Home Renovation Disputes. Steps To Safeguard Your Finance Now.

By December 10, 2018Finance

Receiving the prized possession of brand new keys to a home, scouting around to appoint the most impeccable contractor or interior designer and securing the funds to start building your home sounds picture-perfect. Yet before you sign the renovation contract, take the time to study it. Better yet, secure your own contract with IRB Law LLP. Homeowners across all forms of brand new BTOs or resale flats, condominiums and landed homes of today have been caught by discrepancies between the promised and final renovation works, with little recourse but to accept delivery below par due to an equivocal contract, some of which as according to reports to the Consumer Association of Singapore (CASE), are not contracts but quotations they signed. Based on complaints received, the renovation contractor industry has been in CASE’s top ten ranking list of industries with the highest number of complaints for the past decade. As of 2016, the renovation contractor industry was ranked fourth, with a total of 1,269 complaints lodged with CASE. The top nature of complaint for the industry is failure to honour, meaning that contractual obligations and promises were not fulfilled, followed by substandard services. From January to July 2017, 719 complaints were reported.

 

 

 

(Table: CASE)

 

 

The common renovation pitfalls many homeowners run into starts with paying a large deposit, or paying in full upfront to the renovation contractor. Despite contractual obligations, majority run into disputes due to multiple delays or unsatisfactory renovation works. Worst yet are homeowners who encounter renovation contractors that cease operations and become uncontactable after collecting payment.

 

To protect yourself against avoidable contract disputes, spell out the detailed clauses in your renovation contract from the beginning – explicitly in black and white, down to the fine print. Never rely on a verbal agreement – commit all spoken promises into a written contract. IRB Law LLP sheds light on an explanatory on basic considerations behind selecting the right contractor and an array of dispute resolution options when involved in a home renovation dispute.

 

 

 

 

 

Prior To Commencement of Renovation Works; Do A 3-Step Research

 

  1. Apart from browsing through the ideal interior design of a new home, it is crucial that homeowners choose an accredited contractor. Research on accreditation schemes that ensure the high standards and conduct of their accredited member contractors. To better protect consumers in this industry, Case started a joint accreditation scheme with RCMA last year, which protects consumers’ deposits against business closure through a deposit performance bond. There are currently 30 registered business under the CaseTrust-RCMA joint accreditation scheme. The list of accredited businesses can be found at www.casetrust.org.sg. 

 

  1. Researching on extras such as the contractor’s track record or requesting to see their works in progress is an added advantage. Besides considering cost as a factor, keep other factors such as quality, time taken and defect liability in mind. For Housing & Development Board (HDB) residents, engage a HDB approved contractor with evidence of such.

 

  1. Next, ensure you sign a contract with your renovation contractor while carefully reading the terms and understanding your rights and obligations under the contract. It is advisable to request for and keep a copy of the contract with you. Avoid signing the contractor’s proprietary contract as it may be drafted unfairly in favour of the contractor. CASE discourages the practice of renovation contractors asking consumers to pay a substantial advance deposit before the work begins and encourages consumers to use the CASE model agreement that includes fair guidelines for consumers to negotiate terms with contractors. Samples of a payment schedule with key project milestones and deliverables is provided as well. It is downloadable from their website(https://www.case.org.sg/pdf/model_renovation.pdf). 

 

A Legal Perspective; 7 Must-Haves In Your Renovation Contract

 

The contract should state detailed terms binding both homeowner and contractor. For certain types of works, it may require approvals or permits from the HDB or the Building & Construction Authority (BCA). The renovation contract governs the obligations of the contractor. Prior to the commencement of the renovation works, your contractor may have made oral promises beyond the scope of the contract. Keep in mind that oral promises are rarely enforceable. Thus, request that the contractor commit the oral promise to writing.In any case, contractors or their representatives cannot make false claims, oral or written, to mislead or misrepresent their client. If they do so, it may entitle the client to a cause of action. The following are important contractual terms. 

 

  1. Payment – payment should be made progressively; do not make full payment upfront;
  2. Commencement and completion dates and schedules;
  3. Liquidated damages – if the contractor breaches the contract and the homeowner suffers losses, a liquidated damages clause accelerates the claim process without requiring the homeowner to prove and value his losses;
  4. Variations – without a variation clause, the homeowner may not have the power to require the contractor to alter the works, and the contractor may charge a higher price or delay completion;
  5. Warranties  – as to workmanship and the quality of materials;
  6. Rectification of defects – obliging the contractor to rectify or defects before handover;
  7. Dispute resolution – a mediation clause can oblige both parties to refer the matter to CASE or other neutral parties in the event of dispute.

 

During Course Of Renovation Works; 3 Ways To Supervise Proper Work By The Renovation Contractor

 

  1. Make progress payments only and after satisfactory completion of the job agreed upon
  2. Monitor renovation works vigilantly by having a camera ready to have snapshots of unsatisfactory works or having a witness to as company during inspections. This will avoid mishaps or misgivings beyond the defect liability period when proof will be difficult.  
  3. If progress of work is substandard, raise concerns early and recognize when to give up on the current contractor before engaging a new one in place. 

 

FAQ By Homeowners : What Happens If I Want To Replace My Current Renovation Contractor Halfway Through The Works? 

 

Read the contract to determine if the contractor has breached the relevant contractual terms. To save time and costs, any discontentment should first be communicated to the contractor or the liable party, extending the party a chance to rectify the defect and reach an amicable resolution. Come to a mutual compromise as to termination and payment. Subsequently, you should inform the new contractor of your requirements, apply for a new HDB permit if applicable, and change your house keys if necessary. Take note that the contractor may not be liable if the defective materials are supplied by third party suppliers sourced by you. If the defective works are subcontracted, the main contract between you and the contractor will likely have laid responsibility upon the main contractor for the acts of the subcontractor.

 

Home Renovation Dispute Resolutions; 4 Solutions For Homeowners

 

  1. Lodge A Complaint With Consumers Association of Singapore (CASE)

Lodge a complaint with CASE if your matter is a consumer-to-business dispute. CASE can either correspond with the contractor on your behalf, or draft a letter to the contractor addressing your concerns. To enlist the help of CASE, click here.

 

  1. Mediation at CASE or a neutral board

CASE provides an affordable mediation scheme for the benefit of consumers. If mediation is successful, a binding settlement agreement can be reached and signed by both parties. If the contractor reneges and breaches the settlement terms, you will have a cause of action against the contractor. Be wary of acceding to mediation by certain trade associations. If these trade associations are dependent on their members for funding, their mediation panels have to be examined carefully to determine whether they are fair and unbiased.

 

  1. Lodge A Claim at the Small Claims Tribunal

You can lodge a claim at the Small Claims Tribunal (SCT) if the cause of action (the date when the renovation contract was breached or the date when renovation was to be completed but was delayed or completed in a defective manner, to name a few examples) was not more than a year ago, and that you are claiming for a sum up to S$10,000, or up to S$20,000 if the contractor consents to a SCT hearing. If your claim exceeds the prescribed limit, you may want to consider lowering your claim amount. If you do so, you cannot claim for the remainder sum thereafter. To determine the size of your claim, you can check with another contractor to find out how much it would cost to rectify the defect.

 

  1. Obtaining legal advice or commencing litigation

The relevant renovation contract may contain mandatory mediation or arbitration clauses. If so, civil action may not be available until mediation or arbitration have been undertaken, depending on the precise terms. In any case, if you have exhausted all other options, and the quantum or type of your claim falls outside of the SCT’s jurisdiction, you should consult a lawyer to obtain legal advice, and determine whether litigation is an appropriate solution to your matter.