RE: Real Estate Podcast

Clint C. Galliano, REALTOR® (00:08.546)
Thinking about a home renovation? Don't let a good old boy handshake turn into a legal nightmare. From the 45-day ghosting rule to the new 2025 roofing laws, we're covering how to keep your project on track and on budget. Let's talk about it!

Clint C. Galliano, REALTOR® (00:27.896)
How was that? That was recording.

Ben Harang (00:28.067)
recorded that one it was practice again.

think that works.

Clint C. Galliano, REALTOR® (00:33.952)
Okay. Cool.

All right, and then we'll do a user approach.

And trigger warning, I'm gonna tell a story.

Ben Harang (00:49.612)
All right, all right. Let's keep it under 30 minutes now.

Clint C. Galliano, REALTOR® (00:56.218)
Yeah, yeah, it's going to be quick. I'm just going to more refer to it rather than going into the story. But just do a normal thing. You do the podcast intro and then ask me what we're talking about.

Ben Harang (01:02.829)
Yeah.

Ben Harang (01:11.587)
Let's get back, I'm gonna get us off the screen so I'm not looking at us.

Alright, you ready to go?

Clint C. Galliano, REALTOR® (01:21.24)
Hang on.

Clint C. Galliano, REALTOR® (01:32.396)
Alright, let's rock and roll.

Ben Harang (01:35.061)
I I have all my bells and whistles turned off. All right, here we go.

Clint C. Galliano, REALTOR® (01:39.246)
Nope, hang on, before we get started, me put my focus on.

Clint C. Galliano, REALTOR® (01:47.778)
All right, I'm focused now.

Ben Harang (01:49.601)
You focus now.

Alright.

Ben Harang (01:56.525)
Hello everybody and welcome to another episode of the RE Real Estate Podcast. My name is Ben Harang With me today is my co-host, Clint Galliano. How you doing today, Clint?

Clint C. Galliano, REALTOR® (02:09.71)
You're doing wonderful, Ben. How you doing?

Ben Harang (02:12.475)
I'm doing terrific. We're off of Mardi Gras. We're recording this on Ash Wednesday today. Feels like summertime. They promise we have some more winter coming, but we'll see. So, life is good.

Clint C. Galliano, REALTOR® (02:27.19)
Hey, didn't life is good. Didn't you just get notified that you had no competition for your political seat?

Ben Harang (02:38.747)
I am officially the Thibodaux city councilman from district B elect. It becomes official on Monday after a period expires where people can challenge candidacy qualifications. Assuming nobody challenges it and if they do and I win, whatever, but it is scheduled to be effective on Monday. And then I'll take.

take office sometime between then and the first meeting in March I guess which is March the third. So sometime in there it'll be official. Thank you. It was a it was was pleasantly surprised that that nobody else qualified so that's a that's a good thing we can get started a little sooner.

Clint C. Galliano, REALTOR® (03:12.194)
Congratulations.

Clint C. Galliano, REALTOR® (03:26.798)
There you go

Ben Harang (03:29.185)
Alright, see if I can get rid of the uhs now. What are we talking about today, Clint?

Clint C. Galliano, REALTOR® (03:37.134)
All right, today we're gonna talk about some do's and don'ts when hiring a contractor. Home ownership involves maintaining the structure and systems in your home. So we're gonna touch on some various information about handymen and licensing and insurance and.

contracts and all that fun stuff.

Ben Harang (04:09.016)
Sounds deep.

Clint C. Galliano, REALTOR® (04:11.95)
It's a fairly deep topic. It might even tell a story.

Ben Harang (04:14.637)
But it's important. Yeah, you gave me a trigger warning. But especially in times of duress after a storm or after something happens, people don't think about these things. They want to get things done. And sometimes there are unscrupulous people out there to take advantage of the situation. rather talk about it while the sun's up so if something does happen, it's

There might be a seed planted where you think about something before you commit to anything.

So what's the first one we're talk?

