The title is a play on my favorite television show “Maine Cabin Masters.” There is a clip shown at the beginning of the show, where Chase, the fearless leader, is sitting on a large rock and he yells out “Cabin Masters Unite!” as if to summon his workers from the Maine woods. I am not sure why some of us are addicted to home improvement shows, maybe it is our Yankee ingenuity, but whatever the reason, we are hooked and Maine Cabin Masters in particular, has it down. In six to eight weeks, they complete massive renovations of remote Maine cabins, each culminating in a final reveal to the owners who appear to have had little input in the process. As great as the renovation is, I am left wondering: did the price include materials and labor, did the contractor have workers’ compensation, were there any change orders?
Since most of us are not Maine Cabin Masters, we need a more practical view. If you would like to undertake a renovation in your Massachusetts home or cabin there are a few things you should know.
Sign a Contract
You should always have a contract, even if you are working with a family member or close friend. The basics are a contract that contains the following: the full names and addresses of the parties, the contractor’s Federal Tax ID and State Registration number, the start and end date of the project, a detailed description of the work, the total contract price, the payment terms, a list of warranties, details about permitting (always have the contractor take out permits in their name NOT YOURS), the right to cancel, change orders and insurance requirements.
Hire a Registered Contractor
Your contractor should be registered with the State of Massachusetts pursuant to the Home Improvement Contractor law, M.G.L. c. 142A (the “HIC”). The HIC was created in 1992 to protect consumers and regulate contractors who work on one to four family pre-existing, owner-occupied homes. The law established a registration requirement, an enforcement program and a guaranty fund where consumers can collect up to $10,000 for an unpaid judgment against a contractor. To avail yourself of the guaranty fund you must hire a contractor who is registered, use a contract that contains all of the required terms and follow the rules established by the law. The State of Massachusetts has a website for the HIC. The website contains detailed instructions on how to engage a contractor, what must be contained in your contract for the HIC to apply and even provides a sample contract that anyone can use.
Review the contractor’s insurance before hiring him/her. If he/she has employees, the contractor must have workers’ compensation insurance. You should also obtain a certificate naming you as an additional insured under the contractor’s general liability policy. You should ask for an umbrella policy if their limits are low and make sure they have auto coverage that will provide coverage when bringing supplies to and from your home. If you are unsure if the contractor’s insurance is sufficient, ask your insurance agent to review it for you; they will usually do so free of charge. Your insurance agent may suggest that you add a builder’s risk policy or an umbrella policy as well.
Additional Considerations for Commercial Renovations
If you are planning a commercial renovation, there are additional considerations. Whether public or private, often there is an architect involved in the project and various processes that allow for the oversight of specifications, materials, change orders, etc. Make sure that the terms of the general contract flow down to the subcontractors. For larger contracts we recommend that you require a payment and performance bond. With commercial renovations you can use the American Institute of Architects (“AIA”) contract form and include insurance requirements for the owner, such as builder’s risk insurance, and for the contractor, such as general liability, auto, pollution and other insurance along with payment and performance bonds.
AIA Contract Documents
AIA contract documents are standardized form contract documents for the construction industry that have been in use since 1888. They are revised every ten years and are the number one construction contract form used in the United States. Previously, many lawyers did not want to use them because they were seen as overly complex and unfair, often requiring extensive changes. In 2017, the AIA redesigned several of their contracts to address these complaints. The result is a more user-friendly product with contract forms that are interrelated and provide consistency from the architect to the subcontractor. The 2017 forms include updates regarding insurance, termination fees, liquidated damages, notice provisions, safety means and methods, payments, retainage and indemnification language. These changes are helpful but using these contracts still requires many years of experience and sufficient contract knowledge, i.e. Should you limit the architect’s role? Can the owner’s role be expanded? Should you allow pass-through risk? These are just a few of the questions that arise.
Whether you use a form from the HIC or AIA or write your contract on a napkin (yes, it can be enforceable), in the end, a contract is really a set of promises. The promises must be clear and comprehensive. Each party must know what their responsibilities are and must take steps to minimize risk before a dispute occurs. This way, you can have that big reveal.