3 Legal Issues Every Remodeling Company Should Keep in Mind

Disputes are common in the home improvement industry. Sometimes they make it into a courtroom. Other times, companies get the opportunity to settle outside of court before matters escalate into a public relations nightmare. However, lawsuits are not the only legal concerns a company should keep in mind.

Tax Concerns

Construction can be a capital-heavy business. Hundreds of thousands of dollars flow through companies every year. A lot of this money goes back out in the form of expenses, but it often passes through as revenue, nonetheless. Work with a professional accountant to ensure that your financial documents remain error-free and that every step necessary to operate a tax-efficient business is taken.


It is normal in the remodeling industry to outsource work. Sometimes companies outsource entire projects to other individuals or companies. Other times, they may outsource specific tasks. Always ensure these contractors are experienced, licensed, compliant, and carry general liability insurance. Also, double-check that their insurance policy names your business as an additionally insured party. In fact, your insurance carrier may require this. And, there are mounds of precautions you need to take to defend that a sub-contractor is not actually considered your employee. One miss can open major issues if there is a formal audit.

Litigation Avoidance

Going to court is a costly business, and many lawsuits are 100% avoidable. There are several measures you can put in place to reduce the risk of getting sued. First, ensure you have a proper grievance or feedback procedure in place, so customers can air concerns and work with you to find solutions. Second, hire an attorney to give legal counsel whenever necessary and to assist with the wording of contractual agreements. An industry survey of over 100 companies a few years back that 99% of all contracts being used were in violation of at least one major local, state or federal requirement. Odds are, you may be in the same predicament unless you’ve had a contract review by an attorney that truly understands this industry.

Integrity plays an important role in the remodeling business. It also helps reduce the likelihood of lawsuits. The land mines for home improvement companies can destroy your business even when you think you’re doing everything right. Bring all your legal questions and concerns to the 2020 Home Remodeling Legal Conference in Palm Beach, Florida this December. Berenson LLP will be covering the issues you need to know to profit and protect yourself in 2020 as a home improvement contractor. Find out what the most dangerous contractor practices will be for 2020 and gain an understanding of how to avoid or solve these issues. Walk away with information and forms worth thousands!

In the meantime, show your customers your commitment to offering reliable and ethical services by becoming a member of NAPAC.  NAPAC represents the interests of satisfied homeowners and the successful contractors who serve them. Contact us by calling 267-214-6229 or sending an email for more information.


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