How to Avoid Contract Payments Disputes

A lot of disputes between homeowners and contractors arise because of vague conditions and loopholes in the contract. Some terms are so vaguely worded that contractors may a lot of money in advance. As a homeowner, this should never be done unless you are assured that the contractor has the highest degree of professionalism.

An example of a common vague statement is “Payment is due upon completion of the work”. If this was in the contract, homeowners would withhold payment until the whole house is finished.

The best solution would be to make contract payment terms more detailed. Here’s how:

Include a tiebreaker clause

Both contractors and homeowners should agree on getting an unbiased inspector to judge on the work’s completeness and quality. He will also act as a judge who issues a written decision when disputes arise.

Take Note of Payment Progress

Have a written record of all fees, reimbursements, and changes in expenses as the work goes along. A good record should contain a breakdown of the specific job completed and the expenses for the job. Numbers should be exact and not estimated.

If possible, do this in a computer program so that calculation can be done automatically. Have your records double-checked to ensure that no mistakes were made and make sure that both parties have a copy.

Include a Time Frame

Both parties should concur on fee deadlines. If both parties are well-informed and concur on due dates, then it would save a lot of stress from asking for payments. Homeowners can also budget their money in advance. Make sure that the contract includes a condition giving contractors the right to leave the work unfinished if left unpaid.

Have an Expense Plan Even Before the Contract

For homeowners, prepare cost analysis detailing what you want and need from your contractor. Allow for an “extra expense” part on your budget plan. This would save you from unavoidable sudden expenses that you cannot pay.

Homeowners and contractors should stick to what is written in the contract. Planning, constant communication, and keeping every agreement written would lessen the possibility of payment disputes.