Meet George Shelfliner, the fictitious owner of the fictitious Shelfliner Remodeling, a company that (hasn’t really) been around for two decades. Shelfliner is working on a remodel of a fictitious common room at the fictitious Friendly Estates condo association. The (also fictitious) property manager of this small association hired Shelfliner for the job, shook his hand, looked for him on-site each day, and waited for the job to be completed in the promised one month’s time.

Unfortunately, Shelfliner and his crew were late almost every day. The one month deadline? That blew past two weeks ago. The fictitious property manager is fuming, because he wants the job done and it’s too late to get anyone else to complete it. In addition to his chronic lateness, Shelfliner has also informed the property manager that the original fee quote he gave for the job will have to be adjusted—upward, of course—because of a termite issue that he uncovered when he broke into the wall.

While most contractors make every effort to stick to schedules, show up on time, bill fairly for their services and otherwise do right by their clients, that's not always the case. In some situations, contractor problems like our fake scenario can become all too real and lead to non-payment, angry residents, stalled projects, and heated confrontation.

Roots of the Problem

But what causes problems like the ones at Friendly Estates? Shelfliner is slow to finish the job and now needs more money, putting the entire project over budget. Of course being slow is his own fault, but was it his fault that there were termites in the wall? That depends—and we’ll come back to those pesky bugs in a moment.

Kia Ricchi, author of Avoiding the Con in Construction, says that most problems start because the contractor has a poorly defined scope of work. “The contractor has to have documents that outline the work that needs to be done: blueprints and written specifications,” she says.

Debra Tantleff, vice president of development at Roseland Property Company in Short Hills, also says that every contractor, no matter how big or small the project or hiring association, needs to be managed appropriately—and the first way to do that is with a contract.

But, she says, workers in the field don’t necessarily understand what’s in the contract. “You should have a meeting to go through the scope of what they understand and, depending on the size or scope of the project, have appropriate coordination meetings and identify issues together.”

In our example, the first problem with Shelfliner actually started way before any work had even begun. It started when Shelfliner and the property manager shook hands. “The language regarding timing for completion of the job, payment installments, what exactly they are being hired to do and how the contract can be broken should all be included in the contract,” says Lisa Kochan, assistant vice president of Grubb & Ellis property management firm in Fairfield.

Once work was underway, Shelfliner and his crew were never on time, but whether or not that is an issue typically depends on the contract.

“The property manager shouldn’t necessarily monitor the contractor's hours,” says Ricchi, “but you want to make sure the job is progressing on time,” says Ricchi. “The contract should give the dates when the job will be completed, and it will have certain milestones. If the contractor is falling behind on the schedule, the property manager should have a discussion with him but this job isn’t really a 9-to-5 job. Instead it should be based on the fact that the contractor was contracted to do the work by this date, and they have to meet that.”

Unknown & Unforeseen

And what about the termite issue? In this case, Shelfliner encountered an unexpected problem that needed to be addressed. “When you have a contract, you have to have provisions for schedules and delays,” says Tantleff. “In terms of overages and missing the budget, it depends on the condition that is unforeseen, such as the termites. However, if the contractor omitted something that was on the drawings, then they have to worry about that.”

Typically, property management companies require that any changes in the budget be submitted by a change order. “If it was a large project and there was a change to materials or cost, you would need a signed change order,” says Kochan. “If a contractor arbitrarily sends you a bill, it’s a violation because the contract spelled out the detailed scope of work they were to be paid for. So if a landscape ground maintenance crew is contracted for $10,000 per month for the season, and I get a bill for $12,000 one month, I’m not legally responsible to pay for it—and I’d want to know what the landscaper did without my written authorization.”

In this case, the termites were not something that could have been anticipated, and Shelfliner was given additional money to eliminate the fictitious bugs.

As Ricchi suggests, the property manager could have had a talk with Shelfliner about his tardiness and missing deadlines, and hopefully that would remedy the problem. However, it might not—and Shelfliner might have to be fired from the job. Without a contract, it might get a little sticky, but if the property manager had an ironclad contract, the way that Shelfliner would be fired would be outlined in it as well.

“Be sure the contractors can be let go without cause,” says Kochan. “There should be a termination clause that says the contract can be cancelled within 30 days with or without cause. The contractor might have neglected to carry out work, disregarded laws ordinances, failed to provide insurance, is bankrupt, and fails to make prompt payment for materials or labor.”

You could also start with a warning. “You can prove they haven’t performed and put them on notice. Let them know they have 72 hours to perform,” says Tantleff. “And then when they don’t perform, they are in the termination area.”

Ricchi also says to consider a provision in the contract for resolving disputes in case of disagreement. Nobody wants to think that contractor problems can become this bad, but it can happen. The best defense to prevent a situation like this starts even before your contractor walks into the building.

Build a Relationship

Although Kochan has heard of contractor issues with other properties, she says that her company has had success with their contractors because they’ve spent time building relationships with them.

“We rely heavily on members at our local trade organization who we see at monthly meetings or who we’re on committees with,” she says. “We’ve built these relationships for years.”

When you need to hire a professional contractor to maintain, fix or upgrade any of your building, it’s best to check with your local trade organizations for referrals. Or ask other property managers to recommend companies they have used. Once you have a list of candidates, it’s time to check them out. How long has the company been in business? What’s their philosophy? What are their goals?

“Our contractors have gone through a detailed vetting process,” says Kochan. “Pre qualification—business references, projects they’ve done, multiple references, not just client references, we’ll speak with other people in the industry. We do our due diligence prior to choosing a company.”

Kochan also checks out the clients on the Internet. “You can find out who isn’t happy with their work,” she says.

The bottom line is that you should hire someone you trust, have a contract written up so that both sides know what’s expected of them and then, finally, make sure the contractor is completing their responsibilities. Regardless of your budget or the size of your building, contractor issues do not have to happen. But if they do, your contract will help you out of a situation every time.

So we bid farewell to George Shelfliner, who was fired from the common room remodeling job. But there was a lesson learned here—the property manager made sure to get everything in writing the next time and our fictitious contractor made sure he was on time and performed everything that was expected of him.

Lisa Iannucci is a freelance writer and author living in Poughkeepsie, New York.