When Catastrophe Strikes

This week scores of homes in Andover, Lawrence and North Andover were damaged or destroyed in a bizarre series of gas explosions.  Now that the emergency has passed those whose homes were involved are left the reality that their lives have been turned upside down.

As folks start to sort through the situation, here are our thoughts from a legal perspective.

1. If you own your property, call your insurance company.  If you don't remember your insurance company's name and your paperwork is lost, destroyed, or inaccessible, call your insurance agent.  They can help you make the claim.  You can do this by phone, but you'll want to follow up and put the notification in writing.  It does not have to be anything formal, an email will do, but you should have a paper trail.  Even if your home was not harmed, but you had to be evacuated, you may want to check with your homeowner's policy.  You may have coverage for things like hotel stays, meals and the like.

2. If you rent your property and had renter's insurance, be in touch with your renter's insurance company.

3.  Make a claim with Columbia Gas.  Beginning Sunday, September 16, it will be at the Lawrence Public Library everyday from 8am-5pm.

4. People may show up at your property and get you to sign on with them.  Who are these people?  Public insurance adjusters, general contractors, demolition people and others.  DO NOT sign with these folks, at least not yet.  You may need some or all of these tradespeople to help you, but don't just sign with the first person who shows up on your lawn.  Get references from friends, family, and co-workers.  Take the time to investigate each person just as you would if you planned to do a home renovation.

5.  As mentioned above, your insurance should cover living expenses while your home is being repaired or rebuilt.  Check into your coverage as soon as you can with your insurance company so you can find a suitable place to rent.  In the meantime, keep all your receipts for reimbursement.

6.  A public insurance adjuster can be a real help if you feel that your insurance company is not adequately compensating you for your losses.  However, you may not need such a person in this case.  First, if your insurance company is going to pay you your whole policy, then you don't need to pay someone to fight for you.  You are getting the entire value of what you'd be entitled to.  Second, depending on how Columbia Gas handles the situation, your insurance company may end up being minimally involved.  If you do choose to hire one, make sure they are licensed and have good references.

7.  When you renovate a home, you must bring the home up to the current building code.  Here in Massachusetts, most homes that undergo any renovation, planned or otherwise, must have code upgrades.  Code upgrades are covered by separate provisions in your policy over and above the policy amount.  Typically, that amount is 10% of the policy amount, but you'll need to check your policy as the percentage does vary.  In other words, if you have a policy valued at $350,000, and your code upgrade is 10%, you then have $35,000 for code upgrades.

8.  Knowing and understanding how your policy works is critical.  Knowing how any contractor that you plan to hire works is also critical.  Give serious thought to having a lawyer review any contract you plan to enter, especially one with a general contractor.  You can read about considerations of hiring a contractor in an earlier blog post.  Before you sign any contract for renovation or repair work,  you MUST have a clear understanding of the scope of the work.  Are code upgrades included in the price you have been given?  Many times they are not and homeowners are caught off guard when they learn that the property must be re-wired and that the electrical cost provided in the quote by the contractor does not include this work.

9.  If your home is not completely destroyed, take photographs and videos to document your possessions.  You will need to come up with a list of items so you can be reimbursed for your lost personal property.  If, unfortunately, your home was completely destroyed.  Go through your home, room by room and visualize what was in your home and make a list.  Ask others who might have photos or who frequent your home to help you out.

10.  Don't hesitate to get emotional and mental health support.  What happened this week in the Merrimack Valley was traumatic.  Even if you were not physically injured, there may be a psychological impact on you and/or your loved ones. 

Insurance Claims and Code Upgrades

    When you have a catastrophic event at your home and you have insurance, one of your thoughts might be thank goodness I have insurance. And it is good that you have insurance.  But, the question quickly arises as to what the insurance will coverage.  What insurance covers and what it does not is a pretty confusing question and often depends on what riders you have.

     When your house has damage, say, from a fire, all the repairs have to be done to the current code.  In other words, if your home had electrical wiring from 1968 and it was damaged in the fire, then all the electrical must be brought up to current code.  Insurance policies in Massachusetts traditionally provide code upgrades up to to 10% of the policy.  If you have a $500,000 policy, then the insurance company will pay $50,000 towards code upgrades.  

