Building Work Disputes

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  • Do not rely on word of mouth agreements
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  • Solicitors can also help with planning and architect agreements

Building Work Disputes

Building Work DisputesThere are many occasions where our dispute resolution and commercial contracts team get involved with Berkshire building projects that have gone wrong. You only have to watch a programme such as Grand Design to realise that building things does not always go to plan, and even when there is a “fixed price” agreement, it’s not always an agreement that can stand up in law. With house prices going up fast in Reading and Berkshire, more and more people are getting help from Barrett and Co with regards to planning and building contracts.

If you are planning to extend your home, get a loft conversion or garage conversion done, then you’ll probably be parting with at least £10,000. Whilst you may have found your dream building and got your quote, have you considered what would happen if something went wrong? Who would you turn to? What outcome could you expect?

It is not possible to avoid problems entirely, but there are certain things you can do to minimise the chances of things going wrong or to mitigate the difficulties that occur when they do.  Here are my seven top tips to avoid building disputes:

Contract in writing

First and foremost, make sure that your contract with your builder is in writing.  Building works are notorious for changing as they progress, but there is nothing to prevent you getting a price estimate and time estimate in writing before any work starts.

If your builder gives you a verbal time or cost estimate, then get his email address and confirm his estimate to him in writing.  Your email could begin with: “Further to our conversation earlier today, I am writing to confirm that you said …”

Fixed price and time

Ideally, you want a fixed price for the whole job.  If this is not possible because the extent of the work cannot be determined in advance, then ask what rates you’ll be charged for work that can’t be priced and confirm it in writing.

To avoid timing issues, such as work starting late or over-running, either include timings in your contract, or agree them with your builder, in writing if possible.

The law requires your builder to provide his services for a reasonable price and within a reasonable amount of time, but you do not want to fall back on the court’s interpretation of what is “reasonable”.  Rather than leave it to chance, always discuss and put in writing everything that has been agreed.

If timing is important to you, then state in writing that “time is of the essence” and explain why.  For example, “All building work must be finished by Christmas because I will be hosting Christmas for my family at my house this year.”  If you do not specifically make time of the essence and explain why, then the law assumes it is not vital and you fall back once again on “reasonable time”.

Payment in arrears

Ideally, you do not want to pay anything up front.  However, for anything but the smallest jobs, it is likely that the builder will want some payment as the job progresses and this is usually quite reasonable.  Also, the builder may need you to pay for materials in advance, especially when they are particularly expensive.  Ultimately, this is a matter for negotiation between you and your builder, but there is no specific legal model and therefore do not allow your builder to persuade you that “this is the way everyone does it” because everyone does it differently!

Formal Contracts

For smaller building projects, a formal written contract is unnecessary and to a large extent you can rely on the builder’s written estimate and your subsequent emails to him confirming what has been agreed in more detail before work starts.  However, for projects over about £10,000, I would suggest that you consider obtaining a formal contract.  This does not have to be prepared by a solicitor and a good, cheap source of building contracts are those produced by the Joint Contracts Tribunal or JCT, see www.jctltd.co.uk/category/contract-families.  These are industry standard contracts and relatively easy to use.  I have used the JCT Home Owners Contract (cost £30) for my own building work.

Research the builder

Selecting a good builder is vital.  The law requires that all building work must be carried out with reasonable care and skill, with materials of satisfactory quality that are fit for purpose, but again, you do not want to fall back on the court’s interpretation of what is reasonable, so research your builder as thoroughly as you can.

Personal recommendations, internet searches, company searches, references from previous customers, recommendations and endorsements from trade bodies are just some of the ways to get further information regarding your potential choice of builder. Ideally, you should visit some of the builders’ previous jobs. Most reputable builders will be more than happy to show off their previous work and while you are there you can ask their previous customer for a personal reference.

If the builder is a limited company, then research how long the company has been in existence.  You can obtain lots of information from Companies House. If you have any doubts or suspicions regarding their trading history, then ask the builder to explain and if you are not satisfied with their reply then do not contract with them.

Unfortunately, I have recently dealt with several clients who have paid a building company up front and then found the work to be unsatisfactory.  After settlement discussions have failed and our client threatens them with court action, the building company threatens to go insolvent, which would leave my client with no compensation.

Insurance

Check whether the builder has insurance.  Most builders will have public liability insurance, but do they have Employer’s liability insurance or Contractors’ all-risk cover?  Ideally, your builder should have all three.  A brief description of each type of insurance is as follows:

  • Public liability insurance: this covers injury to a third party (for example, a passing pedestrian being hit by a falling slate) and damage to third party property (such as the kitchen unit installer ripping the lino)
  • Employer's liability insurance: a legal requirement for limited companies; it covers the employee who breaks a leg when the company's ladder collapses; plenty of sole traders forgo this cover, which could involve the homeowner in litigation.
  • Contractors' all-risk cover: a third of builders do not bother with this, which could land the homeowner with huge bills. It covers work carried out by the builder, such as an extension, accidentally destroyed before completion or before the homeowner extends his policy to cover it.

You may also wish to consider Site Insurance or Contracts Works Insurance, which can be taken out yourself or jointly with your builder, particularly if your builder does not have Contractors all-risk cover.

 Ensure good communication

Make sure you have got more than one way to reach your builder – preferably by phone, email and fixed address.

Ensure that you communicate with your builder throughout the project and discuss issues that arise. Regularly being updated on the build will help you feel in control and will allow you to ask any questions or raise any concerns you may have.  Equally, your builder will be able to raise any concerns they have and if additional time or money is required due to changes in the building works then this can be discussed as it arises. Problems often multiply when they are not talked over and lack of communication can lead to distrust and a breakdown in the relationship.

 
Fixed Fee Consultation with a Builder Dispute Solicitor
If you have any questions about building contracts or want Barrett and Co to look at your contract or organise one for you, please speak to Justin Sadler on 0118 958 9711 or email Justin@BarrettandCo.co.uk

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