Have You Hugged Your Contractor Today?
What to Expect When You Renovate Your Apartment
Anyone who has renovated an apartment in Manhattan knows that two words should be deleted from an apartment owner’s lexicon: “fast” and “inexpensive”. The process of finding an architect and contractor, then obtaining the approvals of the co-op or condo, managing agent and New York City Department of Buildings, can be a daunting experience. Once a project starts, there are the inevitable “change orders” or other issues that drive the cost of the project higher and lenghten the time frame for completing the job.
Things Start to Go Wrong
Over the years, I've been involved in situations where contractors did not finish the job, finished the job late or didn't do the job as specified. When a problem does arise, the apartment owner is usually too far into the renovation process to change partners. Let's say that you have a $250,000.00 project. You make a down payment of $50,000.00, then 6 weeks into the project you pay an additional $25,000.00. Shortly thereafter, you start experiencing delays and you discover that a key aspect part of the job was done incorrectly (e.g., the tile selected and installed in your bathroom is not what was promised). What do you do? You have invested $75,000.00. and you are now unhappy with the person that you had great hopes for 2 months ago. The truth of the matter is, there is little that you can do other than to cajole your contractor into finishing the project. In almost all situations, hiring someone else to finish the project (if you could find someone) would be too expensive because of the investment you've already made. Litigation is almost never an acceptable option because lawsuits take an incredibly long time and legal costs can exceed the renovation budget.
Working with an Architect
The complexity of a project often requires an architect to work on design or construction challenges. Once the design is completed, an architect may also be retained to supervise the contractor's work and to approve payments to the contractor as the job moves forward. Executing a design can be quite subjective and architects and their clients are not always on the same page. Some architects are great at design and not very good at administration of the contractor's work. Due diligence before hiring an architect is your best hedge against unsatisfactory work once the project gets started.
Beware of the Change Order
Understanding the scope of work for your architect or contractor before the job starts is the best way to keep costs under control. Most projects get modified, to some extent, once things get started. That being said, tight control on change orders is the best way to keep the project on budget. Clearly spelling out the architect or contractor's responsibilities in the construction documents is essential to keeping costs under control.
The Department of Consumer Affairs May Help
If you are disasatisfied with the services rendered, perhaps you can file a complaint with the Department of Consumer Affairs and apply for a recovery of up to $15,000 from the "Home Improvement Contractor Trust Fund." The truth is, when you get to Department of Consumer Affairs, you're usually in big trouble with a contractor. You can file a complaint against your contractor and the Department of Consumer Affairs will help mediate the dispute. The ultimate result, however, may be costly in dollars and time. And that's when you're dealing with a licensed contractor. At least as a starting point, visit the website of the Department of Consumer Affairs:
Hopefully, no complaints have been made against your contractor. In almost all situations that I've come across, the homeowner is more interested in getting the work completed than in getting his or her money back.
A Checklist for Working with an Architect or Contractor
Here are a few suggestions to ease the pain when retaining professionals to work on the renovation of your apartment:
Bring your professionals into the project as soon as possible. If you are planning a major renovation, make sure that your proposed plan will be acceptable to the co-op or condo Board where you will reside.
Review the “Alteration Agreement” that is obtainable from the managing agent to understand your obligations to your co-op or condo, including any limitations on the time frame in which the project must be completed as well as daily work restrictions. The alteration agreement will also spell out the requirements for your contractor and the fees and deposits required before the project can get started.
If you are working with an architect, he or she may recommend a particular contractor that he or she has worked with before. Make sure that the bid from the contractor has been vetted against the bids from other contractors, so you are comfortable that the proposal from the contractor recommended by the architect is reasonable under the circumstances. Once you commit to an architect, it probably makes sense to use the contractor he or she has worked with in the past. That being said, double checking all estimates is required.
Know who you're dealing with. Look at other completed jobs. Talk with other clients of both the architect and contractor. Find out how busy your professionals are and the size of other projects they are working on or have recently completed. If someone tells you he or she is too busy to take on the job, be forewarned…they probably are.
If you are not using an architect and will be finding the contractor on your own, your contractor will be wearing two hats: assisting you with the design issues and carrying out the actual nuts and bolts of the renovations. Without an architect, the apartment owner is responsible for signing off on the contractor’s work as each portion of the job is completed. If you are experienced with renovations, or if the size of the job is small, proceeding without an architect may work out just fine. If you are clueless about the technical aspects of the renovation, having an architect involved in the process to administer the contractor portion of the job can be invaluable, and in many cases, is a necessity.
The size of your project may require you to work with an architect. Architects have two main functions: designing the project, that is, bringing your design goals to life on architectural plans, and administrating of the work of the contractor. Architects can be good at both phases, and sometimes, better at one or the other. Each phase is equally important to the success of the project.
In all cases, written agreements with both the architect and the contractor are required, that clearly spell each party’s obligations, including all costs and the schedule for completing the job. If the architect or contractor prefers not to use the “AIA” form of owner-architect agreement or the owner-contractor agreement (in which the architect will approve payments to the contractor), take that as a “red flag”. The standard AIA documents, with some amendments, are the best documents to use when an apartment owner is undertaking a major project.
Check with the Department of Consumer Affairs to determine if your contractor is licensed and to see if there are any complaints against your contractor.
Try your best to get late completion penalties and a sufficient “holdback” on the final payment due the contractor until all punch-list items are completed at the end of the job. This is your best chance at getting the contractor to complete the job as promised. Contractors will resist late completion penalties and a significant holdback as contractors always complain that their customers try to walk away when the job is completed and refuse to pay the last percentage that is outstanding. In some cases, that is true and a contractor is right to be concerned about final payment. Most contractors, however, know the drill and expect the apartment owner to ask for completion protections. In most cases, something is worked out to protect the apartment owner from the contractor going off the reservation.
Once you get beyond refinishing the floors and painting, in most cases, it is essential that an attorney review the contruction documents before you go ahead with either the architect or contractor. These documents can be quite technical. What's included and what's excluded in the project often comes as a surprise and may result in additional costs.
If a Dispute Does Arise
When a dispute does arise, particularly with the contractor, the apartment owner is at a disadvantage. Yes, a contractor could be forced to sue over a small balance that the homeowner refuses to pay, but the contractor can file a “mechanic’s lien” that can force the apartment owner to commence an action to get the lien removed. If an apartment owner ignores the lien, problems can arise at unexpected times down the road, when the apartment owner wants to sell the apartment or refinance a loan. If the lien is still present, the contractor will be in a superior bargaining position, as the lien will have to be removed in order for the apartment to be sold or for the loan refinancing to be completed. If the contractor commences a lawsuit to recover the balance that is owed, the homeowner often finds that he or she is putting good money after bad. In many cases, the litigation can cost more than the balance owing to the contractor.
A Word About Managing Agents and Your Building's Architect
Co-ops and condos have set procedures for apartment renovations that can slow the process down to a crawl and add additional expense. Most buildings require plans to be reviewed and approved by the co-op or condo's architect. The building architect often has comments on the plans and an apartment owner can be forced to make unwanted changes in order to get his or her renovation project approved by the managing agent, as agent for the co-op or condo. Hiring professionals who understand the process and who know the building's architect can go along way to expediting your submission and getting your plans approved.
Residential Reality: Measure Twice, Cut Once
Apartment renovations require significant advance planning and thorough vetting of both the architect and the contractor. The effort expended at the beginning in selecting the right folks to work with will pay dividends when a problem arises and you have confidence that the professionals you have retained will have your best interests in mind in finding a creative solution. As I once heard Denzel Washington say, “Stay ready, so you don’t have to get ready”.