Too Late to Salvage This Project?

Andrew and Ginger McBride selected Rafael Lara Construction to build their new home in Monroe, Louisiana. Plans and specs were prepared by a local architect and incorporated into the contract. Laura signed the agreement in August 2018 and started work the following October. As in most construction projects, there were problems:

Conflict started with the floor deck. Lara installed Weyerhaeuser Gold. McBride wanted Advantech. Job specs didn’t specify either type of decking. Advantech wasn’t in stock at the local supplier. To satisfy McBride, Lara offered to double the decking at no extra charge. McBride agreed.

Lara installed 7/16” OSB roof deck. Job specs called for 5/8” foil-backed deck. True, 5/8” roof deck is better for a low-slope roof when snowpack is expected. But snow load isn’t an issue in Monroe Louisiana. And the McBride’s roof was steep pitch. The architect confirmed that 7/16” roof deck was consistent with his specs and was OK under the building code

Lara used 26-gauge galvanized aluminum roof flashing where roofing met brick siding. He used 26-gauge powder-coated aluminum trim coil for exterior flashing. Specs required 26-gauge galvanized steel flashing. Laura likes aluminum flashing because it doesn’t rust. Plus, the powder coated aluminum flashing matched the eaves and soffit.

According to McBride, stone veneer on the front façade had gaps. Several stones had fallen out. Some stones were only pressed in the mortar. Other sections had no mortar. Lara agreed the stone veneer wasn’t done. But installation met the manufacturer's specs. Lara planned to make final repairs as a “punch list” item.

Ten of the 12 windows were hard to open and close. A window sales rep told McBride the windows had not been installed properly. The window cavity was too small. But a rep for the manufacturer found only a few windows that were “closing tight”. Replacing the window sashes would solve the problem. Cost would be four or five hundred dollars. But the manufacturer offered to replace binding sash at no charge as a courtesy to McBride.

Job specs showed 3/8” wood paneling in the garage. Wood paneling in a garage won’t pass inspection. Lara recommended drywall for the garage. McBride agreed if the drywall was moisture-resistant “green rock”. Lara hung greenboard, but only on one wall. McBride didn’t like that.

Before flashing was installed, McBride spotted roof leaks in three areas: (1) Between the garage and house below the laundry room; (2) In front of the dormer over the office; and (3) Over the back side of the garage. Once flashing was installed, the toeboard sealed and a dormer window reset, Lara tested for leaks with a hose pressure nozzle. Then he cut holes in the wallboard and probed for moisture with a paper towel. Lara’s project manager used a moisture meter to check for signs of leakage. The framing was dry.

Despite not finding any moisture in the framing, Lara scheduled a sheet metal company to install extra flashing in roof valleys. Because rain was expected before the extra flashing could be installed, Lara tacked up temporary hog troughs (large metal sheets) in the roof valleys.

That was the last straw. McBride shut the job down and had his attorney send a list of grievances to Lara. Among other issues, McBride demanded replacing 7/16” roof deck with 5/8” decking. Lara responded ten days later. He denied nearly all the defects and offered to resume work. McBride took that as a hard “no”. He filed suit for breach of contract. That was 2019. The case was tried in February 2024.

The trial court awarded McBride $21,860 after offsets to Lara. Both McBride and Lara moved for a new trial. After a hearing on the motions, the trial court issued its second judgment, reducing the total award to McBride to $12,160. McBride filed an appeal. On October 22, 2025, appellate court for Louisiana’s Second Circuit confirmed the lower court decision. Lara was out $12,160.

But Notice This

Lara worked on the McBride job for 6 months. But the case of McBride v. Raphiel Lara Construction dragged through Louisiana courts for over 6 years. Louisiana does not award attorney fees in cases like this. But my guess is that attorney fees approached (or maybe even exceeded) the cost of construction. That’s not a happy prospect for any home builder.