Clint C. Galliano, REALTOR® (04:54.67)
All right, so kind of in thinking about how to cover this, figure first, we kind of cover the size of the job, so how it breaks down. Under $7,500 is considered a minor repair. Some information say no state license is needed, and we all know that there are a lot of unlicensed handymen that do work.

But from my understanding, there is a state handyman license. But they also, at local level, they need a local occupational license and insurance to do this type of work. The next level, or tier two, as it may be labeled, is a home improvement license And so that covers

Ben Harang (05:46.883)
you

Clint C. Galliano, REALTOR® (05:54.144)
jobs between from a total cost of $7,500 to $75,000. So that requires registering as a home improvement contractor with the Louisiana State Licensing Board. And something that came in new at the end of last year and has gone into effect is that any roofing contractors

doing a job of over $7,500, they need a specific license and permit. and we've mentioned this before, but this is to stop the the carpet baggers, the...

Clint C. Galliano, REALTOR® (06:45.186)
destruction eaters or whatever you want to call them. The people that run to Louisiana after a hurricane and provide quote unquote roofing jobs or come to do roofing jobs and then disappear, this is to stop that from happening. From my understanding, the new law states that they have to be licensed and have an office in the state.

and meet the qualifications for that license. And then the third tier is the licensed residential contractor. And that allows them to do jobs over $75,000. So this would be home builders, major renovations, additions, things like that. These contractors have passed trade exams and business and law exams.

So that's kind of the breakdown on, I guess, the size of the job and what the requirements are for the providers for those jobs. Why don't you go ahead.

Ben Harang (07:55.136)
And just one thing about that, just because these are the limitations or the limits of where a license is needed does not mean if you have a $5,000 home repair that you cannot choose to hire a licensed residential contractor.

Clint C. Galliano, REALTOR® (08:13.87)
That's a very good point.

Ben Harang (08:15.459)
So you just can't hire an unlicensed person if it's over $75,000, but it works the other way. You can get a licensed residential contractor to set a door in your house for $300. So just because they donated doesn't mean you don't require them to have it. And do yourself a favor. We didn't talk about it yet. We will, so I'm going to leave it. I'm going let that one go for the time being.

So yeah, yeah, it's coming if I remember to talk about it. The next one is the trade skills and specialty licenses. Just because somebody is a contractor doesn't mean they can do everything. Electricians, plumbers, and mechanical HVAC, AC and heat contractors need specialty licenses. Some of them are general contractors, some are not.

Clint C. Galliano, REALTOR® (08:46.545)
That's called a teaser.

Ben Harang (09:16.109)
So just be aware of that. And they need to be licensed if their job exceeds $10,000. And then there's still a little trap that you can get caught in when you hire a general contractor. You want to ask him how he vets his subcontractors, because he could be hiring people that may or may not be licensed.

may or may not need to be licensed, may or may not be insured. So just ask the general contractor, because most general contractors I know don't do the actual work. They coordinate it, manage it, and oversee it. So just ask him how he finds his subs, and let him tell you what he does, and then you can make an informed decision on how you want to proceed from there.

Clint C. Galliano, REALTOR® (10:14.51)
All right, so that's kind of the, I guess, general description of who you may run into when looking to hire a contractor and what the requirements are for doing those jobs, depending on the scope of work. That's another teaser, because we're going to talk a little bit about scope of work. So once you've found...

contractor that you want to check out or maybe you've got two or three names you want to check out. Go and verify through contractor search on the Louisiana State Licensing Board of Contractors website to look and see if they're licensed and registered. The address is lslbc.louisiana.gov and you can find out and check and see if

any contractor that you happen to run across is licensed and verified and currently active. I know I've done that in the past and either couldn't find some people offering to do work for me or that they may have been registered at one time but they let everything expire. The next thing you're going to want to look at is insurance.

