What to do when in a Dispute with a New York home improvement contractor? - Action you can take
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Dispute with a New York  home improvement contractor?  - Action you can take

Dispute with a New York home improvement contractor? - Action you can take

Note: although this article is tailored to the State of New York, the generic advice applies to the whole of the US.

Contracting a construction company to carry out a home renovation is not only a major investment but also very stressful and too often turns into a nightmare dispute with the contractor. It is estimated that in the US, 30% of construction projects end in a dispute.

Typical problems include:

  • Quality of Workmanship: poor craftsmanship, substandard materials, or incomplete tasks.
  • Delays in Completion: delays in project completion beyond the agreed-upon timeline, whether due to unforeseen circumstances, inefficiencies, or lack of communication from the construction company.
  • Cost Overruns: costs exceed the initial estimate or contract.
  • Contractual Breach: such as failure to adhere to specifications, non delivery or specified goals , or missed deadlines.
  • Change Orders: unexpected change orders issued by the construction company, leading to additional costs or alterations to the original project scope.
  • Property Damage: damage to the homeowner's property during the course of the project, whether through negligence, accidents, or improper handling of equipment.
  • Safety Concerns: safety issues on the construction site, such as inadequate safety measures, violations of building codes, or failure to address hazardous conditions.
  • Communication Breakdown: misunderstandings, delays, or frustration on both sides.
  • Defective Materials or Products: use of defective materials or products by the construction company, resulting in subpar results or the need for costly replacements or repairs.
  • Liability for Subcontractor Issues: subcontractors hired by the construction company fail to perform satisfactorily or cause problems on the job site, leading to disputes over liability and responsibility.


Below are suggested actions homeowners in the New York can take when in dispute with a construction company. These actions assume that you have already talked to your contractor but this did not resolve the problem.

SUMMARY TABLE



Go public on www.disputesregister.org
Mediation or Arbitration
Small Claims Court
Civil court
Costs
  • Expect to cost about $1000
  • $15-$20 to file. Assume another $100 in other fees
  • No need for an attorney
  • Thousands of dollars in attorney fees
Time
  • A few minutes to file
  • A couple of weeks to organise, several hours of mediation
  • 2 to 3 months for a court hearing
  • Possibly longer to collect
  • 2 to 3 months for a court hearing
  • Possibly longer to collect
Pros
  • Cheap
  • Fast
  • Efficient
  • High success rate
  • Non confrontational
  • Faster than taking legal action
  • High success rate
  • Judgement is binding
  • Judgement is binding
Cons
  • May ruin relationship with contractor
  • Unlikely to get full payment.
  • Resolution in non binding
  • Slow
  • You might lose
  • Contractor might counter-sue
  • Even if you win you might suffer more time and cost to collect
  • Expensive
  • Slow
  • You might lose
  • Contractor might counter-sue
  • Even if you win you might suffer more time and cost to collect






1. Review Your Contract:

The first step in addressing a dispute is to carefully review the contract signed with the construction company. Contracts typically outline the scope of work, timelines, payment terms, and dispute resolution mechanisms. Understanding your contractual rights and obligations is crucial before taking further action. There is also likely to be a section addressing how to resolve a dispute such as a complaints procedure or arbitration.


2. Document Everything:

Gather all relevant documentation, including contracts, invoices, emails, photos, and any other communications related to the construction project. Detailed documentation can serve as crucial evidence in resolving disputes whether you are talking to the contractor directly, using an arbitrator, or arguing your case in court.


3. Re-read your contract

New York state law requires that consumers receive a written contract for home-improvement work that exceeds $500. The contract must contain:

  • the approximate start and completion date, including any contingencies that could change the completion date
  • a description of works and materials (such as make, model number or other identifying information)
  • the contract price for the work and materials
  • a notice that all advance payments must be deposited in an escrow account


4. Check your home insurance 

It is worth checking to see if your insurance company covers you for any damage caused by your contractor.


5. Send a demand letter

This is a useful first formal stepwhether you seek to resolve amicably or go to court because: 

  • The formal letter signals to the other party that you are serious and not letting the matter be ignored.
  • it may lead to a resolution without having to incur costs of other options available to you such as legal costs and court fees. 
  • If successful it will save time, and avoid deterioration of relations.

Here is a template letter: https://www.nycourts.gov/courts/nyc/civil/pdfs/UCS124_DmdLtr.pdf


6. Consider filing a Government Complaint

In New York, several government agencies handle consumer complaints against companies or individuals. For a construction related complaint, you can try the New York Attorney General  who is the chief legal officer of the state of New York. The New York attorney general won’t represent you in court but will take up a lawsuit when many New York residents complain about a similar situation.  You can get more details here:

Learn how to file a complaint with the New York Attorney General.


