Plan Your Contracts Carefully

As the housing market takes its first tentative steps toward recovery, home builders and subcontractors should take time to review their contract terms in light of their experiences during the recession.  A little extra planning now can go a long way to ensure contract enforceability in the future. 

Here are some things to look for: 

  • Which payment terms worked best to get you paid on time? 
  • Which contracts were unpaid or underpaid? 
  • Was there a problem with a contract that helped a project manager or owner avoid paying you?
  • Does your contract make provision for a personal guaranty if the work is for a business owner?
  • Does the contract specify who is going to be obligated under the contract to pay you?

In the context of residential construction, it’s good to know whether the person you contract with is actually the homeowner, so make sure and ask for a copy of the deed or check the county land records.  Later, if the homeowner fails to pay according to your contract, you may be able to take a lien against the property to secure payment.                                                                                                  

Another key clause to look for in your contract is a “pay-when/if-paid” clause.  This means the contractor doesn’t have to pay subcontractors until he gets paid by the project owner.  The practice makes sense, but it could mean you have to front all of the expenses to complete a job before you get paid.    

To have an attorney review your Pennsylvania construction contract, or for help with another matter related to your business, call Scolieri Law Group, P.C. Located in western Pennsylvania, our attorneys are experienced in Pennsylvania business law and can help you navigate regulations affecting your business. Contact us today at (412)765-0546 or