So you want to verify that they've got an active insurance policy. And like everything else and things that we run into as being real estate agents, know, anybody can print anything off of the internet or design it and print it up or whatever. So if you've got an insurance certificate to say that the contractor is insured, make sure that it's got the contact information for

the company that's insuring them. And you call them up and verify that their license, or I'm sorry, their insurance coverage is active. Because another thing that can happen is they may be a little bid on a job that requires them to have insurance, and then they get the insurance, and then maybe they don't get the job, or they just decide it's too expensive for the insurance and they drop it.

Clint C. Galliano, REALTOR® (12:36.055)
Well, they've still got the piece of paper that says they're insured, but unless you verify it, you're not gonna know if they're insured or not.

Ben Harang (12:45.891)
and it should be phone number on that certificate of insurance for you to call.

Clint C. Galliano, REALTOR® (12:50.071)
Yep, yep. Another one is workman's comp. I know that that one may be a little harder to find, but your bigger contractors will carry workman's comp. Smaller people may not. And so they may have people working with them that aren't covered with workman's comp. Ideally, you want workman's comp. So if there's any accidents that happen on the job, that

protects you from being sued by that subcontractor or that employee of the contractor for providing an unsafe work environment. the other option, other thing is to ask for references. And not just from jobs last month or the month before, ask for some from a couple of years ago.

Ben Harang (13:45.858)
And that way, that does a couple of things. You know they didn't start last week. And if they can give you job from two or three years ago, give you recommendations or references from two or three years ago, they've been around for more than a minute. Now, I want to go back to the insurance that I was going to talk about earlier. It's up to you whether you require them to have general liability and workers' comp coverage.

I still have a tree that I thought I was going to take down after Hurricane Ida. And if I'd found a tree contractor or an arborist that had workers comp to take it down, the tree would be gone. Thankfully, I couldn't. And they all said, nobody has it because it's too expensive. And my answer to them was, the reason I want you to have it is because it's expensive because people get hurt cutting trees down.

So the tree came back and the tree's fine now, but just be careful. And a lot of times people will have workers comp, but the contractor themselves choose not to be covered by workers comp. So if that's the case and he gets hurt on the job, that could potentially be a claim against your homeowners policy if he gets hurt. So it's just, his insurance stuff is a...

spider web or a web of lot of confusing issues. So just look into it the best you can. So enough about that. How about the permits? These are always fun. We actually have a question on our property disclosure was any work performed while you're on the house and if so were all required permits pulled and a lot of people

Clint C. Galliano, REALTOR® (15:27.959)
Yeah, tell us about permits Ben.

Ben Harang (15:43.479)
go into silence when you ask them that question.

So when do you need a permit? You need a permit when you're doing structural changes and doing additions to the footprint of the house. And now for roofing. You used to not need a special permit for roofing, but you need to get it now. And here's a good one. Guy drives up in his pickup truck and he tells you he's been doing this for 10 years. And he can get started tomorrow if you give him.

100 % of the money that he wants to charge today. and by the way, I need you to go pull a permit because I don't do that. Well, he doesn't do that because he's not a contractor, not licensed. That's a red flag and that might be.

That might be an embellishment, but those things happen. And I've had people drive up in their pickup truck and decided yesterday they wanted to be a handyman. And there was background or something, or they might have lost a license or something. And there's a reason they can't go pull it. And I guess if they're not licensed, they won't let them pull it. So they want you to pull the permit and just be real careful. If somebody says, you go pull the permit.

Clint C. Galliano, REALTOR® (16:38.733)
Yeah.

Clint C. Galliano, REALTOR® (17:03.373)
I've heard third party gossip that some actual big trade specific companies don't pull permits when they do work. And they say for them it's cheaper to just pay a fine for not having a permit rather than actually going through the process of pulling the permit.

Ben Harang (17:30.077)
waiting sometimes a permit takes a while. And it's, you know, it has a charge based on if you would have gotten a permit before the work's done versus the charge of the permit after the work's done. And some people decide the penalty is not worth waiting on a permit to get started and pay the fine when it comes. Not a good idea.

So, all right, how about some scams, Clint?

Clint C. Galliano, REALTOR® (18:00.096)
All right, so somebody pulls up in the yard, especially after a storm, said, hey, I've got some leftover shingles. Why don't you let me do your roof?

