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Thursday, October 26, 2006

Construction ePay - Escrow Service for Remodels

Have you ever heard of something new and thought to yourself, "That's a great idea, why didn't someone think of that sooner?".  Well that's exactly what I thought when I heard of this new company called Construction ePay.  They are basically an escrow service for homeowners and contractors to use during remodels, repairs and other home projects.

Construction ePay helps to keep things fair for everyone involved by acting as a neutral third party during home remodeling projects, much like an escrow or title company does during the purchase of a home.  So if you needed a new roof put on your home, instead of trusting some roofer you found in the yellow pages with an upfront payment of several thousand dollars, you would pay Construction ePay instead.  They hold the money for safe keeping and disburse it to the contractor of your choice as work is completed.  If there are problems, you can freeze your payment until the problem is resolved.  They even offer mediation services if necessary.

Construction ePay charges the contractor a 2% fee, or a 5% fee if the customer pays by credit card.  For the homeowner, Construction ePay offers protection against fraudulent contractors as well as unfinished and sub-standard work.  Construction ePay is also beneficial to the contractor because it keeps him from having to chase down payments and even allows him to accept credit cards if he does not already.  And since Construction ePay will provide customers with a list of contractors who are willing to use their service, contractors might even find some new clients by being on that list.

Knowing that this service exists, I cannot think of any reason why a homeowner would NOT use it when hiring a contractor - at least for major jobs.  And the fact that the fee is paid by the contractor makes this service even more of a no-brainer!

In response to the problems that often arise between homeowners and contractors, my home inspection company, Homewerx Home Inspections offers what's called a Dispute Resolution Inspection.  This type of inspection is just what it sounds like - an inspection by a third party to help resolve a dispute.  We also offer what's called a Remodeling Inspection, which is performed during and/or after remodeling or other home repairs.  Having a Certified Home Inspector on your side can often help persuade a contractor to do quality work.  But it cannot protect the homeowner from a contractor that's just plain crooked - and believe me they're out there.  Just the other day, my inspection company did an inspection and some mold tests for this poor older lady who was left without a roof by a fraudulent contractor.  She paid him to replace her roof, but instead he disappeared right after he removed the old roof.  Of course, it rained while the roof was off so not only did she have to pay for her new roof twice, but now she has mold growing all over her house too.  The inspection and mold tests were necessary after the fact.  But she could have avoided the whole ordeal if she had used Construction ePay in the first place! 

Construction ePay has a great idea and I'll be very interested to see how well this idea catches on.

Visit Shannon Hubbard's Home Page     Written By: Shannon Hubbard

Great American Realty, Inc.

Cell: (480) 695-6672
Email me

Posted by Shannon Hubbard, AZ Realtor & Computer Guru on October 26, 2006 | Permalink



I a have a question regarding homeowner liability during construction. My father had a two story house built recently (Sedona, Arizona)with an elevator. During construction, a worker fell down the elevator shaft after opening the door which he believed was a closet. He is now suing his own contractor as well as my father. Can my father really be liable?


Posted by: Tom | Nov 24, 2006 2:31:48 PM

Hi Tom - I'm not a lawyer so please don't take this as legal advice. But yes, it's possible your father could have liability if he owned the property where the accident took place. Workers injured on a job at someone else's property often sue the property owner in order to get at their homeowner's insurance policy. That's why it's very important to make sure that anyone you hire to work at your home is properly insured - you should make sure they carry both General Liability insurance in case they break something or injure someone else, and Workman's Compensation in case they injure themselves on the job. I hope everything works out for the best for your father.

Posted by: Shannon Hubbard | Nov 24, 2006 3:18:40 PM

I am a remodeling contractor. I did repairs on the exterior of a home for a homeowner. I am six hours short of finishing the job at $1575.00. My customer copped an attitude and said ZI was ripping her off. I actually did 20-25% more work than the contract called for. The sad thing is I did not get a written contract, but a verbal (with witnesses). Now she wants to pay me $1200 but has been dragging her feet for weeks. She won't allow me to finish the work or my crew. I realize I am stupid for not getting a signed contract. Do I have any reoourse. My work has been utterly professional and my company has been written up in contracting magazines for my integrity and craftmansship. I feel really silly.

Posted by: Gary | Dec 31, 2006 9:01:52 PM

Hi Gary -
Sorry to hear of your situation. Without a written contract, I don't think you can get a mechanics lien and any recourse you may have really comes down to your word against hers. If you have witnesses to the verbal agreement, you might try small claims court. But again, it will likely come down to your word (and the word of your witnesses) against her word, and the word of any witnesses she may bring. In that situation, the credibility of the witnesses would be very important along with any other evidence you may have (before and after pictures, etc.).

I would recommend consulting an attorney. Perhaps just a phone call from your attorney would get her attention and let her know you are serious about being paid for your work. Perhaps you could have your attorney mention to her that most attorneys charge $200/hour or more, and therefore a lawsuit will likely cost her much more than the $1,575 she owes you, even if she wins.

My company, Homewerx Home Inspections, performs what's called a Dispute Resolution Inspection in order to help resolve conflicts like this. Our inspector will look at the work to determine what percentage of the job was completed, and whether or not the worksmanship meets acceptable standards, and then provide a report with his findings. However, she may or may not allow an inspection, plus someone would have to pay $200 up front for the inspection which sounds like it would just add to the dispute in this case. I know the Registrar of Contractors sometimes does courtesy inspections for property owners, but I'm not sure what they could do in this situation. You might call them to see.

If you do go to court over this, you should ask her (in writing) to allow a third-party (unbiased) inspection ahead of time - so you have an expert opinion as to whether or not the work was done to standards. Sorry I cannot help more, but I am not an attorney and you probably need one in this case. But in the future, you may want to consider using Construction e-Pay to ensure you get paid for your work! I wish you good luck in resolving your situation.

Posted by: Shannon Hubbard | Jan 2, 2007 10:12:19 AM

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