What could Lara have done to avoid 6 years in court? Lara did what he could to satisfy McBride. But I have three clear observations:

First, the contract could have required arbitration. Courts won’t touch a dispute if the contract requires arbitration. At one point during the six years, Lara suggested mediation. That’s too late. Once work starts, any agreement to binding arbitration has to be mutual.

Second, every change in job specs, every agreement that resolves some issue, needs a written change order. On this job, grievances continued to accumulate. Any time you reach a new agreement, document it. Put a price on the change and get a signature. That draws a line. It’s a meeting of the minds. A fresh beginning.

Third, any time you anticipate problems with a client, add a termination clause to the contract. An owner who shuts down the job owes you for all work done to date of termination plus a proportionate share of your overhead and profit. Because work was never completed, Lara didn’t collect any share of his overhead and profit.

When you sense acrimony might derail a job, your best protection is a good contract. No matter the type of work or the job site, there’s no better contract drafting tool than Construction Contract Writer. The trial version is free.

Changes for California Contractors in 2026

As of January 1, 2026, California home improvement contracts need a new set of disclosures. California Business and Professions Code Section 7159(c)(7) now requires disclosure of subcontracted work. Here’s the new code: 

(c) In addition to the specific requirements listed under this section, every home improvement contract and any person subject to licensure under this chapter or their agent or salesperson shall comply with all of the following: 
(7)(A) The contract shall contain a statement regarding whether or not a subcontractor will be used on the project, including a portion to be checked in response, as follows:
[__] Yes
[__] No
   (B) If checked “Yes,” indicating that a subcontractor will be used on the project, the contract shall contain a disclaimer that states the following:
“One or more subcontractors will be used on this project, and the contractor is aware that a list of subcontractors is required to be provided, upon request, along with the names, contact information, license number, and classification of those subcontractors.”
   (C) If there is a change order during the project, the same disclaimer set forth in subparagraph (B) shall be on each change order.

You probably see a problem here. An owner who knows the names and numbers of your subs may be tempted to strike separate deals with each. That could cut you out of the job. Nothing in the new California law prevents that. But nothing in the law requires disclosure of names in the contract. The contract has to disclose only your intent to use subs, not the names of subs. Change orders for home improvement projects require the same disclosure.

California is the second state to require disclosure in the contract that work will be done by subs. Texas was the first. Texas Property Code Section 53.256 requires disclosure in the contract of names of subs and suppliers the prime intends to use. California doesn’t go that far. My interpretation of the new California law: Names and numbers aren’t required until a sub starts work – and then only after a request from the owner. By that time any sub’s name is no secret. It’s probably on the side of the truck parked curbside.

More Changes to B&P Section 7159
California home improvement contracts now must disclose:

• The name, address, and email address for delivery of any notice of cancellation, and
• The telephone number of a representative who can help the buyer locate and fill out the notice of cancellation.

An owner who doesn’t get the notice of cancellation can now file a complaint with the Contractors State License Board.

Change to Retainage
California Public Contract Code Section 7201 limits retainage to 5% on most public works projects. But until last week there was no limit to retainage on commercial and residential jobs. As of January 1, 2026 California Civil Code Section 8811 limits retainage to 5% on commercial projects and larger private residential jobs. The limit applies to both prime contracts and subcontracts, with some exceptions. Attorney fees can be awarded for breach of this 5% limit.

This Isn’t Simple
Staying legal isn’t easy. California home improvement contracts require at least 36 separate notices and disclosures. The new law for 2026 adds even more. The California's state license board could help California contractors by flagging these new 2026 code sections. That hasn’t happened yet – at least that I could find on the CSLB site. If you’re serious about drafting legal contracts for California home improvement work, there’s one clear choice: Construction Contract Writer. It’s up to date. And the trial version is free.

