By Katherine A. Coba
Following Hurricane Irma, South Florida has plunged into a repair frenzy. To repair the roughly $100 billion in property damage, homeowners across the tri-county area have sought out contractors to restore their property. Unfortunately, no matter how carefully one vets a contractor, a dispute for faulty work or non-performance is possible. Fortunately, homeowners have several tools available to them to help recover monetary damages caused by the misconduct, nonperformance or financial mismanagement of a contractor, and get on the road to completing your project.
Review the Contract Carefully & Negotiate Favorable Terms
It is extremely important that homeowners (or their attorney) take the time to carefully review the proposed contract before it is executed. Often, your future headaches and legal expenses can be avoided (or minimized) by including clear and definite deadlines for the work, a payment schedule and a termination clause. By making payments contingent upon the completion of defined amounts of work, a delay in performance will also delay payments to the contractor. Additionally, as attorney’s fees are not automatically awarded in a breach of construction contract action unless the claim is intertwined with a construction lien claim, it is important to include a prevailing party fee provision in the contract as leverage against a non-performing contractor. It is also important to condition final payment on receipt of a lien release or lien waiver from all subcontractors and suppliers used by your contractor, as well as a close out of the building permit. This will eliminate the possibility for a mechanic’s lien to be filed against your home to satisfy unpaid bills.
Also, if possible, it is always beneficial to negotiate a payment via credit card. This will facilitate and expedite the recovery of any deposits provide in the case of a non-performing contractor. If you have a problem with merchandise or services charged to a credit card, and you have made a good faith effort to work out the problem with the vendor, you have the right to contact your credit card company and withhold payment from the card issuer for the merchandise or services.
Document, Document, Document
No matter how favorable a contract is negotiated, the contractor may still default. In these circumstances, it is important to document any issues with the quality of the work or non-performance. This is best accomplished through written correspondence, and photographs of the faulty work product. Should your efforts to secure performance under the contract go unanswered, your next step is to deliver a termination letter. While the termination letter does not have to be complicated, it is important to ensure that it complies with all relevant sections of the original contract. If the termination letter does not comply with the agreement, then the other party may be able to sue or otherwise hold the cancelling party responsible for wrongfully terminating the contract. This is where having the assistance of counsel is crucial.
Litigation, Available Damages & Collection
If you cannot agree on an out-of-court resolution, you may be forced to litigate the matter. In this case, you have the option of pursuing your claim in small claims court or traditional civil court. Small claims court is limited to disputed less than $5,000, not including costs, interest and attorney’s fees. If the amount in dispute exceeds $5,000, you will need to file in county or circuit court
For a breach of a construction contract, the recognized measure of damages is the reasonable cost of performing construction and repairs in conformance with the original contract’s requirements. This figure may also include relocation, financing costs, engineering and architectural fees reasonably necessary to accomplish the construction. The non-defaulting party bears the burden of showing actual expenditures occasioned by the breach, and the defaulting party then has the burden to show the unreasonableness of these expenditures. Centex-Rooney Constr. Co., Inc. v. Martin County, 706 So.2d 20, 27 (Fla. 4th DCA 1997). In other words, “the rule in Florida is that when a contractor wrongfully breaches a construction contract, or abandons the construction, leaving it uncompleted, the owner is entitled to an award of the cost of completing the work in conformity with the contract and specifications, including the actual expenditures made in good faith as necessary to complete the job.” Young v. Johnston, 475 So.2d 1309, 1313 (Fla. 1st DCA 1985).
Once you secure a judgment, you must execute on that judgment in order to collect your damages. If you have exhausted all resources of payment, and still have not been able to collect on the judgment you may be able to make a claim against The Florida Homeowners’ Construction Recovery Fund. The Florida Homeowners’ Construction Recovery Fund is a fund of last resort available to a natural person who has suffered monetary damages by the financial mismanagement or misconduct of a contractor, and who has exhausted all other resources of payment. While access to the fund is limited to certain violations, should you be eligible to file a claim against the fund you will be eligible to restitution on an otherwise uncollectable judgment.
Now, while embarking on a remodeling job can be time-consuming and stressful, as a homeowner it is important to know what recourses you have against an unprofessional contractor. While all disputes are unique, we are happy to review your case and help you reach a quick and fruitful resolution