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Home>Levelset Community>Legal Help>I am a home owner in California. The GC gave me an estimate for a project that was $85,000 and supposed to take 3 or 4 months. Right before construction started he changed the terms of the project to Time and Materials and after a few weeks his guys were only on site for work one day per week. They worked very slow and made lots of mistakes. The result was that the project went on for 7 months and the final cost was $130,000. I paid him in full because I didn't want a lien put on my house, however I pretty sure that in addition to the poor quality work he padded his hours. I'm considering stopping payment on my final check. ($22,000). It's my understanding that there are two potential violations. 1.) In California Time and Materials contracts are not allowed for residential projects. and 2.) The initial estimate didn't include a notice about his ability to put a lien on my house. At the very least I plan to open an investigation with the California State licensing board, however I doubt I will get any compensation for that. Any thoughts on my situation?

I am a home owner in California. The GC gave me an estimate for a project that was $85,000 and supposed to take 3 or 4 months. Right before construction started he changed the terms of the project to Time and Materials and after a few weeks his guys were only on site for work one day per week. They worked very slow and made lots of mistakes. The result was that the project went on for 7 months and the final cost was $130,000. I paid him in full because I didn't want a lien put on my house, however I pretty sure that in addition to the poor quality work he padded his hours. I'm considering stopping payment on my final check. ($22,000). It's my understanding that there are two potential violations. 1.) In California Time and Materials contracts are not allowed for residential projects. and 2.) The initial estimate didn't include a notice about his ability to put a lien on my house. At the very least I plan to open an investigation with the California State licensing board, however I doubt I will get any compensation for that. Any thoughts on my situation?

CaliforniaLicensesPayment Disputes

I am a homeowner in California. The GC gave me an estimate for a project that was $85,000 and supposed to take 3 or 4 months to complete. Right before construction started he changed the terms of the project to Time and Materials and after a few weeks his guys were only on site for work one day per week. They worked very slow and made lots of mistakes. The result was that the project went on for 7 months and the final cost was $130,000. I paid him in full because I didn't want a lien put on my house, however I pretty sure that in addition to the poor quality work he padded his hours. To add insult to injury I had to spend lots of time supervising the work, pointing out mistakes and instructing on how to fix them. As this was time and materials I was charged to fix their mistakes. I'm considering stopping payment on my final check. ($22,000). But I risk him putting a lien on my house. It's my understanding that there are two potential violations. 1.) In California Time and Materials contracts are not allowed for residential projects. and 2.) The initial estimate didn't include a notice about his ability to put a lien on my house. At the very least I plan to open an investigation with the California State licensing board, however I doubt I will get any compensation via that. route. Any thoughts on my situation?

1 reply

Apr 9, 2019
I'm really sorry to hear about your situation. First, it's worth exploring whether a written contract was even executed here. From the sound of what was described above, an estimate was made - but it does not sound as though a written contract was executed. If that is the case, then that, too, would run afoul of the home improvement contract requirements. As you'd mentioned above - California home improvement contracts must include specific language. This language includes a slew of consumer notices, including, as mentioned above, mechanics lien warning language. In fact, the mechanics lien warning is pretty substantial - spanning almost an entire page. If the mechanics lien warning and other warnings are missing from a California home improvement contract, the agreement very likely runs afoul of what's required, and punishment from the California Contractors State Licensing Board (CSLB) might be appropriate. Regarding time and materials contracts - it does not appear that a time and materials contract, in and of itself, is in violation of home improvement contract requirements. Functionally, however, abiding by the home improvement contract requirements might be near impossible if work is charged on a time and materials basis since California home improvement contracts must include (1) start and end dates for work, and (2) the contract price, among other information. For more background on the information which must be included in a California home improvement contract, as well as an example of a contract that meets all statutory requirements, this resource should be valuable: California Home Improvement Contracts Require Specific Language [Free Download]. This resource can also provide additional clarity: Strict Rules for Home Remodel Contracts in California. As for how to stick it to a contractor who has overbilled - that can be tricky, but there may be a few options. For one, reporting a contractor to the CSLB can help. Where a contractor has run afoul of what's required by the CSLB, serious penalties could be in play - such as fines and, in certain cases, criminal penalties. Further, a claim might be possible against the contractor's license bond when the contractor has acted improperly and run afoul of CSLB requirements. You can learn more about making a claim against a contractor's license bond in this resource from Legal Beagle: How do I Make a Claim Against a Contractor's Surety Bond in California? To find information that will be necessary to make such a claim, the CSLB website has a helpful search function, which can be found here: Check a Contractor License or Home Improvement Salesperson (HIS) Registration. Beyond a contractor's bond, an owner can always attempt to recover payment by taking their contractor to court or to small claims court (if the dispute is under $10,000). Finally, it's worth mentioning that if a contractor is not licensed, a property owner might be able to recover all sums already paid to the contractor, and both fines and criminal penalties could be in play. Though, in order to recover payments made, legal action would lmost definitely need to be pursued. Of course, to make the best decision on how to proceed, it would be wise to consult a local construction or real estate attorney. They will be able to review all documentation, payments made, communications, and other relevant info and advise on how best to proceed.
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