Once you have chosen a Hawaii licensed contractor to perform construction or renovation work on your residence, you should receive a notice of disclosure from your contractor.
Under the Hawaii Revised Statutes Section 444-25.5(a) and Hawaii Administrative Rules Section 16-77-79, a Hawaii licensed contractor must provide you with all of the following before he/she can enter into a binding contract with you and before he/she can apply for a building permit:
- All information regarding the contract and its performance, the absence of which might mislead the homeowner to the homeowner’s detriment, including the lien rights of labor, suppliers and subcontractors;
- The scope of work to be performed;
- The approximate percentage of the work to be subcontracted;
- The contractor’s license number and classification;
- An estimate of the cost of work to be performed;
- Disclosure of all warranties, if any; and
- Whether or not the contractor is bonded and whether the owner has a right to demand bonding on the work to be performed; and if the contractor is not bonded, the extent of the contractor’s financial security available to assure the homeowner that the contractor will perform under the contract.
Once you have been given such disclosure, the next step would be to enter into a written contract that specifies exactly what is being provided by the Hawaii contractor, including the plans, specifications and detailed description of the scope of the Hawaii contractor’s work.
What Contractors Are Required to Put in the Contract
Pursuant to Hawaii Revised Statutes Section 444-25.5(b) and Hawaii Administrative Rules Section 16-77-80, all Hawaii contractors are required to include in their binding contracts prior to execution and performance of any home construction or improvement:
- The contractor’s license number and classification;
- The exact dollar amount due from the homeowner under the contract;
- The date work will begin and the number of days for completion;
- The work to be performed and the materials to be used;
- The approximate percentage of work to be subcontracted and the names and license numbers of all subcontractors, if any;
- A clear statement of the risk of loss of any payments made to a sales representative;
- A provision explaining the lien rights of all parties performing under the contract including the contractor, any subcontractor, or any materialman supplying commodities or labor on the project;
- Terms of any warranty offered; and
- Signatures of the homeowner and the contractor.
What You Should Ask to Be Included in Your Contract
Needless to say there are a lot of other provisions that should be added to the Hawaii construction contract beyond the minimum disclosures and provisions. Just to name a few, you may want to request that the contract include the following provisions:
- The name and address of any salesperson who solicited or negotiated the contract, in addition to the name and address of the contractor;
- A payment schedule that parallels the amount of work completed, and provides that 5 to 10 percent be withheld until all work is completed;
- A description of what constitutes substantial completion of work; and
- A provision requiring the contractor to obtain lien releases from all subcontractors and material suppliers; and
- A provision having your architect as the person to decide any disputes between the Hawaii contractor and you.
If you’re confused about the provisions of your contract or have other questions about the Hawaii’s Contractors statute and administrative rules, or how you can pump up your contract, contact us and we can help you review your proposed contract so you understand your risks.
Please keep in mind that you are probably spending a lot of money on your project and you need to best protect yourself, especially during these hard economic times. Too often people come to see us only after the monies are almost all spent and their options are limited.
Contact us today for a consultation to get your questions answered.
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