Blood, Sweat and Tears

Use caution when tapping friends, family for home-improvement projects
Los Angeles real estate attorney and author Laura Meyer was out tens of thousands of dollars because of delays on a home renovation led by her son's godfather, who also happened to be a general contractor.
Meyer and her husband lost much more as a result of the botched project -- a decades-old friendship.
Meyer's situation isn't uncommon. Renovations and new construction are emotional and expensive, even without piling on the complications -- and benefits -- of personal relationships.
Many go this route for cost, convenience and comfort. Others may feel some obligation to use a relative in the business. Most experts advise that a formal agreement, preferably in writing, follow frank if awkward up-front discussions -- and then only after asking yourself "is it worth it?"

When the friend approached Meyer it seemed like a can't-pass-up opportunity. He was an established business owner and a licensed professional. He knew the couple's taste and was someone they fully trusted with a major update of their newly purchased house, one that would have to be timed to the sale of their current residence. Plus, his services would come at a modest discount that was no small potatoes given the size of the project.

But the contractor apparently took on too many jobs at once and they unexpectedly found themselves a low priority. He probably justified the delay because they were paying less, says Meyer, who uses her legal expertise and her own experiences to counsel a celebrity L.A. clientele and others on real estate and remodeling transactions. She also co-wrote "Remodel This! A Woman's Guide to Planning and Surviving the Madness of a Home Renovation."
"The first week, when no one showed up, we thought, 'Well it's the first week.' And then it was the second week and no one. And by the third, we had a heart-to-heart with him," she says. And so, work at last began. Slowly.
Flash forward several months. Meyer's home was still unlivable. The leaseback they had negotiated on their old place had long run out and the family was paying rent for an apartment on top of their mortgage. Their dog was at a kennel and most of their belongings in storage. It also came to light after an on-site injury that the contractor didn't have adequate workers compensation insurance coverage.
Painfully, they fired him. And the friendship, which had extended to the contractor's wife, didn't survive.
Mutual understanding
Whether friends, relatives or strangers, home-improvement jobs should be conducted at "arm's length," says Meyer's co-author Robyn Roth, who's also an L.A.-based real estate attorney.
Ask for documentation, such as licenses and insurance, no matter how awkward, she suggests. Use the screening process you might use for a stranger: Has your friend or relative handled jobs of this size? Are you making a general contractor out of someone who's really a subcontractor, just to save money or let your loved one gain experience? A licensed general contractor will have deep enough pockets to cover any problems with his subs.
Meyer and Roth offer key points in securing any contractor on their book's companion Web site, remodelthis.net. Among them: nailing down a timeline. Projects often run long and over budget and homeowners need to show some flexibility. But in the case of the friends-and-family discount, there could be a dramatic difference in interpretation. Is this to be a weekend project or a time-sensitive job deserving of the same treatment as other clients? Is a full crew of workers or a limited crew expected?
Meyer's mounting bills had a lot to do with alternative living arrangements and because she had to have a new general contractor come in quickly and finish someone else's mistake-ridden job.
Materials and labor costs can be affected by delays. Lumber and drywall prices in particular are vulnerable to market swings; lumber shot up nationally after Hurricanes Katrina and Rita, for example, says David Lupberger, a former contractor turned consultant with ServiceMagic.com, a national listing service of screened contractors and household professionals.
It cuts both ways
Builders and contractors have a lot at stake too. It's important that homeowners don't exploit the personal relationship to the disadvantage of a professional who needs to make a living.
"It's an opportunity cost for the contractor," says Tom McNulty, president of the Rhode Island Builders Association and a third-generation builder with family business E.A. McNulty Real Estate. He's built new homes for several immediate and extended family members.
Homeowners may feel the personal relationship somehow allows them more time to pay the bill, says McNulty, who suggests a 10% to 15% discount in general contractor services is a reasonable expectation between friends and family. Homeowners shouldn't assume there will be a break and should negotiate early on. Using a relative might be more about "getting a fair price, not necessarily a cheaper price," adds Meyer.
Be considerate about injecting your own subcontractor into a big project, which is commonly done when homeowners have a friend or relative in a particular trade, says ServiceMagic's Lupberger. A $150,000 renovation he worked on was delayed when the homeowner insisted that her cousin, a painter, be brought in for that part of the job. Although he was a professional and did good work, he was also a one-man show and took about two months to finish, delaying other trade workers who couldn't come in until the paint was up.
Keep in mind, too, that some condominium, cooperative and development boards only allow their preapproved contractors, says Roth.
Personal touch
Some experts do argue, with merit, that a family member or a friend's involvement can go a long way toward personalizing a home. And, after all, strangers can drop the ball too. The insider connection may give the homeowner some leverage in making sure the job stays on track, as the contractor or builder will presumably work harder to maintain the personal reputation. Changes to designs and plans may be easier to discuss with someone you know well.
Lupberger has no complaints about his experience building a new house for his brother and sister-in-law in Arlington, Va. The couple works for the World Bank and were frequently out of the country while construction was underway. Having a trusted family member at the helm brought them peace of mind.
Robin Wilson, CEO of New York-based Robin Wilson Home, a remodeling project manager, offers these tips to prevent any tension from mushrooming into a major problem once a friend or relative is brought on board:
• Consider getting a few other bids even if you've settled on using the person you know. That way you have an idea of a fair price and, if there are complaints or a discrepancy over price later on, you can refer to those quotes. Don't necessarily skip getting a written estimate from your friend or relative.
• Make sure to get permits. Handyman work is somewhat covered under a basic homeowners insurance policy but electrical or plumbing jobs, for instance, may not be. If you go to sell your house and there's an issue with the electrical, the homeowner is on the hook if the job wasn't backed by documentation. And, ignore tax laws at your own risk.
• Consider that a relative or friend working in your house could mean gossip making its way through your social network. Take care with any personal papers or items that may cause you embarrassment.
• Set ground rules for parking in the driveway, smoking on premises, bathroom use, phone use and access to food and drinks. Just because Cousin Joe is a frequent guest in your home doesn't necessarily mean that Joe or his workers are afforded the same treatment when doing your job.
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