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Are Roofing Contracts Binding?

Signing a roofing contract for repair or replacement is usually at the back of our minds until we are frantically exchanging garbage cans and buckets under a leak that is akin to a gushing waterfall. The binding strength of a roofing contract doesn’t come into your thoughts as you rush to salvage your belongings and hire an Oklahoma City roofing company, but you should take the time to review the contract all the way through.

Roofing contracts are binding. Some vendor contracts contain a right to cancel clause with a minimum of 72 hours that mirrors the FTC Cooling-Off Rule of 3 days. If your insurance company is paying for the replacement or repair of your roof, you have virtually no control over the binding contract once the insurance company approves it.

The key of roofing contracts comes down to knowing what is in them and selecting a company that you are confident with instead of canceling a contract. Here is what you need to know.

What You Need To Know About Roofing Contracts

Roofs last about 20 years and can be a significant investment to the tune of about $8,000 to $10,000 when you need to replace it, depending on where you live and the materials used. This often requires the homeowner to obtain financing or look to their applicable insurance. The cost of replacement validates that you should:

  • Knowledge of the Right To Cancel
  • Reviewing the contract terms
  • Reviewing the scope of work
  • Obtaining more than one bid

When Can You Cancel?

Knowing your right to cancel and properly utilizing that right will save you thousands of dollars in suits and a mountain of emotional stress. Below are some tools to define the different ways to cancel a roofing contract.

FTC Cooling-Off Rule

The Federal Trade Commission created a ‘Cooling-Off’ Rule that applies to purchases over $25. This rule emphasizes your right to cancel a contract until midnight on the third day (72 hours) for a full refund. The rule is designed to allow a reasonable period of time to review your actions and make sure that you are confident with your purchase, as well as check out the vendors credentials.

You’re saved, right?! Well, there are a few caveats. This rule applies to sales that occur at:

  • Buyer’s residence
  • Buyer’s workplace
  • Seller’s temporary workplace (like a booth at a trade convention)

In the course of business, the seller must:

  • Inform you of the cancellation rights on the spot
  • Provide you copies of the cancellation form
  • Provide you a copy of the contract with date, name, address of seller & right to cancel
  • Provide you a copy of the receipt

Some caution must be exercised here because the Cooling-Off Rule does not apply under these specific conditions:

  • Emergency home repairs
  • Contracts signed at the sellers’ usual place of business
  • Sales made over the phone or through the mail
  • Contracts for real estate or insurance
  • Sales requested by you for repairs or maintenance on your personal property
  • Sales that started at the place of business and moved to your home (such as picking shingles in the store and then signing at your house)

These restrictions certainly limit a cooling off period for roof replacement and repair, so it is essential to review what rights to cancel are in the contract with your vendors as you are collecting bids for your roofing job.

Vendor Contract Right to Cancel

Your roofing vendor is required to provide you with the right to cancel the time period and the form. Review this information thoroughly. Some vendors may give you longer than the 72 hours offered by the FTC. It is vital that you are familiar with:

  • The vendor recognizing the FTC Cool Off Rule
  • The vendor explaining your right to cancel
  • The vendor supplying you the documentation to cancel
  • The vendor reciting a right to cancel in their contract with the time period
  • The procedure with how you are to cancel the contract

Cancellation rights are not something that you want to leave for a last-minute split decision. It is not a best practice to come in at the 72nd hour and cancel or try to at the 73rd hour. The goal is to go into a contract knowing the responsibilities and expectations of each side to avoid cancellation.

Understanding the vendor’s contract and researching the vendor’s work before the contract is signed are best practices to avoid cancellation and have confidence in the:

  • Work
  • Vendor
  • Contract

Breach of Contract Cancellation

This is where things can get tricky and expensive. It is essential that you hire a reputable contractor to avoid this situation and pay close attention to the start and stop times in the contract as well as the vendor scope of work and responsibilities.

If the vendor does not perform according to the contract, it is possible to get out of the contract to seek another. For example, if the roofing vendor was to start work a month ago according to the contract and hasn’t set foot on the property, he is likely in breach of the contract.

Under these circumstances, you can cancel it unless he shows a reason for the delay that is contractually acceptable; like a tornado took out his business.