• Changes for California Contractors in 2026

  As of January 1, 2026, California home improvement contracts need a new set of disclosures. California Business and Professions Code Section 7159(c)(7) now requires disclosure of subcontracted work. Here’s the new code: 

  (c) In addition to the specific requirements listed under this section, every home improvement contract and any person subject to licensure under this chapter or their agent or salesperson shall comply with all of the following:

  (7)(A) The contract shall contain a statement regarding whether or not a subcontractor will be used on the project, including a portion to be checked in response, as follows:

  [__] Yes

  [__] No

     (B) If checked “Yes,” indicating that a subcontractor will be used on the project, the contract shall contain a disclaimer that states the following:

  “One or more subcontractors will be used on this project, and the contractor is aware that a list of subcontractors is required to be provided, upon request, along with the names, contact information, license number, and classification of those subcontractors.”

     (C) If there is a change order during the project, the same disclaimer set forth in subparagraph (B) shall be on each change order.

  You probably see a problem here. An owner who knows the names and numbers of your subs may be tempted to strike separate deals with each. That could cut you out of the job. Nothing in the new California law prevents that. But nothing in the law requires disclosure of names in the contract. The contract has to disclose only your intent to use subs, not the names of subs. Change orders for home improvement projects require the same disclosure.

  California is the second state to require disclosure in the contract that work will be done by subs. Texas was the first. Texas Property Code Section 53.256 requires disclosure in the contract of names of subs and suppliers the prime intends to use. California doesn’t go that far. My interpretation of the new California law: names and numbers aren’t required until a sub starts work – and then only after a request from the owner. By that time any sub’s name is no secret. It’s probably on the side of the truck parked curbside.

  More Changes to Section 7159

  California home improvement contracts now must disclose:

  The name, address, and email address for delivery of any notice of cancellation, and

  The telephone number of a representative who can help the buyer locate and fill out the notice of cancellation.

  An owner who doesn’t get the notice of cancellation can now file a complaint with the Contractors State License Board.

  Change to Retainage

  California Public Contract Code Section 7201 limits retainage to 5% on most public works projects. But until last week there was no limit to retainage on commercial and residential jobs. As of January 1, 2026 California Civil Code Section 8811 limits retainage to 5% on commercial projects and larger private residential jobs. The limit applies to both prime contracts and subcontracts, with some exceptions. Attorney fees can be awarded for breach of this 5% limit.

  This Isn’t Simple

  Staying legal isn’t easy. California home improvement contracts require at least 36 separate notices and disclosures. The new law for 2026 adds even more. The California state license board could help California contractors by flagging these new 2026 code sections. That hasn’t happened – at least that I could find on the CSLB site. If you’re serious about drafting legal contracts for California home improvement work, there’s one clear choice: Construction Contract Writer. It’s up to date. And the trial version is free.

   

  
  
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Unsigned Change Orders

Nearly every significant construction project includes changes. Some required by the owner. Others demanded by the building inspector or due to site conditions. No matter. Every change in the job merits a change order – a new agreement. A written change order signed by both owner and contractor will make dispute unlikely. With nothing in writing or nothing signed, any change in the job, price or schedule has a chance to end up in court.

Some states and most construction contracts require written and signed change orders. That’s strict construction. Don’t try to collect on an oral agreement for extra work in strict construction states: Arizona, California, Massachusetts, Nevada, New York, Texas. This is especially true when trying to foreclose a mechanics lien. A lien claim on an oral change order could be treated as an exaggeration and qualify for an award of damages and attorney fees. 

Courts in other states are more flexible. Even if the original agreement required written change orders, you might collect if:

• Both owner and contractor ignore a clause requiring written change orders. (Virginia)
• A project manager has apparent authority to make oral changes. (federal court applying Maryland law)
• Both owner and contractor assume there was a valid change order. (Pennsylvania)

Best Practice

You’re going to have changes. Accept that as fact. Welcome an owner who asks, “Could you make a little change here?” Your answer is always, “Of course I can make that change. I’ll draft up a little agreement we both can sign.”

