High Risk Contracts & DocumentsSep 18, 2023
URGENT: Check Your Restoration Contracts and Releases*
Are You Covered?
The funny thing about RISK is; We don’t often recognize it until it’s TOO LATE.
Among the very first things you can do is have a solid contracting and documentation process.
Contracts vs Work Authorizations
Our industry has misled us. But don’t blame it (the industry). It has only repeated what it was taught. That is how generational education happens.
For a few decades, restoration contractors in the mitigation and emergency services space have adopted the terrible information that simple work authorizations are adequate. They simply aren’t.
A contract is a legally binding document between two parties that contains many required components such as a price, the scope of what's included, dates for completion, etc.
Contracts are required in many states in the US.
Yep. REQUIRED. Meaning any work performed without a contract that meets the requirements for that state is null and void.
Be careful and make sure you know how your state views your contract. Because I can bet your customer knows.
A work authorization is a component of a previously executed contract. Often called an MSA: Master Service Agreement.
These often apply to agreements or service contracts with commercial property owners, management groups, or other authorized parties.
Your contract is in place, which should outline your rates, billing format,, and other terms and conditions.
Work authorization is used upon any project beneath that MSA but is not to be used as a stand-alone contract.
Believe me, as a Consultant and Mentor to hundreds of contractors, I have seen these put to the test, fail, and then help the contractor right the ship with proper contracts.
How does anyone put a price on a contract in an emergency?
This is almost certainly the biggest speed bump we hear. The idea that you must immediately get to work doesn’t allow you to go through the steps to estimate the loss and complete a full contract.
I will challenge that all day that you should not be using such blind speed for a number of reasons. Environmental testing, safety assessments, client interview, proper documentation, etc.
We have tools in our Document Packages that help a lead tech or any first responder actually put a preliminary number on a job.
You need to understand that you are not likely providing a FINAL invoice amount, but a ROM (Rough Order of Magnitude). The language of your contract will address that the number you provide is based off of a initial and limited inspection while using an appropriate amount of urgency to properly mitigate.
In some cases, your number will be solid and your final invoice will reflex that. But in some cases, especially more complex losses, change orders are absolutely standard. Customers understand this if they have ever had a vehicle repaired, maybe medical care or other home services.
Your Receivables might reflect the issue
Consumers are often far savvier than they let on. I am not stating that they are being deceptive, but they likely know that they are not agreeing to a contract with an agreed-upon price. This small realization may be an indicator that this leads them to believe that you will work with and settle for whatever their insurance company decides they want to pay that week.
In my experience, that amount is generally less than what is actually required to operate a proper financially stable company.
Contracts = Accountability
Proper clear and transparent contracts that are mutually acceptable serve as a tool to hold all parties accountable to agreements and promises.
They ensure that the customer fully understands their position in financial responsibility while giving them leverage against a contractor underperforming the agreed-upon scope of work.
Contracts generally keep all parties in line, but protect as well, when they are not.
Contracts also eliminate almost all arguments or discussions with other MIPs (Mutually interested parties). Your contract and its included terms and conditions are locked and agreed upon by the parties included. Any interference with terms otherwise is futile and possibly punishable by law.
Do I need contracts for different restoration services?
The short answer is no. In our experience over 21 years years, we generally kept one general contract for all services hired for. This included Fire Damage, Water Damage, Earthquake, Mold Remediation, Bio, etc.
The services of each might require a different approach, timeline,, and certainly costs.
This is where we use a SCOPE. In our packages, we have a SCOPE LETTER. A scope letter is an opportunity to specifically document, explain and outline what you found and what your professional approach will be to recovery and restoration.
In the primary contract, there is a place for a scope outline. You simply add” See attached Addendum” and include it with your presentation and obtain signatures and initials where indicated.
This allows you to use a principal contract, streamline your processes and help with training and accuracy.
What about Restoration Specific Releases?
We believe a selection of appropriate releases is a professional position for a qualified restorer.
Thee might include:
- Hold Harmless
- Limitations on Standards Compliance
- Customer Responsibility Form
- Microbial Disclosure Release
- Many more….
These can be deployed when limitations present themselves. They not only cover your liability but might create more client understanding of the necessity of certain practices.
Electronic or paper contracts and documents?
This is purely a personal choice. I would base this on your current operations and system.
We believe that having your company operate in a digital format is far more efficient and professional. Your customer and the public are for more accustomed to electronic signatures with the workflow of emailed documents.
What's most important is that you USE the right forms and that everyone on the team operates the same way.
You may want to shoot for accuracy before getting into other deployment practices.
Don’t I need an attorney to write my contracts?
It is not required to have an attorney write your contracts from scratch. There are standard templates out there like the ones we sell here.
We do recommend that our contracts be reviewed by your attorney to ensure that your local and state laws are inserted. But a review is far more affordable than the creation of them from the ground up.
We have had hundreds of specialists purchase one of our selected packages whether they were just starting out or if they have grown and just need to update.
What about editing and logo’s?
All of our documents are editable in Microsoft Word or Google Docs. Upon instant download, you can begin to customize, review and deploy as soon as you are comfortable.
Why are our packages so affordable?
Ha! We are asked this OFTEN and that should be an indicator that we should change the prices.
The public perception is that when something is too cheap, it's not valuable, yet we all look for the best and most affordable options.
While that mindset is certainly often true, we literally have priced these packages strategically so they match our company’s overall goals.
We cannot likely help those just starting out by pricing things out of reach or causing financial strain.
We have used these ourselves for decades and offering to our peers at a very low price is one way we can give back and still operate a company that supports our other goals.
I will keep it simple. You put so much energy, investment, and time into education around the professional practices of remediation and services, you need to consider protecting those investments with better foundational contracts.
Maybe you have not been challenged yet….but believe me, you WILL. As you grow and get new opportunities, you will see an increasingly obvious need to have good contracts in place.
Take a hard look at the infrastructure of your documentation and design a workflow that works for you.
We encourage you to take a look at our document package offerings in your homework. Grab the one that suits your needs.
* please note. We are not legal scholars or licensed legal professionals. The following blog is written based upon our experience in the industry and working with some of the best restoration legal professionals. You should consult a legal professional to understand the legal requirements for your company, your state, and locality.
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