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Proactive Measures for Developers and Landlords When Hiring a Contractor for a Multi-Unit Project

January 6, 2021 0 Comment Category: Construction

When looking to hire a contractor, there are proactive duties that should be performed by the management company.  Hiring any contractor for a construction project involves inherent risks.   Consider fiscal and labor liabilities, as well as the impact on your property community tenants, and any landlord or developer looking for a contractor needs to take certain precautions.

1. Choosing The Contractor

Picking the right contractor determines the success of the project. The contractor needs to be reputable and have completed similar jobs to the one they would be completing for your property, and make sure to call and verify the references. Validate the contractors’ existence by verifying a valid CSLB license, and if they are a real business, research around online as the most candid feedback often lives a few clicks away.

When you find a contractor you think will be a good fit, and after double-checking their insurance certificates, identify the specifics of the job scope.

2. Draft The Contract

After selecting your contractor and awarding the job, the contract may be the single most important component other than completing the project itself.

It’s vital to include a detailed warranty agreement.  A good warranty will cover your project for years to come. Outline the details before the project starts. Include the materials covered, the names and addresses of those who will honor the contract, and the length of time the warranty will last.

Once you have a comprehensive warranty, add the expectations of the contractor. Cover their specific duties and responsibilities, and the level of quality and completeness required. Include the clear distinction between compensable and non-compensable delays, along with the legal justification, to prevent financial disputes should setbacks occur.

Another, of many provisions to be included in the contract, is a guarantee that if an accident does occur, the contractor’s insurance will cover and accept liability.

3. Delays and Rent Roll Impacts

When ownership and the contractor have finalized the contract, you’ll want to begin managing the project plan. While a detailed timeline should be part of the proposal from the contractor, plan for delays.  Most construction projects experience a postponement of one sort or another, so be prepared and build it into your subsequent plans for the units if they are off the market while being remodeled, or otherwise.

4. Communication is Essential

Clear and regular communication is essential to documenting progress and dealing with any issue that may arise. Maintain an open communication channel between the contractor, project manager, and others involved.

Ensure that you know the plan for the project, and check in weekly with your contractor for progress updates and to iron out any small potential problems before they get far off track.

Communicate information to tenants regularly and as soon as you can to put their discomfort at ease.  If issues arise with tenants in the midst of a construction project, turn to the legal team at Davidovich Stein Law Group LLP in North Hollywood.

The attorneys assist real property owners and landlords with construction issues and tenant issues at their California residential and commercial properties, exclusively representing landlords and property management companies. Visit us online at davidovichlaw.com or call us at (818) 661-2420.