A collection of avoidable horror stories about home renovation
All too often, Bolster comes into contact with homeowners who have experienced a renovation nightmare. Sometimes we are able to help save their project, sometimes it's too late. In every case, their tragic stories anger and inspire the Bolster team to help others avoid the same fate. We choose to publish these stories here in our anti-portfolio to help other's understand the importance of following the Bolster process on their project. Some names have been changed to protect the innocent.
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How no Performance and Payment Bond cost Steven $140,000 & 12 months
Steven is a venture capitalist with a well known firm in Silicon Valley. In 2012, Steven and his wife renovated their home in Palo Alto and, due to a previous renovation nightmare, decided this time to go with a contractor who had done beautiful work for, and came highly recommended by, their best friend and neighbor.
Unfortunately, the contractor was having financial problems and went bankrupt halfway through their project. Several of the sub contractors hadn't been paid by the general contractor and placed liens against Steven's home forcing him to pay twice for the same work he'd already paid the general contractor for (to make matters worse, some of the work the sub contractors were requesting payment for hadn't even been finished).
Steven spent months in and out of court fighting the liens and by the time it was all settled, had overspent by $140,000 and was 12 months late in completing his project.
Lesson: Don't hire a general contractor for a major renovation without purchasing a 100% performance and payment bond. This financial instrument transfers the financial risk of delivering your project from you to the contractor via a surety (a type of insurance company) and guarantees the contractor delivers as promised. It also protects you from liens being placed against your home.
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How the wrong professional cost Marinella $10,000 & 6 months
Marinella and her husband Tom were renovating their first apartment together in the UWS but had to move in with Marinella's parents after the contractor their co-op recommended disappeared in the middle of the project because he never filed building permits.
Lesson: Don't hire an unlicensed general contractor and always verify the permits you and your contractor are responsible for obtaining.
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How purchasing his own materials cost Ian $18,000 & 5 weeks
Ian was doing a $200,000 addition to his townhouse in Brooklyn and chose to purchase his windows, flooring and kitchen directly to avoid his contractor’s surcharge of $8,000. After storing the flooring incorrectly, it succumbed to humidity and had to be replaced. As a result of the flooring stage having to be postponed his contractor's painters (who were due to start work once the flooring was installed) had to leave to start another scheduled project and couldn't return for another 4 weeks. All in, Ian's mistake cost him $18,000 and an additional 5 weeks.
Lesson: Don't purchase your own materials.
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How insufficient general conditions cost Jane $110,000 & 6 months
Jane was doing an $800,000 gut renovation and combination project to her West Village home and hired a contractor whose general conditions were just 9.7% (quality contractors typically require closer to 20%). Unsurprisingly, without suitable site supervision, the project went through 3 different job captains by the end of the demolition phase and the general contractor began not showing up. She had to fire the contractor, stop the project, hire a replacement contractor at a premium and rip out $60,000 of unsupervised work.
Lesson: Don't hire a general contractor with insufficient general conditions (<20%), profit (<10%) or overhead (<10%).
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How insufficient workers' compensation cost Anette $16,000
Anette was doing an $60,000 project to her East Village apartment and hired a contractor who did not have suitable workers compensation insurance. The contractor cut his finger during the 2-month project and filed a claim against Anette as the “employer”. She was court-ordered to pay $16,000 in damages to the contractor. She countered by pointing out that the contractor wasn’t licensed for which he was fined just $250.
Lesson: Don't hire a general contractor without a valid workers' compensation policy.
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How insufficient general liability insurance cost Carolyn and Robert $55,000 and 4 months
Carolyn and her husband Robert were doing a $140,000 kitchen and bathroom project to their Upper West Side co-op apartment and hired a local contractor who had been recommended to them by their building's super. Although the co-op board approved the contractor, it transpired that his General Liability Insurance policy was insufficient to cover a Property Damage Claim from Carolyn and Robert's neighbor after the contractor cut through their property's piping causing a flood and forcing them to vacate, the property. The mistake also caused tens of thousands of dollars in damage.
The high cost of the pending lawsuit without adequate coverage forced the contractor to shut down their business leaving Carolyn and Robert stranded and in need of a replacement contractor, not to mention an uphill struggle against an understandably disgruntled neighbor and now overly-cautious co-op board that made completing their project extremely laborious. By the time they had finished their kitchen and bathroom renovation, Carolyn and Robert had spent an additional $55,000 and endured 4 months of arguments and inconveniences.
Lesson: Don't hire a general contractor with inadequate General Liability Insurance cover. A good general contractor in New York City that has been in business long enough to have been audited by their insurer will typically be charged around 3% of their revenue (your project value) to be properly covered.