In today's Freedom Friday blog and email newsletter, I want to talk about another very common issue, especially for those with construction issues, and that's “How can I settle a dispute with my contractor?”  I get a lot of inquiries regarding contractors who fail to perform their work, although they've been fully paid.  This is often a complex situation, and so in today's Freedom Friday blog and email newsletter, I'm talking about “How to settle a dispute with a contractor.”

First of all, if your contractor is not doing the job as expected, you need to find the most effective way to settle the dispute.  You don't want to do anything that will cost you more money than you have to spend.  This means you need to review your contract carefully.  The contract you signed should include requirements for the scope of work, start date, deadline for completion, and what happens if you and the contractor don't agree on the schedule or the quality of the work.  You need to read the contract carefully before you sign it.  You need to figure out if your contractor is violating a specific part of the contract.  Some common disputes include the start date of the project, completing the project on time, who pays for materials, and when the contractor gets paid.  If the planned work changes during the project, you and the contractor need to write down those changes and sign any contract modifications.

The next step to resolve the dispute with your contractor is to speak with your contractor.  Often you can just go to the contractor to settle any disputes or problems and with discussion and goodwill, you might be able to resolve the issue without losing time or additional costs for legal procedures.  However, sometimes complex issues require some form of legal help.  Litigation isn't always the answer.  Litigation can be expensive and can cause a huge loss of time if your project isn't completed.  If you have a dispute with a general contractor, you might be able to seek resolution through a trade group or licensing agency.  Also, you need to review the contract, again.  Many construction contracts include a requirement for either mediation, arbitration, or both, before filing a lawsuit.  Mediation is an alternative dispute resolution program which involves a retired judge or senior construction attorney to foster a settlement between the parties.  Arbitration is usually a binding process, and the judgment of the arbitrator, which is usually an attorney or retired judge, is final and binding on the parties.

If mediation and/or arbitration is unsuccessful, or perhaps refused by the parties, the next step may be to go to court.  If the amount of the dispute is less than $10,000.00, you might be able to try small claims court.  You do not need an attorney in small claims court, the filing fees are less than regular civil court, but you will still need solid documentation to show how you were harmed, including a copy of the contract, written records of timelines, photos of work, building plans, and receipts for materials.  If the amount of the dispute is more than $10,000.00, or even in some cases less than $10,000.00, you need to file in civil court, in which case you need to hire an experienced business lawyer to help you prosecute your case.  Unfortunately, litigation is more costly than the other options, but you and the contractor do have a right to appeal.  Of course, a major disadvantage of litigation is it can cause the project to stall, which may be an unwanted outcome.  A good litigation attorney may be able to help prevent that from happening.  If you're having a dispute with your contractor, and its getting out of hand, contact us for a free consultation.

Thinking about starting a small business?  Or maybe your small business is having issues with contracts, leases, business partners, collection issues, or experiencing other barriers to growth?  Please contact me at [email protected] to schedule a FREE strategy session.

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