Why are there so many construction law disputes?

Small businesses by their very nature are likely, at least occasionally, to have disputes with their customers regarding the work they have done and the bill. It is not uncommon for the customer, if an individual or another small business, to demand their money back if they are unhappy with the product or for the customer to refuse to pay. I often get calls from customers who are unhappy with the service of the business or a business who needs to pursue the customer for payment. There are usually varying degrees of merit for either the customer or the business. When a customer is asking for their money back from the small business, there is an inherent problem in this request that I don’t think many people realize. Depending on the size of the business, many small businesses which have less than five employees, do not have a sizable amount of money in their operating account i.e. the money goes out almost as fast it comes in.

This is the business equivalent of an individual living paycheck to paycheck. Many small businesses are never able to build up a sizeable amount in the operating account due to having too many expenses. Another reason that the small businesses will have a relatively small balance in the operating account is because if there is a large amount in there, the owner will pay it to themselves. This especially seems to be a problem in the construction industry in Raleigh, at least amongst the smaller contractors or handymen. Depending on the work done, the amount which homeowners will pay to contractors will represent a significant portion of their disposable income for a year. Often the work is either not done to the homeowner’s satisfaction or needs to be redone. When the work needs to be redone, the homeowner typically has problems affording it.

The situation which seems to arise the most often is that the homeowner will pay a portion of the total fee to the contractor and then the contractor will do some of the work. When the contractor has gotten somewhere past the halfway mark or finished, the contractor will ask for payment in full. The homeowner will either be dissatisfied with the work and demand it be redone for free or they will get a second opinion from another contractor about the price of finishing or fixing the job and the quote will be a significant portion of the original amount paid to the contractor or more than was paid in the first place. This is where the contractor has to make a decision about what to do. Remember when I mentioned the money going out quickly? The contractor, most likely has already spent the money from the work, and is unable to return the full balance, if any. Also, they do not have the time to redo the work because they have to move onto the next job in order to keep a positive balance in their operating account not to mention they are going to be angry at the homeowner and feel that they were right. There are ways to be able to recoup at least some of the money from a small business, even if it is not in the business’s operating account. Unfortunately, this cycle of events seems to repeat itself over and over again in the Raleigh and Wake County. There are ways to avoid these situations altogether and if the situation is not avoided, at least to minimize the amount of time and money spent on the dispute. If you would like more information, please contact us at anytime at 919-803-1516 or me directly via e-mail at chris@anglinlawfirm.com.