A Home Builder’s Guide to Best Practices

What is a Best Practice?

The Cambridge Dictionary defines Best Practice as:

“a working method or set of working methods that is officially accepted as being the best to use in a particular business or industry, usually described formally in detail.”

Home Builders should be following industry best practices while overseeing workers, promoting safety, while making sure plans are followed so that the ultimate goal (client satisfaction with the finished product) is achieved.

Home Builder Risk Management

The LHBA GL Trust (GL Trust) offers the following Builders Risk Management Checklist which will provide a cost-effective risk management plan for your business and may help reduce contributions and increase the likelihood of future dividend distribution…a key piece of the GL Trust program and something that only the GL Trust can offer in Louisiana on General Liability coverage.

Home Building Best Practices

The following points are what we would consider Best Practices in the industry, and we are glad to share them with Louisiana licensed home builders like you:

• Sign contract requiring mandatory arbitration with your client under American Arbitration Association (“AAA”) rules.
• Use Homeowner contracts that are specific to each project depending on custom or spec, your lot or the owner’s lot, and how the project is financed.
• Obtain a Geotechnical Soil Report if you are building in an area with soil settlement issues.
• Record/File signed contract with clerk of court.
• Confirm subcontractor’s insurance agent has sent an updated certificate of insurance before starting each new job. Do not accept a paper copy or email from a subcontractor. Also confirm your business has been added as an additional insured on the subcontractor’s policy.
• Add new job to Builder’s Risk insurance policy if such policy is in place.
• Make regular job inspections, make notes, and create a paper trail.
• If you receive a demand letter from the homeowner or the homeowner’s attorney, immediately report it to the GL Trust. The GL Trust may provide pre-litigation assistance to assist you with the demand.

Benefits of GL Trust Membership

A valuable benefit of the GL Trust is access to sample forms, contracts, and agreements which are available to all indemnitees on our newly refurbished website www.lhbagltrust.com. These forms, contracts, and agreements are only available to current indemnitees.

To learn more about contractor best practices, please visit the NAHB website at www.nahb.org.