     A catastrophe is a time of great stress.  You may find that insurance adjusters and/or contractors show up at the fire to try to get you to sign with them.  Do not sign with anyone on the day of the fire.  If your home is a total loss, then you probably don't need an adjuster, you are going to get the whole of the policy.  You don't need anyone to advocate for you and take 10% of your proceeds.  In any event, do not sign any documents the day of the fire.  Take a little bit of time to take a deep breath and take stock.  I promise you, adjusters will be happy to help you, if you decide you need them a few days later.

     When meeting with contractors, find out whether code upgrades are included in the contract price or not.  If they are not included in the price, then secure estimates for the cost of those upgrades before signing with the contractor.  Also, check the scope of the work carefully.  If your contract is tied to the insurance adjuster's scope of work, you may find that certain things are excluded from the scope of the work because the adjuster did not note the issue.  For example, if the insurance company deems that just one wall of your living room needs painting, then double check to see if the quote from the contractor provides for a fresh coat of paint for the whole room or just that one wall.  If that fourth wall is not included, then you will either not get it painted or you will pay extra for it.

     Sometimes, a contractor can swap out something the insurance will pay for, for an upgrade or something you want done, that is not covered by the insurance money.  If you plan on doing some "while we're at it" changes, be clear with the contractor as to the cost. If you are foregoing something called for in the insurance adjuster's report, then make sure all the changes are in writing.

     Finally, just because you receive funds from the insurance company, that does not mean the contract is entitled to them.  Similarly, just because the insurance company says something needs to be fixed that does not mean that your contractor is obligated to do that work.  Review all documents carefully.  Understand the scope of the work included and understand what unknowns might possibly arise during the work.  If you have questions or are unsure, ask questions and consider consulting with an attorney before you sign the contract.



   



   

Building Permits and Local Ordinances

We recently touched on the issue of obtaining building permits in home improvement work.  In addition to state requirements, most cities and towns have their own local ordinances that govern home construction.  You are likely aware that cities and towns dictate zoning and setback requirements, but did you also know that local ordinances can also put further conditions on the manner and means of pulling a building permit?

The City of Waltham is currently contemplating a new ordinance governing the issuance of their building permits.  The proposed ordinance would impose more onerous requirements on the applicant for building permits on construction projects that are estimated to exceed $500,000 – so the ordinance would not apply to minor home improvement projects, but could very well apply to new construction or significant additions.  Among the proposed requirements, the ordinance would disallow such permits to be issued to any firm that has “been debarred or suspended from performing construction work by any federal, state or local government agency or authority in the past three years.”  The proposed ordinance also places more stringent requirements in regards to workers compensation insurance and compliance with wage and hour laws.  

When hiring a home improvement contractor, talk with them about their experience in your city or town.  Contractors tend to focus most of their work in one or several towns, making them more experienced in dealing with the local building departments and inspectors.  The more work they do in your city or town, the more likely they will be familiar with local requirements – and the more likely it will be that the permitting process will go smoothly.

You may also want to speak with your local building department to ask about your potential contractor before hiring him or her.  The city officials might have some valuable insight about your contractor.

Another Trap for the Unwary - Building Permits

On this blog we previously discussed what to look for when hiring a home improvement contractor.  But what about after you hire that contractor?  Another trap for the unwary is during the process to obtain the building permit.  Under the Massachusetts Home Improvement Contractor statute, in order to avail yourself of some of the statutory benefits available to homeowners, the contractor must pull the building permit.  Resist any attempt by the contractor to convince you otherwise.  If a contractor insists on the homeowner pulling the permit, this may be a sign that something is not quite right with the contractor.  It may be that the contractor is not licensed, or is uninsured.  

If the homeowner, rather than the contractor, pulls the building permit the homeowner is no longer eligible to participate in the Home Improvement Arbitration Program or the guaranty fund.  Both of these programs were set up by the Commonwealth of Massachusetts specifically to assist aggrieved homeowners.  What’s more, by pulling the building permit, the homeowner takes on significant liability for the project and may take on liability for the workers performing the work.

If you’ve done your research you can reduce the risks of being caught off guard by a contractor trying to skirt the rules.

