When money is at issue, the best approach is to handle a dispute quickly and effectively. Payment disputes are not uncommon in remodeling and home additions. Here are five key steps that will allow you to document every payment and every part of the work in a way that will quickly resolve disputes:

  • put payment amount and work description in writing. If you do not have a formal contract, at least put in writing a description of the work to be done, the cost of the work, and when payment is due. Be sure it is signed by both you and the contractor. When payment is made, note it in the margin.
  • put all changes in change orders. It is easy to forget about decisions to make changes from the original plan. It is also easy to forget about additional costs associated with those changes. You can protect yourself from disputes by putting all changes in writing in change orders that include the amount of the additional cost and when it will be due. You and the contractor should sign and date every change order.
  • pay with checks so you have an official copy. Always pay with checks. If there is a dispute or a question about an amount, you will have your cancelled check to prove that payment was made, the amount of the payment, and that the payment was received by the contractor.
  • keep all invoices. Keep all invoices, no matter how large or small the amount. When you pay the invoice, note the check number of the check with which you pay the invoice. When the cancelled check is returned to you by the bank, attach the check to the invoice.
  • use lien waivers with each payment. You don’t want to end up with a lien on your home because a contractor or sub-contractor failed to remove it. Each time you pay an invoice, immediately get a signed lien waiver for that amount from the contractor. Keep the waivers with the invoices and cancelled checks. This will give you complete proof of your payment, the contractor’s receipt of the payment, and the waiver of the lien.

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If you found this tip helpful, you might also want to read this:
How to Handle Disagreements With Your Contractor During a Remodel
Save Money by Having a Well-Written Service Contract
Contract Checklist