. Instead, he spent the money on his personal debts. After a few weeks, the cement company put a lien on the house due to the unpaid bill for cement.
In this case, the homeowners actually had to pay for the cement even though they already had. The contractor would most likely have a hard time getting recommendations after behaving this way, but I’ve seen it time and again.
There are many legal firms that have the real estate documents ready and can sell a basic package of contracts for home construction.
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