Chapter 142A -- the Home Improvement Contractor Act

     Massachusetts requires contractors who perform home renovation work not only to have a Construction Supervisor License, but also require him or her to have a Home Improvement Contractor Registration under Chapter 142A.  The Home Improvement Contractor registration is only required for contractors who do renovation work -- additions, renovations, demolitions -- changes to the existing structure.  It does not apply to new construction work.

     If you knock down your home and build a whole new one, you do not get the benefit of Chapter 142A.

    Why does this matter?  Chapter 142A provides for a guaranty fund that reimburses homeowners up to $10,000 when they succeed on a claim against their contractor.  Further, a violation of Chapter 142A is an automatic unfair or deceptive act or practice under our consumer protection statute, Chapter 93A.  If your construction work does not fall under Chapter 142A, you can still have a Chapter 93A claim, it is just not automatic.

     And why does Chapter 93A matter?  Chapter 93A is a fee shifting statute.  In other words, a plaintiff successful under Chapter 93A is entitled to an award of attorney's fees to be paid by the contractor.  If the contractor's unfair or deceptive acts or practices are knowing or willful, then the court can award double or treble damages.

     For example, a contractor who violates the building code, while doing renovation work has violated Chapter 142A and therefore the consumer protection act.  For new construction, this connection is not automatic.

     If you run into a problem while your doing construction work, be certain to look at Chapter 142A and see if it applies to your construction work.  

Hiring a home improvement contractor

     It is that time of year -- the "for sale" signs are up, and the crocuses will be up soon.  As we joke in our family, very shortly, the for sale sign comes down and the dumpster appears in the driveway and the building permit in the window.  Whether you are buying a new home and renovating or sprucing up the house you have, here are some things to consider before you let a contractor do work on your house.

• Contractors in Massachusetts should have both a home improvement contractor registration and a construction supervisor license.  Make sure your contractor has both.
• Ask friends, family, colleagues, and neighbors for referrals. Receiving a referral from someone you know is often the best way to find the best person to do the job.  But don't rely solely on the referral.  Do your homework.  
• Make sure that the contractor can do the job for you.  In other words, if the contractor mostly renovates kitchen, he may not be the right person to bump out that dormer on the second floor.
• Ask the contractor for the names of the last 3 projects he has completed or is presently working on. Also, ask to visit one or more of his current work sites.  If a contractor will only give you references make sure that the projects were completed in the last year.
• Find out what kind of insurance your contractor has.  Keep in mind that it is rare that a contractor has insurance that will pay you for a claim that the contractor was negligent.  Most policies exclude poor workmanship from coverage.
• Make sure you have a contract in writing and that the contract includes basic items like payment terms, termination, and language required by Massachusetts law.  

The Dangers of Not Doing Your Homework When Hiring a Home Improvement Contractor

Kyle Buckminster of South Grafton was recently ordered to pay $111,000 in restitution, along with $35,000 in civil penalties, and $12,600 in fees based upon four consumer complaints to the Office of Consumer Affairs and Business Regulations ("OCABR") by consumers who complained that Buckminster failed to comply with home improvement contracts and failed to finish the work contracted.  Buckminster's home improvement contractor license was revoked nearly 13 years ago, according to Attorney General Martha Coakley.  Buckminster allegedly operated under numerous business names throughout the last several years.

When hiring a home improvement contractor a homeowner should be sure to do his or her homework regarding the qualifications and reputation of the contractor, including checking that the contractor holds the necessary licenses in Massachusetts.  In Massachusetts, home improvement contractors are required to register with OCABR.  A searchable database of all registered home improvement contractors is located here and gives valuable information on whether any complaints have ever been filed against the contractor.

The fate of the homeowners damaged by Buckminster may have been different if they had done a simple search on OCABR's database.  We recommend that if you are checking out a contractor, don't just search on the registration number the contractor gives you.  Unfortunately, we are aware of instances where contractors have had judgments against them and been able to obtain a new number.  Make sure you search on both the name and number.  The database can be searched by the home improvement contractor number or the name of the contractor.  When searching on a contractor, the owner's name should also be searchable with the OCABR.  If your contractor is missing from this database or has a license listed as revoked or lapsed, then proceed with caution.  Quick, easy homework can save you a long, arduous journey later.