Ben Harang (18:09.462)
you

Do they match?

Clint C. Galliano, REALTOR® (18:14.157)
right? Another one is the the high pressure push. Hey this price is only good for today I'll let you have it at this deep deep deep discount. Doesn't matter that

Ben Harang (18:28.969)
suggest the answer to that be no.

Clint C. Galliano, REALTOR® (18:32.307)
is correct. If the price is good only for today, it's not a good price. Another one. Exactly. And that's the thing. It's a... well, I guess it's okay to call it a used car sales trap. They hey, today only, you know, if you want to take this car now off the lot, get it today.

Ben Harang (18:39.171)
They don't want you to price it around and get another price.

Ben Harang (18:53.795)
you

Clint C. Galliano, REALTOR® (18:59.351)
This is only day that this is good. If you wait till tomorrow, the price is going to go up. It's like, that doesn't make sense.

Ben Harang (19:07.159)
Right. is no.

Clint C. Galliano, REALTOR® (19:10.253)
Exactly. There's another one, 50 % up front. While our materials here say 10 to 25 % is standard, I would still say no. You don't pay anything up front.

Ben Harang (19:28.907)
If you can't afford to front the materials, you may not want to do the job for them. I may not want you to do the job for them.

Clint C. Galliano, REALTOR® (19:37.655)
That's right. That's another indicator that they're not a, that's not their regular business. Or maybe even that they're not running a business, they're just trying to get money.

Ben Harang (19:51.908)
Or if it is, one way to avoid this is if you want somebody to do the work and it's a handyman saying they really don't have an account, they can't charge anything, they don't have enough cash in their pocket to go to Lowe's and get something or The Thibodaux Store or wherever they're going to go, the agreement might be you buy the materials and you pay the handyman the labor to install whatever you need installed.

rather than giving him the money to go buy the materials. a lot can happen between your house and the store when he goes to buy the material. So that's just one way to get around.

Clint C. Galliano, REALTOR® (20:32.634)
Yep, I'll use that one on my rentals

Ben Harang (20:33.931)
and if he goes south you have the materials. I'm sorry I talked on

Clint C. Galliano, REALTOR® (20:37.933)
Yep, you don't know what he's buying and ultimately if you buy it that if you should decide to use somebody that doesn't have the finances to front everything and then get paid as they get work completed, then by you buying it, that cuts that cost and is just costing him and his crew.

Ben Harang (20:53.539)
Mm-hmm.

Clint C. Galliano, REALTOR® (21:02.529)
All right, another one, and I don't think this one is as critical, but if somebody just shows up in a, if they show up in a beat up pickup truck, then that's one red flag. But generally, professional contractors are gonna have their name or their company logo on the door of the vehicle. If it's just a plain vehicle or a beat up vehicle.

Ben Harang (21:24.696)
Yeah.

Clint C. Galliano, REALTOR® (21:29.665)
that likely not as professional as you may want them to be.

Ben Harang (21:34.468)
A handyman may show up like that, maybe. There was a guy around Thibodeau that had exactly what you had, a beat up old felt like it was an extra long bed, four door pickup truck. It looked like it took two days to pass in front of the house. It was so long. And he didn't buy anything. All he did was the labor. Whatever you wanted done, if you got the materials, he'd do it. And he did fairly good work.

when he drove up you would you would be suspect just just by stereotyping so just just don't agree to just anything they they ask you to agree to just be pushed back a little bit and and you'll probably be be okay because people that want to take your money they don't want they don't want to leave they don't want to leave without your money or they don't want

If they don't get you money today, they're not going to get it. So if they need it today, don't. That's just Ben's advice.

Clint C. Galliano, REALTOR® (22:39.053)
So speaking of those types of people, I got a little quick story. So back in my baby investor days, we thought we were hiring a contractor to rehab a property for us so that we could put it up for rent. And the way we found them was that

Ben Harang (23:00.394)
Mm-hmm.

