Originally Published: May 29, 2015 6 a.m.
QUESTION: We recently moved to Prescott from a state that did not regulate contractors or construction contracts. What is important when signing a contract? - Ed, Prescott
ANSWER: The Arizona Registrar of Contractors (AZROC) protects Arizona consumers by licensing and regulating the state's construction industry. The Legislature established the Registrar of Contractors (ROC) in 1931. The ROC licenses and regulates residential and commercial contractors and the ROC staff investigates and works to resolve complaints against licensed and unlicensed entities.
Here are some precautions to follow while dealing with contracts and binding agreements. A contract is a legal agreement between two or more people. A written agreement is one of the most important communication tools for both you and the licensed contractor. It insures there are no misunderstandings about what a job will include. A thorough contract tells how the work will be done, when it will be done, what materials will be used and how much it will cost.
Disagreements over home improvement projects can cost time and money. Besides producing bad feelings, they also can lead to lawsuits or other legal action. A well-written contract can prevent that.
All contracts must include specific information about your rights and responsibilities. In addition, any changes made to that contract must be in writing, be legible, be easy to understand, and inform you of your rights to cancel or rescind the contract. If you are promised something verbally, make sure that it is also included in writing.
A contract should contain everything agreed upon by you and your licensed contractor. It should detail the work, price, when payments will be made, who gets the necessary building permits, and when the job will be finished.
Arizona State Statutes Title 32, Chapter 10 of ARS §32-1158(B) requires any contract in an amount of more than $1,000 with a property owner to be in writing and contain all of the following elements:
The name of the contractor and the contractor's business address and license number.
The name and mailing address of the owner and the jobsite address or legal description.
The date the parties entered into the contract.
The estimated date of completion of all work to be performed under the contract.
The total dollar amount to be paid to the contractor by the owner for all work to be performed under the contract, including all applicable taxes.
The dollar amount of any progress payment and the stage of construction at which the contractor will be entitled to collect progress payments during the course of construction under the contract.
That the property owner has the right to file a written complaint with the registrar for an alleged violation of section 32-1154, subsection A. The contract shall contain the registrar's telephone number and website, address and shall state that complaints must be made within the applicable time period as set forth in section 32-1155, subsection A. The information in this paragraph must be prominently displayed and in the contract in at least 10-point bold type, and the contract shall be signed by the property owner and the contractor or the contractor's designated representative. A good contract also has warnings and notices about the right to cancel, mechanics liens, and allowable delays.
Since a written contract protects both you and the contractor, all agreements should be put in writing. It should be as specific as possible regarding all materials to be used, such as the quality, quantity, weight, color, size, or brand name as it may apply. For example, the contract should read "install oak kitchen cabinets, manufactured by Company XYZ, model 01381A, as per the plan," not just "install kitchen cabinets."
Don't sign anything until you understand the contract and agree to the terms. Anything you sign as authorization to move forward with the project could become the contract. Ask questions until you understand and agree to all the terms before signing. You also may wish to review the proposed contract with an attorney.
Make sure the contract includes everything that is agreed to, up to and including complete cleanup and removal of debris and materials, along with special requests like saving lumber for firewood or saving certain materials or appliances. Also, give instructions regarding pets, children or areas where materials may not be stored.
Never sign a blank or partially blank contract. Once you sign, both you and the contractor are bound by everything set down in the contract. Make sure to get a copy of the contract, and keep it for your records.
Always update your contract. Even after you have signed the contract and the work already has begun, you may want to make some changes. If you have added or subtracted work, substituted materials or equipment, changed the completion date, etc., make sure to note it in writing on a "change order," and include any price changes. After a change order is signed, it becomes part of the written contract.
Make sure the financial terms are clear. The contract should include the total price, when payments will be made, and whether there is a cancellation penalty. You should expect to make a down payment on any home improvement job.
Remember to tune in to YCCA's Hammer Time every Saturday and Sunday morning 7 a.m. on KQNA 1130 am/99.9 fm or the web kqna.com. My wingman Mike Enders of Benttree Custom homes and myself talk with and interview community industry partners. It's fun - don't miss it.