Save your Skin with an Independent Contractor Agreement

Property Management Blog

Real estate investors must work with contractors on a frequent basis. They usually look for properties where they can earn good money. Investors know it is a bit risky working with these contractors. However, they can mitigate this risk by using independent contractor agreement.

One of the risks for realtors working with contractors comes from properties that these contractors repair or rehab for sale. If you have been to any such property, you know what risk I am talking about. Imagine yourself inside a property where ladders are everywhere, and workers are standing on them holding drills, hammers, and nails. You can find electrical machines and electric cords lying on the floor and electric lines being placed in the walls. It could be a house where paint job is being done or the workers are driving nails into their places using nail guns. You can see yourself getting injured very easily in these places.

If you are putting your money in any such property under the control of contractors, one way of mitigating risk of harm or injury to you is to sign an independent contractor agreement. You cannot avoid exposing yourself to this risky environment, but you can feel protected with an independent contractor agreement.

Make sure the contract is right

If anything can save you from harm or injury because of working closely with contractors, it is the wording and the clauses in the contract your sign with them. The contract should make it clear who has the authority of entering the property and who can work inside it. Make sure they are not mentioned as your employees or those needing your permission to enter or leave at certain times. A clause should clearly mention that you are not their boss supervising their actions. In fact, the contract should spell out that they are independent contractors responsible for their own safety and insurance in case of a mishap. As the owner, your responsibility ends by giving them a task and how they go about it is entirely their jurisdiction.

As you can see, an independent contractor agreement takes much of the burden off your shoulders in case of a mishap or injury to anyone in your property being repaired or rehabbed. In case of absence of such a contract, the liability of an injury or perhaps a death lies solely on your shoulders. In fact, if an accident takes place in such a property, people look for someone with deep pockets to pay compensation. Being the property owner, you are expected to pay money for any loss of limb or life.

Phrases to include in your agreement

Signing a contract before contractors start work in your property makes life easy for you. Keep it short and meaningful and take advice form a lawyer so that there are no legal loopholes left for anyone to exploit you in case of as mishap and injury.

Give total control of the task to the contractor and make it clear that he is free to carry out in any manner that he deems best. Make sure that you can inspect the work in progress to judge its quality. Let it be clear that the contractor is required to have all the necessary insurance that includes compensation to any worker sustaining injuries because of an accident. This contract should remain in force until all work has been completed and the premises cleared of equipment and workers. Your contractor should agree to all the points and clauses in the agreement.
It is an independent contractor agreement that will keep you protected during the time your property is being repaired. Get this agreement reviewed by your lawyer.

If you’d like to talk more about property management, or you need help with Everest Property Management, please contact us at Everest Realty. 

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