Clint C. Galliano, REALTOR® (23:06.217)
He was sharing all over social media and running radio ads on the local radio station.

Ben Harang (23:11.92)
wow, spending some money.

Clint C. Galliano, REALTOR® (23:13.887)
Spending some money and he must have got a deal. I'm sure And so we decided to hire him. We talked to him He says yeah, I could do this and I could do that and this might be a good idea and and so he seemed fairly professional and He said he needed money up front and so we gave him money up front and at the time I was working in Lafayette so I was driving back and forth to Lafayette and

Ben Harang (23:17.709)
He

Clint C. Galliano, REALTOR® (23:43.342)
basically being busy and over the course of three months or so, he said, oh, I've done this and I've done that and I've completed this, I need some more money for this. And so twice he went back to my wife and got her to write him a check and totaled up to just under $6,500 for all these repairs.

And so one day I decided to go to the property after work and take a look at how it was progressing. And the only thing that was done was that he had pulled an 18 inch piece of baseboard off the wall in the kitchen. And that was the only work he did.

Ben Harang (24:28.877)
Sound like a scam.

Clint C. Galliano, REALTOR® (24:30.509)
and wound up being a scam. He had a dump trailer parked in the driveway, had a banner for his quote unquote company, and on it and everything. And so I went and got some bike cables and some padlocks and locked up the wheels to the axles so that he couldn't pull off.

Ben Harang (24:52.355)
Absolutely.

Clint C. Galliano, REALTOR® (24:56.269)
And then I get a phone call from an equipment rental place in Lafayette saying that his trailer was sitting on our property and that he was trying to find the quote unquote contractor because the guy rented it from him and had it for three months and never paid anything on it.

Ben Harang (25:20.033)
been using it to advertise.

Clint C. Galliano, REALTOR® (25:22.015)
and been using it for advertising. And he said, would it be okay if I take my trailer? I said, well, I got these bike locks on it and I'm busy right now. I can't go unlock it. And so he said, well, can I cut them? And I said, sure, fine, that's fine. Just stick the locks up against the house. So anyways, we wound up using the fraudulent contractor law.

to get that guy arrested and he went to jail and paid some restitution and then he disappeared. They let him out of jail, they didn't keep him in jail, but the ultimate thing was that he had to pay some restitution and everything. So that led me to get a lot more involved on the front end.

as far as what we require or I require as someone hiring somebody to do the work. And so use all of that, well, actually, before we talk about that, here's another teaser. We'll talk about that more in a second about scope of work and contracts and things like that. But before we get into that, why don't you tell us what the law says?

Ben Harang (26:47.361)
All right. I'm not a lawyer and I did not sleep at a Holiday Inn Express last night, but I can tell you what it says. There's a new 45-day rule that if somebody, if you pay somebody to do some work and they don't do any work in 45 days, that's now a crime. So if that's a scam, you do agree to give them some money up front and they don't come back for month and a half, 45 days, that's contract of fraud.

they're in deep trouble. And then, this one's near and dear to my heart, elderly protection. Penalties are harsher if the victim is over 60 years old. So 60 used to be old at one point in my life, not so much anymore. So just, there are consumer protection laws to protect you from something like this, but.

you can do some things on the front end to minimize your exposure to being taken advantage of. And look, when water's coming in your house and it's raining and you may agree to a lot of things you would not normally agree to, but just tell people the sun will come up tomorrow. So just be prudent when you hire somebody and take Clint's story to heart, because there are people out there.

best way to deal with them is just push back. If they're aggressive, you probably don't want to use them. That's just the way I see it. So we're to let Clint talk about the scope of work now. The S-O-W...

Clint C. Galliano, REALTOR® (28:29.771)
Yeah, S-O-W. So that and, well, let's do it like this. Like I said, basically, I'm not gonna say I'm an expert, but I got really educated on how to prevent a scam from a contractor. So part of what I recommend, it's what I do when I get work done for

on my rentals and stuff is develop a scope of work. So it's most important part of a contract and it prevents scope creep. So, well, I know we didn't talk about changing out the toilet, but let's change the toilet too. And at the end of the day, having a he said, she said.