Changes can be either additive or deductive. Every written change order should identify the job, the work to be done, the added or deducted cost, the new contract price (including all approved change orders to date) and any change in the schedule. The change order should be signed by both the contractor and the owner.

If you work in a state that’s more flexible on oral changes:

• Be sure your contract requires written change orders.
• Accept that every oral directive entails high-risk.
• Caution tradespeople and subs to avoid taking instructions from an owner.
• Understand that any dispute about changes will be expensive.
• Recovery on an oral agreement requires credibility and documentation

If you start making changes on an oral agreement, keep detailed records. Who said what and when? When did that work start? Who did the extra work? When was work completed? Break out in your invoice the cost of changes: labor, material, equipment, overhead and profit. Identify each change with a change number and date of the change.

Changes should be done at your price. There won’t be any competitive bidding. Remember that overhead will nearly always be higher on changes. It takes time to negotiate a change and write up the change order. And full payment for any change should be due when the change is complete, not when the entire job is done.

There’s plenty more to know about change orders. Construction Contract Writer has all the details, including change order forms that resolve potential disputes. The trial version is free.

When an Owner Wants an Oral Contract

Maurine McCarthy selected Chris Taussi of RHI Home Improvement to do work on a home she bought in Pequannock, New Jersey. Maurine wanted to add a bedroom and bathroom, renovate the kitchen and make other improvements. New Jersey’s Consumer Fraud Act (CFA) requires a written contract for home improvement projects. The contract has to cover scope of work, price, start and end dates and any right to cancel. That’s all well and good. But Maurine didn’t want to sign the contract RHI offered. Instead, she insisted on an oral agreement and nothing more. Chris Taussi started work based on the oral understanding he had with Maurine.

As you might guess, it didn’t go well. Maurine and Chris got into a dispute over scope and quality of work and payment terms. Maurine paid Chris for most of the job but filed suit to resolve items not completed to her satisfaction. In her complaint, Maurine alleged violation of New Jersey’s Consumer Fraud Act  – no written contract. The penalty for a CFA violation can include a refund of all money collected or treble damages plus legal fees.

With no written contract, RHI had a problem. They couldn’t refute Maurine’s claims or prove completion of the job. It was a case of “he said” and “she said”.

How Would You Decide This Case?

The trial court wouldn’t buy Maurine’s claim of a CFA violation. She had insisted on an oral agreement. RHI offered a written contract. On that basis, the trial court dismissed Maurine’s complaint. Maurine appealed.

The appellate court affirmed dismissal of the case. Why? Because there was no way to identify Maurine’s loss. Scope and quality of the work were uncertain. There were no start, finish or payment dates. There was no agreement on making changes or resolving disputes. Also missing: any right to cancel the job and duration of the warranty.

Why couldn’t Maurine win this case under the doctrine of “contra proferentem” as described in this space last month? True, contracts are interpreted against the drafting party. But in this case, Andrews21 LLC vs. RHI Home Improvement, the court couldn’t interpret the contract for or against anyone. Two reasons:

1.       There was no written contract. There was nothing to interpret.

2.       RHI had offered a written agreement. Maurine opted out. RHI shouldn’t be penalized for Maurine’s choice.

What should you do if an owner insists on an oral agreement? You could simply walk away. Working under an oral agreement always puts the contractor at risk. Loss of reputation, time lost and money wasted in litigation are just the start. But there’s a better way.

A Better Choice

Instead, write up a good contract. Use Construction Contract Writer to be sure you’ve covered all the important points. Send the draft to your client. Retain a copy in your file. The written agreement is your understanding of job requirements. If the owner gives an OK to begin work and starts making payments, you’ve got a written agreement, even if never signed by the owner.

Don't Risk Contra Proferentem

A spring 2024 storm damaged the roof on Arthur Robertson’s 1,800 SF Jacksonville home. Arthur agreed to have Florida Roof Specialists (FRS) make repairs. Arthur signed a FRS contract with no price. Salesman for FRS said Arthur didn’t have to worry about the price. FRS would negotiate a price with the insurance carrier.

