Canadian Contractor

We have a winner!

Mitch found himself in a complex dilemma, with only one prudent way out.


December 18, 2015
By John Bleasby

Our most recent contractor dilemma found Mitch and his carpentry crew replacing the originally-hired crew on a large home renovation. However, the job is without any building permits because the wealthy young homeowner, acting as his own GC, feels permits are an annoying bureaucratic obstacle. What should Mitch do?

We received a large number of excellent responses and eventually turned to some legal experts to help unravel this situation. Thank you for the excellent suggestions!

Although most entries agreed that the risks were too high for Mitch to continue, there was more to the situation than first met the eye.

The response that we judged best summarised this complex situation was submitted by Jim Walowski of JSW Construction, Coldstream B.C.. Jim wins a DEWALT cordless mitre saw. Congratualtions!

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A DEWALT cordless mitre saw is headed to Jim Walowski of Coldstream B.C.

Analysis
Hindsight is 20/20. Mitch should have seen red flags when he joined a job already in progress, replacing the previous carpentry crew that had been ‘let go’ by the homeowner. What was the real problem? Secondly, Mitch should have ensured all necessary permits were in place before committing his team to the job.

The multiple risks
Now he’s facing the current dilemma, however, Mitch must recognise that should anything befall that house, either while under renovation or after occupancy, he will be drawn into any resultant dispute. As one of several trades teams involved, the potential liability exposure when the gloves come off and the lawyers go in is real. Everyone can be named in a civil lawsuit, whether directly involved with the problem or not. This could cost Mitch money and reputation.

Mitch must withdraw from the job site and state his reasons in writing. There may be lost revenue in the near term for Mitch and his crew, but this is his most prudent choice.

Other ways out?
Mitch could try to explain these risks to the homeowner and the benefits of obtaining permits. Given that proper architectural drawings exist, this should not be difficult. However, if the homeowner is still determined to continue on his current path, Mitch could ask for a signed airtight indemnification for him and his team. However, the homeowner’s temperament appears to make that unlikely; if he won’t get permits, why would he sign an indemnification? However, even indemnification wouldn’t exclude Mitch from being named in a civil suit.

Look for our next ‘What would you do?’ Dilemma’ in mid-January!


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2 Comments » for We have a winner!
  1. Jim says:

    I agree with everything here. It’s possible being asked to sign a letter idemnifying the contractor from liability may cause the homeowner to realize the benefits of having a permit. I used this method years ago when I came across a concerning electrical issue a client felt there was no need to correct. Once asked to sign a letter acknowledging the repair was declined by them, they changed their mind.

  2. Neil D says:

    My contract has a standard clause requiring the homeowner to provide all city issued work permits and that is generally standard in my area (Quebec) although I am aware that service standards and follow up of post permit issuance inspections carry different responsibilities for contractors in other areas.
    If the work is non structural interior renovation I don’t push it beyond the initial enquiry but the moment it’s either structural, involving electrical or plumbing there’s zero negotiation if a permit is required and I’m very willing to walk away.
    I make it crystal clear at the beginning of any job that because all work is done by appropriately licensed workers and subcontractors it’s all documented and taxed in a paper trail that ultimately shows where the work has taken place and who’s paid for it. The takeaway I stress to the client is there are no secrets if you want guarantees and value thats transferable down the line.

    As contractors we go through hoops of fire to get all the right licenses, permits, collars and shots for the pleasure of working so I just don’t want the hassle of being told to stop before I’m finished let alone being tangled up in someone else’s drama!

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