Ben Harang (29:27.907)
Mm-hmm.

Clint C. Galliano, REALTOR® (29:28.385)
kind of conflict. Well, you said this, so that's not what I meant. Things like that. So it's better to do, to be very specific rather than general. So don't say update the bathroom. Instead say, install this brand and model of vanity and retile the shower with 12 by 12 porcelain tile and this particular

product number and install this bronze Moen faucet and spell it out in detail what you want done. Make sure that there's a materials list.

Ben Harang (30:11.235)
The more details in there, the better off you and the contract.

Clint C. Galliano, REALTOR® (30:16.499)
Exactly, because there's less chance for it not being done correctly. Specify who provides the materials. Typically, if you know a little bit about what you're doing, you can develop a materials list on what's needed. I like to ask the contractor to provide me a materials list for the job and to make sure that the materials that will cover the whole job and

like in the case of flooring, make sure that you've got excess. You might want 15 to 20 % excess material to take into account for cutting tiles and things like that.

Ben Harang (30:57.443)
And you can develop your own list and then compare it to the list he gives you. Just to make sure it's close.

Clint C. Galliano, REALTOR® (31:04.013)
That's right.

Clint C. Galliano, REALTOR® (31:07.965)
And so you want to make sure who provides the materials. So does it include the tile and the labor or just the labor? And like Ben said earlier, you may want to provide the labor, I mean the materials yourself because you may have a connection that makes a better deal than being charged cost plus by the contractor. So it depends on how you want to approach it. Another little short story from a different property.

I had a contractor come up and I told him specifically I wanted labor only quotes and costs and that I had a budget of X number of dollars. And he came back and turned in a material and labor's quote that was almost three times my budget. That told me that he really didn't want to do the work.

Ben Harang (32:01.919)
didn't listen.

Clint C. Galliano, REALTOR® (32:04.587)
Like I said, he really didn't want to do the work. And then another thing to make sure you include in the scope of work is verifying that it includes a dumpster rental or some way to get rid of the trash and debris and doing a final magnet sweep to pick up any nails that may be laying around in the yard. Because if they do all the...

Ben Harang (32:06.712)
That's true.

Ben Harang (32:32.535)
You mean the city of parish?

Clint C. Galliano, REALTOR® (32:35.615)
I was gonna say if they didn't, if they just do all the work and then pile up all the trash in your yard, it's gonna sit there. Even if they put it out to the road, it's gonna sit there unless you contact the parish to come pick it up.

Ben Harang (32:50.595)
And the parish or the city are gonna push back about, wait a while, if a contractor did that, they are supposed to haul it off. If you do it, it's a different story. But the contractors like to say, don't worry about it, I'm just put it in the front and they're gonna pick it up. Well, they're long gone and that stuff is still in front of your house. So make arrangements for them to have it hauled off.

Clint C. Galliano, REALTOR® (33:17.645)
Yep. All right, why you tell us about contract provisions.

Ben Harang (33:23.511)
Alright, so how about...

Ben Harang (33:28.887)
Don't do anything verbally.

if it's more than a couple hundred dollars. Or if it's more money than you want to lose, don't do it based on an oral conversation or verbal conversation. Louisiana law has contract specific provisions that need to be in a contract and there things such like the full names, addresses, and license numbers of contractors.

So if you do it verbally, you may or may not be able to find a guy. He'll give you a business card and there's somebody else's name and phone number on it. It may not be him at all. And then a clear description of the work, which we just talked about, the scope of work and the total price and whether it includes labor only or labor and materials. Have that spelled out in the contract so there's no misunderstanding. Proof of insurance, insurance certificates are important. The insurance...

agents will email them to you but when you get one or the contractor will carry him around if he's carrying it around yeah that's a red flag he can carry it around and show that he has it but you know if he's at 530 in the afternoon and he wants it done today he's got a piece of paper that says he has insurance and the agency is closed and you can't call him the answer is no

until you confirm that they have it, don't hire him. Even if he's showing it to you on a piece of paper, get it from a third party. Because it could have, they could have had it on an installment plan and he made one installment to get a job he wanted and whether he got that job or not. And then he didn't continue the payments and insurance got canceled. But he still has that certificate that he's carrying around with him. So, yeah.

