Building or remodeling? Hang on to that paperwork
When you started your building or remodeling project, you probably weren't ready for all the paperwork that was going to build up, from estimates to receipts to lien notices to material warranties.
It's kind of amazing how much paper can accumulate on a construction project. And the bigger the job, the bigger that accumulation can be.
However, as tempting as it is to find the nearest recycling bin, there are some very good reasons to hang on to all that paper — even long after the job is over.
Tracking a job
Let's say you've undertaken a major kitchen remodel. You've hired a contractor to do most of the work for you, but you're going to do all of the electrical wiring and all of the painting yourself. Part of the work will require building permits.
During the course of construction, you'll need to keep track of all the paperwork related to the project, and also have it readily available to refer to. Among the papers you'll accumulate and need to hang onto are:
• Estimates: You need to be able to keep track of exactly what your contractor bid, so you know the costs and the exact nature of what the two of you have agreed. It's also a good idea to keep the estimates you received from other contractors that you didn't hire; it occasionally happens that your original contractor is unable to complete the job, and having the other bids can simplify finding someone to complete the project.
• Contractor information: This includes contractor's license number, bond and insurance information, past-client references, business cards and brochures, and anything else you've been given. You'll also want to get names and other information for any subcontractors on the job.
• Material suppliers: As the job progresses, try and find out who's supplying the materials for the j ob. If l egal i ssues ar i s e i n t he f uture, i t could be i mportant to have this information.
• Legal paperwork: This i ncludes a copy of the original contract you and the contractor signed; all specifications included with the contract; any o f f i c i a l g o v e r nmentmandated papers your contractor i s required to provide; and signed change orders that arise d u r i n g t h e c o u r s e o f construction.
• Plans, permits, and Correction Notices: Hang onto the official plans for the job, the permits, and all of the permit numbers. Your contractor will probably need to keep all of this on the job site and accessible for the inspectors, but be sure and ask for all of it when the job is finished. If the inspectors issue Correction Notices — written notice of items that failed inspection and need to be fixed — hang onto them so you know what items needed correction. As the inspectors sign off on the permit card, that will be your proof that the necessary corrections were made.
• Receipts: Your contractor will keep actual material receipts for whatever he or she supplies, but you need to keep the ones for anything you buy. Receipts are necessary if you want to return anything, or if you want to remember where you bought something so you can match it in the future. They're also important for tax issues when you go to sell the house.
• Preliminary Lien Notices: In most states, subcontractors and material suppliers have the right to lien your property if they are not paid by the contractor — even if you have paid the contractor as per your contract. During the course of the job, you will probably receive Preliminary Lien Notices, and you need to hang onto them. These are not liens, they are simply legally-required notices of the company's right to lien.
• Completion Notice: When the job is done, the city or county will sometimes issue a completion notice, or a certificate of occupancy.
• Instructions and warranty information:
Be sure your contractor leaves all of the instructions books and warranty information for all the appliances, fixtures, and anything else they supply, as well as anything you purchase yourself.
• Loan information:
If you took out any type of loan to finance the work, including a refinancing of your home, keep everything related to that transaction, as well. You may have received an appraisal of your home; Truth in Lending documents; interest and payoff documents; or other paperwork.
Organizing, storing
How you organize and store all this paper is really a matter of personal preference, as well as a matter of just how much there is to deal with. If you have a file cabinet, consider dedicating one drawer to the project, and then setting up hanging folders in the categories described above. For everyday papers you need ready access to, you might want to purchase an inexpensive expandable accordion file, the kind with individual pockets labeled alphabetically. They're available at office supply stores, and the individual pockets make organizing and finding all the papers easy.
When the project is done, you still don't want to head for the recycle bin. The list of reasons for keeping your paperwork is endless, so you'll want to sort through and file just about everything (about the only thing I'd toss are brochures for materials you didn't use).
Why save it all? You may have warranty issues that arise, or you may have legal disputes over problems with materials or workmanship. There may be other liability suits that arise that you need this documentation for. You may have an insurance loss and need documentation of certain items. You may want to sell your house and the new buyer wants proof that any improvements or repairs had the proper building permits. You'll want to be able to document the cost of major improvements to offset your liability for capital gains tax. And of course, you need those instructions!
For long-term storage, I like the basic cardboard storage boxes available from any office supply store. Transfer your files to the box, label the outside for easy reference, and you're done. Store the files for as long as your accountant or attorney recommends.