Bad Contractors Resource Guide – What you need to know in Colorado

You should be able to trust your contractor to create the kitchen of your dreams or perform emergency repairs on your office. When a contractor performs shoddy work, holds up the project, or never completes the job, you may be able to recover damages.

If you’re battling a bad contractor, a litigation attorney can fight for the financial compensation you deserve.

Robinson & Henry, P.C. is Ready to Help

Let our experienced real estate litigation attorneys take on the bad contractor. Contact us to schedule a free consultation at (303) 688-0944.

Types of Contractors

Unless you are a master at Do-It-Yourself projects, most major home and business construction involves some kind of contractor.

In Colorado, a contractor is anyone who performs work that requires a building or mechanical permit. A laborer who works under a contractor’s supervision is not considered a contractor.

  • A general contractor supervises a construction site.
  • A subcontractor is a skilled tradesperson who performs specialized work.
  • A handyman performs maintenance or repair work inside and outside a property.

Let’s look at some examples:

  1. You want an open-concept kitchen and living room. Currently, your kitchen, living room, and dining room are three separate spaces. This project needs different specialists, like a plumber, an electrician, and a demolition crew. A general contractor will oversee the entire project. S/he will:
    • assess the plans
    • pull permits
    • create a project timeline
    • hire and manage subcontractors
    • ensure work is up to code

    The contractor may hire subcontractors to take down walls, rewire the electricity, and install cabinets.

  2. You have a few things around the house that need some attention. The guest bath has a leaky toilet, and you’d like to have a dimmer installed in your dining room. A handyman can perform these kinds of small repairs or tasks.

A handyman may also take on larger jobs such as rebuilding a deck or tiling a backsplash.

Common Issues that Lead to Lawsuits

Suing your contractor is generally the last thing on your mind when you hire them. Unfortunately, construction projects, big and small, can end in a lawsuit. Let’s examine why.

Picture of a Colorado construction defect
Breach of Contract

When your contractor deviates from the contract’s terms, they’ve breached the agreement.

Contract breaches happen for many reasons:

  • Botched craftsmanship
  • Excessive delays
  • Exceeding the budget without approval

How do you prove the contractor breached the contract?

  1. Establish a contract exists
  2. Demonstrate you met your obligations in the contract
  3. Prove the contractor/handyman did not meet their duties
  4. Show there are damages as a result of the breach

A breach can be difficult to prove if there isn’t a written contract.

If you breach your duties without justification, you may forfeit rights to a claim.

There’s a breach. How much money can I recover?

The amount of damages you recover depends on the nature of the breach. Is it a material or non-material breach?

Non-material breach – Minor in nature. It does not hinder the project’s outcome. If your contractor carries out a non-material breach, you’re obligated to the contract.

Example: A plumber installs pipe brand X. The contract calls for pipe brand Y. Brands X and Y are made of the same materials and have the same quality.

Material breach – It is a serious breach that significantly affects the contract and the project’s outcome. If there’s a material breach, you are not obligated to meet your contractual responsibilities because the other party breached the contract.

Example: The contract states the plumber must install copper pipes. Instead, the plumber uses PVC piping. This may be a material breach.

You can recover damages from both kinds of breaches.

Before you take matters into your own hands, speak with an attorney. Robinson & Henry’s litigation lawyers can help you assess what kind of breach may have occurred. They can advise you on the next steps to protect you and your assets.

Unreasonable Delays

Most construction projects experience delays. Unexpected situations can create delays beyond your or the contractor’s control.

Setbacks can have significant financial consequences to both parties. As a result, many contracts define how to remedy a delayed project.

  • Contractors and owners receive compensation for delays (liquidated damages)
  • Contractor gets an extension based on based on delay beyond his control
  • Contractor must accelerate work to meet deadline
  • Termination of contract for significant inexcusable delays

Excusable Delays

Most contracts limit the contractor’s liability for certain delays. Excusable delays generally give a contractor more time to finish the project. Here are some examples of excusable delays:

  • Act of God – e.g. extreme weather event
  • Labor issues – e.g. unprovoked worker strike
  • Owner delay – e.g. design change
  • Other unforeseen issues – e.g. acts of terrorism; sink holes

Inexcusable Delays

A delay created by an avoidable action is considered an inexcusable delay. Most of the time, someone working on the job causes them. The owner may be entitled to damages.

