How to Handle a Dispute With a Contractor

Home improvement disputes usually involve delays, poor workmanship, unexpected costs, or abandoned jobs. A methodical approach protects your money and your home.

Step 1: Review the contract

Check the scope of work, materials, schedule, payment terms, change order procedures, warranties, and any dispute resolution or arbitration clause. Verbal promises are harder to enforce.

Step 2: Document everything

• Photos and videos of the work and defects, dated
• Emails, texts and change orders
• Payments made and receipts
• Opinions from another licensed contractor or inspector

Step 3: Raise it in writing

Describe the problem, refer to the contract, and give a reasonable deadline to fix it. Many states require homeowners to give contractors notice and an opportunity to repair before suing for construction defects; see construction defect claims.

Step 4: Payments

Do not pay ahead of the work completed. Withholding final payment may be justified for unfinished or defective work, but withholding too much can be a breach on your part. Follow the contract.

Step 5: Licensing board complaint

Most states license contractors. Licensing boards can investigate complaints, and some states have recovery funds that compensate homeowners harmed by licensed contractors. Hiring an unlicensed contractor can limit options in some states.

Step 6: Mechanics liens

Unpaid subcontractors and suppliers may be able to place a lien on your home even if you paid the general contractor (Cornell LII). Ask for lien waivers with each payment.

Step 7: Mediation, arbitration or court

• Mediation through a local program
• Arbitration if the contract requires it
• Small claims court for amounts within your state's limit; see small claims
• A breach of contract lawsuit for larger losses; see breach of contract

Cooling-off rights

If you signed a contract at your home with a seller who came to you, the FTC's Cooling-Off Rule may give you three business days to cancel certain sales (16 CFR 429.1). States may provide more.

Prevention

Use licensed, insured contractors; get several bids, a detailed written contract, and permits; and pay in stages (FTC).

A real estate lawyer or construction attorney can help with larger disputes.

Sources

1. Federal Trade Commission: Hiring a contractor
2. Cornell Law School LII: 16 CFR 429.1, Cooling-off period for door-to-door sales
3. Cornell Law School LII: Mechanic's lien