A self help guide to avoiding disputes when building or renovating your property in the St Lucia.
Disputes are a commercial risk which exists when dealing with any contractual transaction, including building your property. At Greer and Associates, we strongly believe disputes are less likely to occur when all parties to a contract are clear as to the nature of the transaction and the risks involved.It is not uncommon for property owners to enter into a contract to build their homes without any thought of the likely risks and how they could affect the integrity of their home or budget. It may seem costly to consult a lawyer early in the game but failing to do so could result in costly litigation down the road. If consulting a lawyer is not possible, you can still provide yourself with some protection by ensuring your contract contains the basics.
1 Check your contract with a specialist building consultant or lawyer before signing.
Building works are notoriously complex because many of the factors which will affect the project are unknown or could change at any time during the course of the works. A good contract will incorporate mechanisms to enable you to deal with any eventualities that will affect your project.
When building your home, it is probably not necessary to use a complex construction contract but you should have one nevertheless. A building professional or a lawyer can prepare one for you at a competitive rate. If your prospective contractor offers you a contract to sign, you should have it reviewed. It may seem like a costly exercise but doing so will highlight any concerns or issues which you may not have thought about, avoiding costly disputes during construction.
In instances where you have obtained financing in St Lucia, the financier will often provide a building contract which is designed to protect your interests. While it is advisable to have this reviewed, at the very least you should read the contract thoroughly.
2 Background check your contractor.
Even if you have the most effective contract between you and your contractor, if he is penniless you will not recover any losses you have suffered against him. You should therefore satisfy yourself before becoming contractually bound, that the contractor is reputable and financially solid.
Many contractors operate through companies. Do not be afraid to carry out a company check to find out who runs the company and whether it has any assets or substantial debts. The worst position to be in as a creditor is to have a judgment which cannot be enforced because the company you are dealing with is an empty shell.
If your investigation shows that the company has no assets, do not be afraid to ask for part of the purchase price to be held as security or ask for a warranty from one of the directors or shareholders.
3 Make sure your contract is complete.
It is important before signing your contract to ensure that it is fully completed with all blanks filled in and any hand written amendments initialed. Particularly when using a standard form that permits you to enter your details into blank spaces, ensure all the spaces are either filled in or crossed out. Leaving a space blank does not mean that this provision will not apply and may have undesirable consequences to your project.
Once the contract has been signed, it will be very difficult to renegotiate it. Also proving what was intended to go into a blank space can be extremely difficulty.
4 Include a start and completion date.
Your contractor is only obliged to carry out the works in accordance with the contract between the parties. You should therefore discuss with your contractor the amount of time the works are likely to take and ensure it is specifically set out in the contract.
If your contract does not make provision for a completion date, the law only requires the contractor to complete it in a reasonable amount of time. Reasonableness is highly subjective which means if there is a dispute as to the date of completion, you will most probably need expert technical advice to determine when the work should be finished. It is not uncommon in disputes to have experts for each side give conflicting evidence which means you have a 50:50 chance of being right. Setting a completion date eliminates this risk as well as the cost of an expert.
5 Make provision to extend the time for completion if necessary.
Your building contract needs a degree of flexibility to take into account unexpected events, such as weather condition or unforeseen ground conditions, which may cause your project to overrun. If this happens, you want to be able to extend the time to another date. If you are not able to do so, the contractor can argue the work must be completed in a reasonable amount of time and for the reasons discussed in point 4 above, this is a vulnerable position to be in.
Ensure the contract enables you to extend the date of completion for any events out of your control or if you increase the scope of works.
6 The Scope of Works should be clear, detailed and annexed to the contract.
Most building disputes revolve around what the contractor is or is not required to build. This usually occurs when the description of the works is non-existent or vague. Ensure that a description of the work is annexed to the contract.
If the description has been prepared by the contractor, you should have it reviewed by an independent third party to ensure it includes all of the works necessary for the successful completion of your project. If it does not, you are likely to enter into costly disputes with your contractor as to what work formed part of the contract.
For example, you may assume that asking a contractor to build a room includes windows but if it is not specified in the description of the works attached to the contract, the contractor may argue it is a variation.
7 Make sure the contract provides for variations and all variations are documented and agreed before work is commenced.
Variations are commonly disputed items on building projects. Even in instances where the contract specifically sets out what constitutes a variation, parties will still have disputes about what works are considered variations and how they should be priced. Having a contract which deals with variations reduces the likelihood of disputes.
When variations do arise, you should agree on the scope and cost before the work starts. Failing to do so leave you at risk to costly disputes after the work is completed.
8 Ensure you understand the method of pricing the work.
There are many ways in which the works being carried out by a contractor can be priced. In some instances, you will take the risk for price increases and in others the contractor will. For example, if your contractor offers you a fixed price for carrying out all of the works set out in the contract, he will bear the cost of any increases in labour or materials unless the contract says otherwise. The situation would be very different if the price is based on estimates or provisional sums.
Clarify with your contractor very early in the process the basis on which you are being charged and how additional costs will be dealt with. These details should be set out in your contract.
9 If a contractor prepared or built it, make sure he takes responsibility for it.
It is not uncommon for home owners to discuss their intended vision for their home with a contractor who then prepares a proposal or estimate for the work based on these discussions. There is a danger in relying solely on a contractor’s expertise to prepare the scope of work and cost estimates for your building project. If your contractor is wrong, unless your contract provides you with some sort of recourse, you may be left to bear the cost of any defects in the work. For this reason, you should always have the contractor’s proposal or estimate reviewed by a competent third party such as a quantity surveyor or engineer.
If this is not cost effective, ask the contractor to warrant in the contract that his proposal is fit for purpose. In St Lucia, a contractor’s warranty is valid for 10 years which provides you with some protection if something goes wrong. A good contractor should always be prepared to stand by their work and if they refuse to do so, you should be wary.
10 Deal with disputes promptly and seek professional advice as soon as possible.
Even where the parties have meticulously reduced their agreement to writing, disputes can nevertheless still arise. In these instances, the secret to resolving these disputes is to seek advice early. In the long run, it will be cheaper and the problem is less likely to elevate into a full blown dispute. If it does, you would have taken all the necessary steps to protect your interests.
Your first port of call is the contract. Check the remedies which are available as well as any time limits which are applicable. Many contracts specifically set out notice periods which must be complied with in order for you to exercise your rights. If you are unsure as to how to proceed, obtaining professional advice will avoid compromising your position.
The biggest mistake many clients make is in failing to obtain advice early on for fear of incurring legal costs. However, it is much more cost effective to obtain advice at the onset of a problem as oppose to when it has escalated into a full blown dispute.
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