A contract may note how the owner is to be compensated for an inexcusable delay.

Inexcusable delays can include:

  • Poor planning
  • Not obtaining proper materials/equipment
  • Late project start
  • Quality failures
No Damages for Delay Clause

A “no damages for delay” clause allows one party to escape damages in the event of delay. For example, a contract may absolve the contractor of being financially responsible if they create a delay.

Some states have outright banned “no damages for delay” clauses.

Colorado still enforces this provision in private contracts.

If this provision is in a contract, there are exceptions to its enforcement.

  • Active interference by a party
  • Delays outside of the scope of the contract
  • A contractor who acts with fraud or bad faith

A Robinson & Henry attorney can assess whether you could recover damages as a result of a delay. In extreme circumstances, you may be entitled to terminate a contract altogether.

Poor Workmanship

Workmanship is the skill and quality put into a project. Whether a toilet installation or tile work, the caliber of the work – good or bad – is the workmanship.

A construction contract lays out many elements of the job. Workmanship is not always one of them. Oftentimes, craftsmanship expectations are implied or expressed, instead of written down.

If a handyman skips vital steps, the finished product may lack the quality you expected.

Examples of Poor Workmanship

  • Loose railing on a deck
  • Gap between hardwood flooring and baseboards
  • Uneven kitchen cabinet doors

If the contract does not address quality, it can be difficult to prove poor workmanship. But it’s not impossible.

  • Establish the industry standard
  • Email conversations may imply a standard of workmanship
  • Demonstrate sub-standard materials use instead of premium materials as promised

In a typical claim, a homeowner hires a new contractor or handyman to fix the problem. The homeowner later sues the contractor for the cost of the repairs.

In larger cases where there could be significant damages an expert may be called to evaluate the workmanship.

Poor workmanship can lead to future problems, such as mold, flooding, and electrical issues. A lawyer may be able to help resolve these issues before they worsen.

Unlicensed Work

In Colorado, local municipalities license or register general contractors, including roofers and repairmen. Electricians and plumbers must acquire state licensure before applying for a local license.

Licensing and registration rules vary between municipalities. Some cities require testing, some don’t. In some towns, a contractor must have a current license from another county or city. Some cities, such as Denver, require additional certificates, like a business license.

The homeowner undertakes the most risk when they hire an unlicensed contractor. You may face:

  • Little legal recourse against an unlicensed contractor
  • Liability for injuries during the work on your house
  • No insurance coverage for property damage by an unlicensed contractor

If you aren’t the only victim, you may be able to bring a suit.

The Colorado Consumer Protection Act (CCPA) protects customers from deceptive trade practices.

An unlicensed tradesman can be sued for violating the CCPA.

To mount a successful Consumer Protection Act claim you must show:

  • The contractor’s actions constitute a deceptive trade practice
  • The action must have occurred while they worked as a contractor
  • There must be a significant effect to actual or potential customers
  • An injury of a legally protected interest as a result of the conduct
  • The contractor caused actual damages to the client

If it’s proven your contractor acted in bad faith when they violated the CCPA, you can be awarded three times the amount of the actual damages.

Civil Theft

If you give a contractor money upfront in Colorado, state law requires them to put the funds in a trust. If they fail to do this or misuse the funds in the trust, you may be able to sue them for civil theft.

The Colorado Construction Trust Fund Statute requires contractors to pay for project costs before settling their own expenses. For example, the contractor must purchase supplies and pay subcontractors before covering their own overhead.

The law was created to deter contractors from robbing Peter to pay Paul, if you will.

Example: You hire a contractor to update your bathroom. He asks for a quarter of the project’s cost up front. Unbeknownst to you, your contractor has not paid subcontractors for other projects. He uses your money to satisfy those debts. But then, he can’t pay the subcontractors working on your bathroom. You’re in the dark until subcontractors file a lien on your property for nonpayment.

