If the process of building your home were a machine, a verbal agreement would be like when one part of the system fails. Everything about building a structure- residential or commercial- is about efficiency and getting the job done right and on time. That is why multiple tools and ideas have been put into place to help create the most efficient construction machine one can imagine. However, the problem with this verbal agreement is that they can essentially shut your construction machine down if not handled properly. Verbal agreements are not only potentially illegal in the state of Florida, but they can also potentially put a strain on you as a builder and as an honest business person. Likely, however, if you are a builder, you are familiar with how much issues in your business can cost you. All it takes is a phone call from an attorney to a partner regarding the enforcement of a contract that was made over the phone to put at least a little strain on the efficiency of your business.
In the state of Florida, oral agreements are not enforceable under the Statute of Frauds. This means that any verbal agreement you make with your clients to get something approved on Saturday when it needs to be done Monday is legally void. For example, say you have a section of marble or tile that will go along the diagonal of a large room. You won’t be able to get the tile or the marble approved until After the floor is installed. So you and the client agree to do the work over the weekend for additional pay to the tile setter or master craftsman. Unfortunately, the weekend has come and gone with no payments made and no marble installed because it wasn’t in the same contract that was given to you. First thing Monday morning, you get a call asking where the agreed upon floor is, and your client is not happy you did not get their approval. Many builders use verbal agreements on a regular basis. Maybe it’s just to get cash under the table to save the client some money that would have been used on taxes or because you need them to get you cash ASAP. It’s an accepted practice, especially in an industry where giving additional pay to a contractor on the weekend is not a bad thing. The hope is that everyone follows the terms of the verbal agreement and that it does not lead to legal disputes.
The issue with verbal agreements is that they are not legally binding. For one reason or another, the terms of the verbal agreement were not written out, or the agreement was written out and not transferred into a new contract. As the law in the state of Florida explains, verbal agreements are “highly prone to misrepresentation and uncertain meanings.” (Haines City Community Development Department v. Sirianni, 458 So. 2d 255 (Fla. 1984)). What that means is that a verbal agreement between a client and a builder could result in many different problems:
If you are to take a job with the understanding that you and your team will be responsible for floaring-that is, installing the floor of the home-and the ceiling, and the cabinets, and the stairways, and the doors, and the windows-when is it your last day on the job? How long have you been working with this client? Did you agree to do the roof? Or was that with somebody else? Who is responsible for the structure? This is a familiar conundrum among builders, especially those who agree to take on projects without writing up a very specific contract. While you can be organized in your business to a certain extent, it’s possible that one missed detail could be the cause of a huge problem.
While your clients may sing your praises on sites such as Yelp and Indeed, someone else may say otherwise and that could potentially spoil your business. If a client is unhappy with your services, they will let other people know. This can be even worse online than it was in person, because hundreds of reviews can be seen by thousands of potential clients and even potential employees.
If you don’t have any legal experiences when it comes to contracts, this can be a real hurdle for you. You may have to seek expert advice and legal counsel that equals up to five percent of the total project cost (Thomas vs. Grant-Burton, 500 So.2d 540, 1987). Or, if the worst happens and you have to go to court, then your legal costs could increase tenfold. When you’re in the middle of a project, you may not have the time to focus on the legal ramifications of a verbal agreement. On the other hand, contracts are complicated. Without a legal opinion, you may not know how to make a verbal agreement legal. This could turn out to be an extra expense you do not need.
Verbal agreements should not be your go-to practice when it comes to contracts. And while this may mean extra paper, printing, and a lot of fine writing, it is the best way to keep your business from draining down the toilet. However, there are ways around the need for many written contracts. Many parents do not know who provided the agreement for their children to get into college. You can also take work on the condition that you finish it after the project itself is complete. While many builders will not do this simply to preserve the reputation it took years to create, there are others that do.