Clint C. Galliano, REALTOR® (35:21.377)
Now something you want to watch out for, and this is kind of, guess, an extrapolation of a tenant screening trick. If they're kind of hip to the idea that you're going to call the number on that insurance certificate to verify it, he could have somebody set up to answer the phone and say, yeah, yeah, he's got insurance with my company and blah, blah, blah. And it's all fake.

So instead of asking to verify an insurance certificate, call up and ask about quoting insurance. And so that'll, you know, if they say, huh, what you talking about? Then that'd be one way around if they're a scam, they say, oh, sure. I say, well, actually, I was looking at verifying an insurance certificate for a contractor.

Ben Harang (35:50.125)
Mm-hmm.

Ben Harang (35:58.487)
Mm-hmm.

Ben Harang (36:04.483)
There you go.

Ben Harang (36:14.072)
Yeah.

And then everybody needs to sign a contract. Again, don't do a verbal contract in Louisiana, because what I never understood was a verbal contract is legally binding but unenforceable because nobody knows what anybody said. So if...

If it's put it in writing and sign it have the contractor sign it and just if you want to take it a step further ask him for his driver's license. He says he's Billy Bob. See if his license says Billy Bob. Just you can't be too careful and if people get their feelings hurt because you feel they feel like you're checking on them. Good bye. Find somebody else.

because anybody that's reputable will not that won't bother them at all. All right. You're to take budgets and.

payment schedules, Clint.

Clint C. Galliano, REALTOR® (37:23.201)
Yep. All right. So if you've ever built a house, you understand that the contractor gets paid on draws. And typically if you're using a loan to build a house, they require that certain amount of the work be done before they'll authorize a draw to pay the contractor. even if you just any any work you're getting done, if it's

you know, over that $7,500 threshold, put milestones in and tie the payments to that. So say you're doing an addition. So after the foundation's poured, you pay them a percentage. After the sheetrock's hung, you pay another percentage. And kind of base those on what it costs for those specific, to get to those specific milestones.

So that way you're not paying everything and then your contractor has no incentive to come back and finish the work if they're not finished.

Ben Harang (38:26.904)
You always want to the contractor more than he's done. That makes sense. You want to be ahead of him. You don't want him to be ahead of you.

Clint C. Galliano, REALTOR® (38:40.545)
Yep. Another tip is don't pay the final 10 % until your punch list is 100 % complete and you have the contract to sign a lien waiver that they're not going to put a lien on the property. This is another incentive that, you know, it's like you go through, you check the work and you see maybe they cracked an outlet cover or they

miss a spot when they were painting or something like that. Never pay that final 10 % until after all of the items on the punch list are complete. And I mentioned the lien waiver. When you get that final, when you pay that final amount and everything is complete, you make that contractor sign a lien waiver acknowledging that they did the work, they got paid for the work.

and they have no claim to any lien rights on the property.

And if something does happen that you decide to do different from your scope of work, write up a change order and make sure that you as the owner and the contractor both sign acknowledging what the work is and what changes to the cost are going to be and have that documented. So nobody can say, well, you said it was going to be this and now you're charging me this and

everything so make sure that you have that in place those are things that it's a little bit extra work on your part but in the long run it protects you from having exorbitant charges on your final bill or getting a lien placed on your property because the contractor says that you'll

Clint C. Galliano, REALTOR® (40:39.337)
and to make sure that things get completed in a timely fashion, Ben's gonna talk about some incentives that you can put into the contract, kind of a carrot and stick style incentives.