If you’re in a similar situation, you may consider speaking to an attorney. Sometimes a letter from your lawyer is all you need to recover your money or get the lien removed.

If the case ends up in court, a judge can award three times the actual damages and attorney fees if the contractor violated the Colorado Construction Trust Fund Statute.

Invalid Liens

State law protects contractors and subcontractors from non-payment.

The Colorado Mechanics Lien Law allows contractors to file a lien against real estate if they are not paid for their work. The property can be foreclosed to recover the unpaid services.

I have a lien. Can I get it removed? The short answer: yes.

Liens can be rendered invalid if a contractor does not follow the filing process.

  • Files late. If a contractor supplies only labor, they have two months to file from the last day workers are on the job. If the contractor also provides materials, the deadline is extended to four months.
  • Fails to notify property owner. Contractors must provide the property owner a Notice of Intent to Lien at least 10 days before acting.
  • Overstates debt owed. The amount of the lien must reflect the balance due, and it cannot exceed the price of the contract.
  • Makes technical mistakes. The lien must be notarized, include a sufficient property description, and be signed, among other procedures.
  • Misses foreclosure deadline. A lien is only valid for six months. After that, the contractor forfeits their lien rights.

If the contractor fails to foreclose, the lien remains on public record, but it is not legally enforceable. You may need to have it removed.

A quiet title action can remove mechanic’s liens that have expired or a debt that has been paid.

A quiet title action challenges the lien’s validity. Confirming the title rights lifts challenges to the property.

The Construction Contract

If you hire a contractor or handyman to work on your home or business, you may sign a construction contract.

A contract sets expectations and safeguards both parties involved in the project. But, contracts likely will include clauses or provisions that benefit the contractor. These obscure passages can be in fine print or on the back side of pages.

Contracts at minimum should include:

  • Scope of work
  • Start and finish dates
  • Permit acquisition
  • Project cost and payment terms
  • Materials to be used
  • Contractor’s and owner’s responsibilities
  • Owner’s right to cancel
  • Project change policy (“change order”)
  • Liquidated damages clause

You may be familiar with some contract terms like scope of work and permit acquisition.

Here’s an overview of other terms that may not be as familiar:

Owner’s Right to Cancel

Colorado law lets some homeowners cancel a contract within three days of signing it. Roofing contractors are required to notify a client they can rescind the contract. The homeowner is entitled to a full refund for any deposit.

Project Change Policy

A “change order” occurs when you or the contractor alters an aspect of the project after the contract takes effect. Changes can affect budges, extend timelines, and increase labor.

Construction contracts often contain a policy about how to handle project changes. Changes may be required to be in writing. Both parties may have to sign off on them.

A policy like this can reduce change order abuse by contractors who attempt to increase costs.

Project Cost and Payment Terms

On the surface, cost and payment terms sound straightforward. But the homeowner can be harmed if they don’t carefully read this section.

Most homeowners enter into a fixed-price agreement. Ideally, this keeps costs down. However, a contractor or handyman may cut corners to stay on budget. A corrupt contractor could abuse change orders to inflate the price of the work.

Liquidated Damages Clause

The liquidated damages clause limits damages. Many times the clause relates to a project’s deadline. If either party breaches the contract – for instance creates a delay – there is a pre-set amount paid to remedy the breach.

This provision serves two purposes.

  • It motivates the contractor and client to stay track.
  • It compensates either party for potential losses due to delay.

There are two sides to the liquidated damages coin. What you get may not equal what you actually lose. But, proving actual damages can be difficult and costly in litigation.

Here’s an example:

A bed and breakfast owner hires a contractor for a complete remodel. Both parties agree to pay $700 a day if they delay the project. The job’s deadline is five months. Instead, the overhaul continues for four extra weeks.

Contractor causes delay – The contractor fails to get a necessary tool. The carelessness delays the bed and breakfast reopening by 28 days. The B&B owner may have lost revenue during that additional closed month. However, it’s difficult to say how many guests they would have served during that time.

The owner is entitled to $19,600 in liquidated damages.