When FRS finished work, Arthur’s insurance company wrote a check for $23,000. Arthur paid FRS. So far, so good. But that wasn’t the end of the story.

After completion, Arthur got a “final invoice” from FRS. FRS claimed Arthur owed another $23,000. The job cost was now $46,000. When Arthur refused to pay, FRS filed suit to enforce a lien on Arthur’s home. That put the FRS contract front and center.

Turns out, the FRS contract was a printed form with blanks to be filled in by hand. Only the owner’s name, job address and the contract date changed from job to job. Did FRS have an enforceable contract?

To be enforceable, a contract has to cover:

Scope of work: The contract required FRS to restore the property to pre-loss condition. But there was no list of materials and no quantities. There was no scale drawing. And think about it. If the roof was leaking pre-loss and was still leaking after FRS finished work, wasn’t that the “pre-loss condition”?

Price: The amount due was left to the contractor’s discretion or the insurer’s later adjustment. There was no dollar amount or cost per unit.

Labor and material specs: FRS didn’t identify the type, brand or quality of roofing materials. The court had no way to evaluate whether FRS had performed what the owner expected.

Payment date: The contract made payment due “upon insurance payout”.  But was that after an initial advance? Or was it after payment in full? What if the insurance company refused to pay in full?

Changes: Nearly every job has changes or extra charges. The FRS contract said nothing about change orders or how changes would be approved.

Start and finish date: The contract required that work begin “as soon as possible”. What does that mean? The court found that term indefinite and unenforceable.

With terms this vague, either the owner’s interpretation or the contractor’s interpretation could be right. What’s a court to do?

The Court's Decision

When a contract is vague on some issue, courts are required to construe meaning against the party who drafted the agreement. That’s known by the Latin name Contra Proferentem. As the drafter, FRS had to show clear and mutually agreed meaning for contract terms. If a contract term can be interpreted several ways, the term will, as a matter of law, be interpreted against the party that drafted the agreement.

Without a clear definition of the (i) scope of work, (ii) price, (iii) job specs, (iv) payment date, (v) change order procedures and (vi) timeline, the FRS contract did not meet Florida minimums for a residential contract. The contractor had no right to enforce the agreement or claim a construction lien.

All these deficiencies could have been avoided by clear, custom contract drafting. That’s my recommendation. Use Construction Contract Writer to draft an enforceable agreement for any type of construction project and for any state. The trial version is free.

Protect Your Plans

Your bid for every job is based on the plans. That’s clear. What’s not clear unless made explicit in the contract: Who owns those plans? If you or your designer drew the plans, those should be your plans. Leave no doubt. A recent case highlights the issue.

Jason and Kacie Highsmith needed new cabinets and closets in their North Carolina home. The Highsmiths liked a proposal prepared by Design Gaps, Inc. and signed an agreement to have Design Gaps do the work. The contract had no completion date. But eight months later the job still wasn’t done. After multiple delays, the Highsmiths gave up on Design Gaps and opened negotiations with Bryan Reiss of Distinctive Design. Before signing a second agreement for their cabinet job, the Highsmiths shared with Distinctive Design the plan prepared by their first contractor, Design Gaps.

Disregard the ethical question -- sharing a prior contractor’s plan with a subsequent contractor. What’s the legal obligation? What prevents an owner from sharing one contractor’s ideas (plan) with some other contractor? Essentially, who owns the plans? Design Gaps claimed copyright in their plan -- though nothing had been filed with the Registrar of Copyrights. Was passing the plan to Distinctive Design a violation of Design Gaps copyright?

