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Tips for avoiding legal conflicts with contractors

The world of real estate can be lucrative, but is also fraught with legal complications that can drain your wallet. Even a minor dispute can be long, tedious and expensive. Sometimes, these disputes arise from issues with a project’s contractor.

When most people are hiring contractors, they do not focus on the possibility of a lawsuit. But in our litigious world, legal tussles are increasingly common. It is helpful to have a few general tips on hand for how to avoid legal conflicts with a contractor.

  • Conduct careful research

Before hiring any contractors, be sure to extensively research their qualifications, reputation and past work. Ask for several references, and check them carefully. Search online for client reviews, both positive and negative. Taking the time to research a contractor’s history can help you weed out bad seeds who might cause you trouble down the road.

  • Require contractors to have insurance

It is very smart to work with contractors who have their own insurance. Errors and omissions insurance can cover contractors’ mistakes; general liability insurance covers any property damage that they may cause on a project. If a client sues the contractor and they are not insured, you are in for a legal nightmare.

  • Make an airtight contract

Some people don’t consider contracts necessary. They believe in verbal agreements and a firm handshake. But this is a huge mistake. Contracts are crucial documents for protecting your interests if a contractor decides to take you to court. Before starting a project, have a legally airtight contract in place that stipulates the terms and conditions for you and your contractors.

  • Know your legal options

If another party is intent on suing you, you may be in for a massive headache. In a situation like this, it is crucial to be aware of your legal options. You may have to consider arbitration versus litigation; settling with a contractor out of court; and dealing with the ripple effect that a lawsuit can have on partners, clients and subcontractors. You should consider every legal option in your arsenal if a contractor decides to sue.

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