Owner causes delay – The bed and breakfast owner changes some remodeling elements and creates the delay. The contractor could incur extra overhead costs and miss out on other work.

The contractor receives $19,600 the for additional expenses.

Mechanics Lien Notice

Contractors who are not paid for their work will often file a lien against the property. The owner cannot sell or refinance the home as long as the lien remains enforceable.

Builders, material suppliers, and architects can also impose a mechanics lien.

There are instances when the lien can be removed. For example, if a contractor places a lien on your home for more than what you actually owe.

No Written Contract. What now?

If you don’t have a contract and you encounter a bad contractor, you will wish you had something in writing. But, not all hope is lost if you don’t.

In Colorado, you do not have to have a written contract to sue a contractor or handyman. However, not having a written agreement complicates the lawsuit.

If you sue, the burden of proof is on you. Without the job’s details in writing, your case is more difficult to prove – and win.

State law allows oral contracts to be as enforceable as a written contract.

  • Text messages and emails can be used as supporting evidence.
  • A contract signed only by the homeowner is more proof of intent to enter into an agreement.
  • Demonstrating a handyman performed some work is an indicator of an oral contract.

Statute of Limitations: three years (verbal and written)

The Contract Takeaway

If you believe your contractor strayed from the contract, reach out to Robinson & Henry, P.C. Our contract attorneys can help you figure out whether there is a breach.

Are you concerned your construction contract is not adequate? Is the contract’s language difficult to understand? Our attorneys can assist you with that, too. They can review the contract to ensure it’s fair. If not, our lawyers may be able to help you renegotiate the terms.

Meet a Colorado Real Estate Attorney

Donald Eby

Picture of tax attorney Donald Eby

Bar Admissions:
Colorado Bar
U.S. District Court, Colorado

Practice Area:
Real Estate, Litigation, and Probate

Office Location: Castle Rock

Robinson & Henry firm partner and lead attorney Donald Eby received his Juris Doctor from the Sturm College of Law at the University of Denver. He earned a Bachelor of Science from Oklahoma State University.

Don has experience helping clients who face a variety of real estate challenges, including those up against a bad contractor.

One of Don’s clients lauded him as “an outstanding problem solver.”

Don’s knowledge of business and commercial law lends itself well to assisting clients who have contract issues or a contractor who has abandoned their obligations.

Boyd Rolfson

Picture of tax attorney Boyd Rolfson

Bar Admissions:
Colorado Bar
U.S. District Court, Colorado

Practice Area:
Real Estate, Litigation, and Probate

Office Location: Colorado Springs

Boyd Rolfson earned his Juris Doctor at South Texas College of law. Boyd attended Brigham Young University for his undergraduate studies.

Boyd’s desire to help individuals solve issues they could not clear up on their own led him to law. His practice areas include real estate, business law, civil litigation, and probate. His area of expertise make him an excellent resource for individuals fighting a bad contractor.

Boyd advocates for his clients in and out of the courtroom, protecting valuable real estate assets.

Steve Whitmore

Picture of tax attorney Steve Whitmore

Bar Admissions:
Colorado Bar
U.S. District Court, Colorado

Practice Area:
Real Estate, Probate, Business Law, and Criminal Defense

Office Location: Denver

Stephen Whitmore received his Juris Doctor from the University of Denver Sturm College of Law. He attended the University of Notre Dame for his undergraduate degree where studied psychology.

Stephen is an effective litigator having achieved favorable results for hundreds of client in Colorado.

“We cannot thank Mr. Whitmore enough for his opinions, recommendations, and legal services,” one client said. “ We would, without hesitation, enlist the aid of Mr. Whitmore once again.”

An NCAA Division I hockey player, Stephen’s competitive drive helps support a successful legal career. He takes pride in representing his clients with enthusiasm and candor. His clients can count on him to keep them informed throughout the case’s progression.

If you’re facing contractor troubles, contact Robinson & Henry’s experienced litigation team. Call (303) 688-0944 to schedule a free consultation. Let Don and Boyd hold the bad contractors accountable so you can focus on restoring your goals.