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Contents/Title Page
CONTRACTOR REGISTRATION
More than likely, wherever you may be based, some sort of contractor
registration or even certification is necessary. Investigate with
your local builders association, state department of commerce or other
state government offices.
CONSTRUCTION CONTRACTS
Before you enter into a construction contract, make sure you understand
how responsibilities, risks, and costs are to be allocated between the
owner and all others involved in the project. Addressing liability within
the contract can reduce your exposure to third-party claims.
The following information is an overview of construction contract
issues, not a comprehensive discussion of contractual protection. For more
guidance, you should consult your attorney. Two publications containing
helpful information regarding construction contracts are available from
the National Association of Home Builders (NAHB) at (800) 223-2665:
- Contracts and Liability - provides detailed information about many
of the different aspects involved with contracts
- Construction Forms and Contracts - provides various forms you can
copy from the book or load directly into your computer from the free
disk enclosed
ENVIRONMENTAL REGULATIONS
Compliance with environmental regulations helps protect you from
liability and financial hardship. Your contracts with subcontractors
should require their compliance as well. All subcontractors should be
required to:
- Comply with all government requirements.
- Protect the construction site and monitor activities to prevent a
third-party from creating a hazardous incident or causing
environmental contamination.
- Identify hazardous materials used or stored at the project site and
ensure proper labeling, storage, handling, and disposal.
Known or Suspected Hazardous Substances
Some environmental contaminants were prevalent in construction
materials prior to the 1980s (such as asbestos in floor tile, insulation,
and shingles). When remodeling, your contract should address the need to
test for known or suspected contaminants and should specify who is
responsible for hiring a qualified person to conduct such tests.
Federal and state environmental regulations require proper management
of hazardous wastes generated at your site. You are responsible for
hazardous waste management, removal, and, if transferred off-site,
assurance that the waste is delivered to its final destination.
Unexpected Site Conditions or Hazardous Substances
Your contract should clarify your responsibilities and obligations for
unexpected site conditions or the discovery of hazardous materials.
The owner's disclaimer of liability clause should be modified to state
that the contractor has no responsibility for existing site conditions or
materials located at the site such as toxic, hazardous, or other dangerous
substances. If you encounter an unknown hazardous substance or condition,
immediately notify the owner.
If you must absorb the risk of unexpected conditions on the site,
negotiate a provision that allows you access to the site and time to
evaluate that risk before beginning construction. Provide for a contract
allowance to cover appropriate inspections and testing. The contract
should give you the option to terminate the contract if conditions are not
satisfactory.
Superfund and CECRA Sites
Congress created the federal Superfund program in 1980 under the
Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)
to address the cleanup of the nation's most contaminated sites. As a
residential building contractor, you are unlikely to work on a project
that is located on a Superfund or CECRA site (typical Superfund or CECRA
sites include old landfills and dumps, old mining and smelting facilities,
barrel sites, or places where chemicals or solvents were used such as
autobody shops, drycleaning businesses, etc.).
Regulations
- Comprehensive Environmental Response, Compensation, and Liability
Act (CERCLA)
- Comprehensive Environmental Cleanup and Responsibility Act (CECRA)
- Superfund Amendment Reauthorization Act (SARA) Title 3
Utilities Underground Location Center
Call the "North American One Call Referral System" at (888) 258-0808 before
you dig anywhere on your site. This national hotline is also known as the
"Call Before You Dig" or "One-Call" line. Once
referred to your local center, observe the following
recommendations. Please verify the exact services of your local
center!
- Call to give advance notice at least 2 (but not more than 10)
business days prior to digging
- Be prepared to describe the type of work to be done and to pinpoint
the exact location of your dig site
- Your local center should notify subscribing utilities and
underground facility owners for you
- Utility representatives will come to your work site and mark where
buried facilities are located according to the following color code:
Red - Electric
Yellow - Gas/Oil/Steam
Blue - Water
Green - Sewer
Orange - Communications/Cable TV
Pink - Temporary Survey Markings
White - Proposed Excavation
- You must stay at least 2 feet away from the marks (they do not mean
"dig here")
- If you do not notify your local "call before you dig
center" (and fail to obtain information about an underground
facility location) prior to digging and you damage an underground
facility, you are liable to the owner of the facility for the entire
cost of the repair.
INSURANCE COVERAGE
Most contractors rely on general liability coverage because of the
difficulty in obtaining pollution insurance. General liability insurance
may be purchased alone (mono-line) or included in a commercial package
policy (contractors' equipment, property, general liability, auto, etc.).
Although liability insurance is usually inexpensive, it is some of the
most important coverage you can buy. Because any type of liability
insurance is extremely complicated, your attorney should review the policy
to determine exactly what your coverage is.
Workers' compensation insurance may be available through your state or
through a private insurance carrier. Private carriers may select
those individuals or businesses they wish to insure and so may offer more
competitive rates.
Contacts
- Appropriate legal counsel
- Insurance representatives
- National Association of Home Builders (NAHB)
(800) 223-2665
1201 15th St. NW
Washington, DC 20005
- Local or State Contractors Association
- North American One-Call Referral Center
(888) 258-0808
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