7.Make your dispute Public on the disputesregister.org

If you are certain that you are in the right then consider making your dispute public by registering the details on the Business Disputes Register. For a filing fee of $38, you can efficiently document your grievance online. Public scrutiny will likely result in  pressuring your contractor to seek a resolution to the dispute. Furthermore, by publicly registering your dispute you can bring attention to common issues in the industry and potentially help others facing similar challenges. It's a straightforward way to hold companies accountable for their actions and promote transparency. This action can be taken in tandem with other actions such as mediation and legal action. For more details see the website www.disputesegister.org


8. Mediation and Arbitration:

Mediation and Arbitration involves a neutral third party to facilitate discussion and negotiation between you and the construction company to reach a mutually acceptable solution. Mediation is different to Arbitration in that mediation nearly always non-binding. Check your contract to see if there is a Mediation or Arbitration clause as these are quite common in the construction industry. The American Arbitration Association (www.adr.org) is most often used but  other services such as JAMS are rising in popularity.

Construction mediators typically charge between $500 and $1,000 per hour and the mediation service typically also charges a service fee on top of the mediator’s fee

Once the mediator is appointed a mediation will be scheduled and both parties will submit position statements and supporting documents. On the day of the mediation,  the parties will be in separate rooms and the mediator will then go back and forth between the rooms discussing the claims and negotiating. The process usually takes several hours but sometimes can take several days.


9. Consider Legal Action:

If all else fails, then consider taking legal action, but be warned this is the most expensive, stressful and time consuming route to resolution and may even work against you. 

If you claim is less than $10,000 you can use a Small Claims Court in New York city ($5,000 for County Courts and $3,000 for village courts). For up to $50,000 you can start a civil case in a City Court. Above that you will need a Supreme Court.


Small Claims Court: 

The Small claims court process is simplified and expedited. Homeowners can file a claim in small claims court without needing an attorney. Using an attorney may improve your chances of winning but this is very costly: expected to pay an hourly rate between $200 and $599. These are the main steps of filing with a Small Claims Court:



1. Evaluate Your Claim:

First assess the validity of your case and check your dispute falls within the jurisdiction of the small claims court by checking online here: https://www.nycourts.gov/courts/nyc/smallclaims/welcome.shtml. Gather relevant evidence such as contracts, invoices, receipts, quotes, emails, text messages and other written correspondence.


2. Determine which New York small claims court to file your lawsuit

You will need to provide a New York address that corresponds with where the other party either lives, works, or has an office. 


3. Complete the Necessary Forms:

The main form to complete is the "Small Claims Statement of Claim and Notice of Claim" (Form SC-500). You can find this form here: https://www.nycourts.gov/courts/nyc/smallclaims/forms.shtml. Fill it out with details of your claim and the claim amount.


4. File the Claim:

File your completed forms with the small claims court clerk's office in the appropriate county. The filing fee varies by county but is between $15 and $20. Once you file your case, you will get a hearing date scheduled anywhere between 30-75 days later.


5. Serve the Defendant:

After filing your claim, you must properly serve the defendant with a copy of the claim and notice of claim. This can be challenging but must be done.  This can be achieved by personal delivery, certified mail with return receipt requested, or through a process server. There is a risk that the defendant files a counter-claim against you.


6. Attend the Court Hearing:

After the defendant is served, both parties will receive a notice of the court hearing date. Prepare for the hearing by organizing your evidence and any witnesses you intend to present. Present your case before the judge, and be prepared to answer any questions.


7. Obtain a Judgment:

After hearing both sides of the case, the judge will render a decision. If the judge rules in your favor, you will be awarded a judgment for the amount owed, plus any applicable court costs and interest.


8. Collecting Your Judgment:

If you win the case, there is still no guarantee that the defendant will pay you voluntarily. You must take steps to collect the judgment from the defendant and you may need to hire a debt collector and or pursue collection methods such as wage garnishment, bank levies, or property liens. This is likely to involve further time and expense.


9. Appeals:

Either party has the right to appeal the judgment within 30 days of the decision. This could result in additional court proceedings and costs.




Note that there may be additional fees associated with filing a small claims case beyond the initial filing fee. These can vary depending on the specific court and the steps involved in the legal process. Here are some common fees that may apply:

  • Issuing a Summons - $45. You may need to pay a fee to have the court issue a summons to the defendant. 
  • Service of Process - $30 to $100. When serving the defendant you may employ process server
  • Filing Fees for Counterclaims or Appeals: If the defendant files a counterclaim or if either party appeals the judgment, additional filing fees may apply.
  • Court Appearance Fees: Some courts may charge a fee for attending a court hearing. This fee typically covers administrative costs associated with scheduling and conducting the hearing.

See here for more details on court fees: https://www.nycourts.gov/courts/nyc/civil/fees.shtml


City Court

Civil Litigation: For larger disputes, homeowners may need to file a lawsuit in civil court. Hiring an attorney experienced in construction law is advisable in such cases. Litigation can involve complex legal procedures, including discovery, depositions, and trial proceedings.

The steps involved are similar to the Small Claims Court, but the fees are higher. As an individual, you are not obliged to use an attorney, however corporations are obliged to do so. Therefore if you are suing against a corporation you will be at a disadvantage if you do not hire an attorney.