The starting point here would be attempting to reach the vendor directly and see what is going on. If he has a viable excuse that you accept, it is advisable to sign a new contract with him that restates starting and stopping dates.

One thing that can assist in the disruption of service is the surety bond company that the construction company uses. Surety bonds are carried by several industries as a requirement to ensure the projects or services that they render are sufficient. In construction, there are three types of bonds:

  • Bid
  • Performance; and
  • Payment

Bonds are registered and usually appear on the contract. If they don’t, you can call the government entity that oversees the roofing contractors in your state and get the information. If your vendor is unresponsive, you could handle it in a few ways:

  • Call his bond company to get the job done by another company
  • Call his bond company to cancel the contract and refund you
  • Sue for breach of contract

Take the time to research your roofing vendors before making any decision to sign a contract. Doing this will save you considerable time and money in the future.

What if it isn’t your money? What if your insurance company is the one that is swooping in to save the day after you dutifully made a claim with them, and you are now unhappy with the vendor?

Will Insurance Cancel A Roofing Contract

Insurance companies are usually involved in roofing contract in the cases that your roof was damaged by fire or force of nature. In some cases, you pay for the roof replacement and seek reimbursement from them. In other cases, you pay the deductible, and the insurance works directly with the roofing contractor under a contingency contract.

Insurance companies usually have their own preferred list of vendors that they will utilize to do the roof repairs or replacement, and you will basically have no voice in that system other than paying your deductible. This depends on your insurance carrier. But commonly, this is how it works.

Contingency contracts serve as your agreement to work with a roofing company and are legally binding. The roofing vendor will work with your insurance company and do all of the insurance-approved repairs. So, basically:

  • The insurance will send the vendor to assess
  • The roofing company tells the insurance what needs to be done
  • The insurance will approve what they believe needs to be done
  • The contract is formed based on the approved repairs and does not include unapproved work

The insurance company may ask you to provide three bids if they don’t have an immediate vendor, but the contingency contract would only provide for work that is insurance approved in any case.

The roofing company may offer to negotiate on your behalf with the insurance company and have you sign the contingency contract as a guarantee that they will be used for the work. The caution with this is that you do not allow work to proceed until you receive a definitive answer for what the insurance company will pay for.

If you want more work done than what the insurance company is willing to approve, a separate contract would need to be signed between you and the roofing company applicable to the same right of cancellation terms outlined above.

The only reasons a contingency contract would be canceled are:

  • Insurance doesn’t approve the claim
  • The roofing company doesn’t feel the claim amount approved is worth the work
  • The roofing company feels the relationship is too demanding (tight deadline or unpleasant people to work with)

Insurance is a wonderful thing and can significantly help you cover the costs of roof replacement or repair, but you will not have as much control as if you were handling the job yourself.

If you are handling the job yourself, make sure you have an in-depth understanding of the contract terms to avoid cancellations.

Reviewing the Contract Terms

Besides the scope of work and the right to cancel, there are several other things that should be made clear in a roofing contract. Replacing a roof is a high-ticket item and worthy of a thorough review of contract terms. Things that you should look for in a roofing contract are:

Roofing Company Warranty Information

If there is any warranty provided by the roofing contractor or the manufacturer of the supplies being used, it is a best practice to have that referenced in the contract. Having this information will allow it to be called upon if needed at a later date.

Payment Terms & Schedule in A Roofing Contract

The contract should detail the payment schedule. Usually, 10-25% of the payment is received upfront as a deposit. The rest of the amount due is paid as the roofing company reaches milestones of completed work or the remaining balance is due at the completion of work in its entirety.

The contract should also state how much of the payment can be held back upon completion for say 30 or so days to make sure none of the work is defective. What this means is you will:

Pay the 10-25% deposit amount upfront

Pay the scheduled payments at each milestone of work competed

Pay the remaining balance due on completion – LESS 2 or 3%, which you hold for 30 days

Any defect with the work usually will make itself known within 30 days. If there are no defects, you release the last 2-3% of the payment. This clause is something you will want to discuss with the vendor.