Ben Harang (40:54.487)
Well, one of the things you can do is agree to pay the contractor more money if he finishes early. If you're on a tight timeline and you need it finished for a certain event or a certain date, you might incentivize that contractor if he's going to charge you $25,000 to do whatever. You might say, if you can finish it by this date, I'll give you an extra $2,500.

as an incentive to get it done. It might get it done on time.

The flip side of that is I it done by this time. You say you can do it by this time. There'll be a penalty in there if it's not done because I'm gonna have to go hire somebody else to finish it because I need it done by this time. So something called liquidated damages. they don't do it by a certain date, weather considerations. You can't penalize somebody because of.

They can't do outside work because it's raining and it rains for a month. And they just can't get to it because they couldn't physically do the work because of the weather. Different story. But if they have ample opportunity and time to do the work and they don't, there could be liquidated damages in that contract that you all signed. And then the penalties need to be reasonable or if there's a...

a court proceeding over the penalties. If the penalties are not reasonable, they may not be upheld. So just be realistic, because all you want to do is get the work done at a reasonable price. So don't try to take advantage of somebody because the weather went bad and they couldn't get it done, and now you're mad because it didn't happen. it's an adult world. If you need something done by a certain date,

Ben Harang (42:54.647)
You might want it finished two months before you really need it to give you time to do something else if something happens to the contractor. I suggest don't do a major renovation when you need it done by a day and the contractor says, I think I can have it done by that day. It's not gonna happen. So.

Clint C. Galliano, REALTOR® (43:12.971)
Yeah, some tips on that. can tell them what they think it'll take, how long they think it'll take them, and then add a little bit more to that and put that as the baseline finish time. That way you're being a little bit more generous to them, giving them a little bit extra time to do it, and that kind of sets that completion date. And then base your...

Ben Harang (43:16.067)
you

Clint C. Galliano, REALTOR® (43:41.75)
your carrots and your sticks on that completion date. So if they finish early, pay them X number of dollars early, per day finished early. And if they go over that date, then at that point you can add X number of dollars per day additional to our discount on the total price because of that.

Clint C. Galliano, REALTOR® (44:11.007)
All right, in conclusion, we talked about, well, we kind of talked about the lien waiver already, so I'm just going to kind of wrap things up here.

Ben Harang (44:11.145)
Okay, now you tell them what a lean waber is Clint.

Yeah.

Clint C. Galliano, REALTOR® (44:23.807)
So in conclusion, we talked about signs to watch out for to make sure that your contractor is legitimate, ways to spot a scam contractor.

We talked about.

provisions of the law regarding work, contractor work, and how long it takes to complete it. We talked about developing a scope of work, so spelling out in minute detail what needs to be done.

and how it's done and then putting together things to include in your contract with your contractor. Funny how those two words sound alike. And how to set up your payment schedules and things to make sure that things stay on budget. And incentives to ensure that the contractor finishes early and is disincentivized.

Ben Harang (45:16.707)
Mm-hmm.

Clint C. Galliano, REALTOR® (45:35.369)
from taking longer than the scheduled time. And we also covered the lien waiver. And I think we discussed that in pretty good detail. So if you like what you hear, if you think it's good information, share, like it, subscribe, comment. We enjoy that. Let your mom and them know. If you got friends that are thinking about

doing some contract work have them listen to this episode. You can listen to it on rerealestatepodcast.com. You can also go to rerealestatepodcast.com and click on the video podcast link and that'll take you to our YouTube channel. You can also listen to the episodes right there and on the website or you can subscribe with your favorite podcast app to listen to the audio versions.

Ben Harang (46:31.043)
I think you said the website was re real estate podcast dot com

Clint C. Galliano, REALTOR® (46:36.811)
I was about to ask you if that was it.

Ben Harang (46:39.319)
think that's it. That's three times.

Clint C. Galliano, REALTOR® (46:42.527)
Yes, indeed. All right, that's another one in the can.

Ben Harang (46:48.577)
All right, enjoyed it, Clint, have a good one.

Clint C. Galliano, REALTOR® (46:51.405)
You too, Ben.