The case went into arbitration, as required by contract. The arbitrator’s decision did no favor for the contractor:

[Design Gaps] failed to enter into evidence a valid copyright registration; however, even if they had, [Distinctive Design] certainly established fair use of the design work, especially considering that [the contractor] did not profit from the design. The sharing of a PDF of the design did not materially impair the marketability of the design. [Design Gaps] failed to prove that [Distinctive Design] or anyone else converted its designs for this project. Bryan Reiss of Distinctive Design confirmed that he did not use Design Gaps' designs for the cabinets. I am convinced by Reiss's testimony and the exhibits provided that any similarity in the designs is due to the limitations of the space and the client's desired layout. Therefore, there has been no violation of any copyright which [Design Gaps] may have had.

The arbitrator denied relief on Design Gaps' counterclaims and declared the Highsmiths the prevailing party, awarding them $152,884 in damages plus $17,411 in arbitration costs and $126,113 in attorney's fees.

Any Time You Draw the Plans

Adding your name and a copyright symbol to your plan isn’t enough. Neither is registering your plan with the Copyright Office. Leave no doubt about who owns the plans. Make it clear in the contract: You own the plans. My recommendation: Use this option in Construction Contract Writer:

Plans, Drawings, Specifications and copies prepared for use in construction under this agreement are the property of Contractor. Contractor retains all common Law and statutory rights to these Plans, Drawings and Specifications. Owner agrees that these documents will not be used on any other project and, with the exception of one record set to be retained by Owner, will be returned to Contractor on request.

No Valid Contract in New York

George Azarias wanted some electrical work done before moving into his Manhattan apartment. Work included upgrades to electrical wiring, a sound system and Internet connection. Azarias solicited a proposal from Orpheous Nelson of Orpheous Electrical, Inc. According to Azarias, the proposal from Nelson was a little vague. It didn’t specify either the work to be done or the total price. Still, Nelson got an OK to start work. Unfortunately, the job didn’t go as planned.

Nelson’s work was slow and “lousy” according to Azarias. After paying over $20,000, Azarias fired Nelson and hired another electrical contractor. Then Azarias filed suit against Nelson, asking damages of $30,000 for breach of contract.

Counsel for Nelson defended, insisting there was no valid contract. Hence there could be no breach of contract. Neither Azarias nor Nelson signed anything. Nelson sent his proposal by email. It was never signed. New York General Business Law § 771 makes it clear. Home improvement contracts must be in writing and must be signed by both the contractor and the owner.

Section 771 is cited most often by owners as defense against a contractor’s claim for payment. A New York contractor who ignores § 771 isn’t going to collect the full contract price. Instead, the law implies an obligation to pay only some reasonable amount to prevent unjust enrichment. That’s called quasi-contract. The contractor can claim quantum meruit – the reasonable value of services, usually excluding any profit.

But can an owner claim contract damages if there is no valid written agreement? Put another way, can a contractor use § 771 as defense against a contract claim by the owner?

A July 1, 2025 decision by the Supreme Court of the State of New York, New York County, answers that question:

Of course, this statute [§ 771] typically arises in situations . . .where a contractor is suing the homeowner for failure to pay. But the Court sees no reason to depart from this caselaw and find that there is no valid breach of contract claim as there was no contract signed by the parties as required under the General Business Law. Plaintiff [Azarias] can pursue his claim under a quasi-contract claim . . . barring a contractor from recovering under a breach of contract theory for failure to obtain a signed written agreement but permitting the contractor to pursue a quantum meruit claim

Notice that § 771 is heads I win and tails you lose for New York property owners. With a lame contract, New York contractors are at a disadvantage, whether plaintiff or defendant. I agree with the court’s decision. Here’s why. Section 771 is consumer protection law. It’s purpose is to protect owners from abuse by sophisticated vendors. Allowing contractors to use the law against owners would be contrary to what lawmakers in Albany intended.

If you do home improvement work in New York, the case of Azarias v. Nelson is just one more reason to work under good contracts. There is no better contract-writing tool than Construction Contract Writer. The trial version is free.