Project Deadlines For the Roofing Company’s Work

It is crucial to put in a starting and stop date for the project. Some roofing vendors will put in the starting date but avoid putting in a detailed ending date or milestone of the work to be completed, which can lead to a job being dragged out over months. To keep your sanity, having an end date and milestones are essential.

Roofing Company Insurance, Bonding, and Licensing

Working on a roof can be dangerous, considering the height and all that is involved. It is imperative to make sure the contract includes details about worker’s compensation and liability. Having the bonding and licensing information prominently displayed on the contract will help your research verify you are dealing with a reputable, qualified vendor.

This information is important in case your property is damaged while the roofing company is working on your property. This can include landscape, trucks tearing up the driveway, etc.

Plans for Unforeseen Circumstances Or Delays

Sometimes roofing companies will find additional problems as they peel the onion that is your house. There could be underlying issues that were not seen at the time of the estimate, such as rot or infestation. The estimate will need to be adjusted by cost or timeline.

Also, if mold is found, some roofing companies won’t agree to mold cleaning. These hiccups should be mentioned at the beginning of the negotiations to see how they handle unforeseen circumstances and the process involved.

Worksite Details For Roofing Company Work

This includes protecting your home while it is exposed in inclement weather, damage to your property that occurs due to roofing workers, or clean up. You will also want to discuss inspection schedules. Basically, any concerns that you have should be referenced in writing in the contract.

Lien Process To Secure Payment for The Roofing Company

The roofing company must also protect themselves and will have certain expectations coming from your side of the table; this includes payment. A mechanics lien placed on the property is common and creates an incentive for timely payment. An important thing to note is that mechanics liens can be foreclosed upon.

Should you not make the payments as required by the contract, the roofing company can foreclose on the home, taking your home as payment. Any surplus of the sale would go to you after the lien and subsequent legal fees are paid.

Roofing companies are not interested in seizing your home; they are interested in payment. The mechanics lien, like a surety bond, is a tool used to make sure that each party holds up its end of the contract.

If the contract has a lien process or placement clause, you may want to consider asking for a lien waiver in the contract or even a subcontractor lien waiver. You can also negotiate to redefine the causes for the lien to ensure there is no hold on your property unless warranted.

Scope of Work For the Roofing Company

We can’t stress enough how important the scope of work is in creating the contract. It illustrates everything that will be completed in the contract. Everything discussed should be in the contract. This portion of the contract should be well-detailed and crystal clear to include:

  • Material being used
  • Supplies being used
  • How many shingles, clay tiles, etc.
  • The interior and exterior worklist
  • The project procedures
  • Building permits
  • Who is doing what work (subcontractors, architects)
  • Removal of old roof detail
  • Discuss any exclusions to the contract

The more detailed this part of the contract is, the less likely there is to be any confusion or argument post-roofing job completion. Review this section carefully; if there is anything that you don’t understand or feel has been left out, make sure that you bring the concerns up with the roofing contractor before signing the finalized contract.

Obtaining More Than One Bid

It is prudent and financially responsible to contact more than one roofing vendor. This is another way to avoid canceling a contract because you are signing with confidence that you have selected the ideal candidate for the job.

Obtaining more than one bid also gives you perspective. If one bid is widely out of whack, you should look at it with more scrutiny and find out why. Obtaining more than one bid gives you an idea of the value and experience that you are hiring to help ensure you are hiring the right company.

Competitive bidding ensures that you are getting the most for your money when it comes to your investment. While you are obtaining your bids, you will want to:

  • Check references
  • Verify the bond, license, and contact information
  • Interview the company, not just go off the paper proposal or flyer

Do the things that will elevate your comfort level with the roofing company you select and review the contract extensively. After you are comfortable, commit to signing on the dotted line without a thought of canceling in your mind. Know that you made the best choice possible with the information you gathered.

Top of The World

Roofing contracts are legally binding but do have a 3-day escape clause. Enacting the escape clause is not necessary if you review the contract thoroughly and allow yourself the time to not make any rash decisions. The interview process is an important process and allows the roofing companies to gain your confidence and showcase their ability.

Roofing contracts are designed to protect you and the roofing company by knowing each other’s responsibilities and duties upfront, leaving nothing to question. Committing these expectations to writing will ensure that there is no miscommunication and no reason to cancel the job.