Construction Fraud

All construction projects follow budgets and timelines to help ensure the project is complete on schedule. When fraudulent activities occur, both budgets and timelines can be quickly skewed and the entire project can be put in jeopardy. Gainesville construction attorneys with Warner, Sechrest & Butts, P.A. have helped many clients put their project back on track when construction fraud occurs. Contact our law firm today to schedule a consultation.

What Is Contractor Fraud?

Contractor fraud, also called construction fraud, is any deception related to the performance of construction work. At the core, one party makes a promise or promises to another party who subsequently relies on the promise(s) to be fulfilled. When the performing party doesn’t fulfill its part of the agreement, the other party is subject to a harm or loss. This harm or loss can be committed by anyone involved in a construction project during any stage of construction. Examples of who can commit contractor fraud include construction consultants and partners; contractors and subcontractors; and material suppliers and vendors.

Common Fraudulent Activities By Contractors

Since fraud can be committed by anyone at any time during a construction project, there are many types of fraudulent activities that can occur. If you’ve discovered fraudulent activity, including the five fraudulent actions listed below, contact the construction lawyers in Gainesville, FL, with Warner, Sechrest & Butts, P.A.

Falsified Or Forged Payment Application

Payment applications are unfortunately easy to falsify and/or forge as each one usually has many details that need to be verified. To avoid this type of fraudulent activity, look for:

  • Materials with a seemingly inflated cost compared to current market value;
  • Incorrect wage categories and/or rates; and
  • Any payment application outside the agreed to scope of work.

Manipulated Change Orders

Most issues with change orders can be resolved by keeping the lines of communication open between contractors and subcontractors. But, watch for any of these situations that should be backed up by additional documentation:

  • Change orders without thorough scope descriptions;
  • Work substitutions with inadequate price decreases;
  • Any changes to the scope of work for the base contract;
  • Excessive charges; and
  • Disregard or omission of design specifications listed in the original scope of work.

Contractor & Subcontractor Collusion

Contractor and subcontractor collusion can include allocation schemes, bid rigging, market division, and/or price fixing. When collusion occurs, the owner ends up losing both benefit and money during the bidding process.

Stolen Equipment & Tools

A contractor or subcontractor may steal equipment and tools by using the items for other projects and/or personal use. Or, equipment and tools may be bought then shipped to a different address or project site.

Substituted Materials

Specifications should include exact details for materials to be used during construction. Watch change orders for substituted materials which may be inferior in quality and lead to structural defects in the project.

How To Avoid Contractor Fraud

It can seem difficult to distinguish between legitimate and unscrupulous contractors. But remember, if it sounds too good to be true, it probably is. Reach out to a Gainesville construction lawyer with Warner, Sechrest & Butts, P.A. if you’re unsure of the legitimacy of a contractor’s services.

Use Established Contractors

Established contractors will likely be known in the local area by both residents and trade associations, and have a physical address where their main office is located. These contractors will never ask for upfront or lump sum payments.

Ask For Licenses & Proof Of Insurance

Legitimate contractors will carry all insurance and licenses required by states and municipalities. At a minimum, the contractor should have business liability and workers’ compensation insurance. Check with the Better Business Bureau for complaints against the contractor or verify licenses with the State of Florida.

Secure Multiple Bids

Each bid should include all:

  • Work and/or repairs to be completed;
  • Labor and supplies with exact costs;
  • Applicable guarantees and warranties; and
  • A specific timeframe for the entire project.

Put All Plans & Specifications Into A Written Contract

Both parties should be involved in the development and discussion of all plans and specifications related to the project. Once the details are ironed out, make sure to put everything into a written contract. Don’t allow a contractor or subcontractor to fill in any parts of the contract without reviewing the information first. Only sign the contract when all parties are in agreement and a construction attorney in Gainesville has reviewed the document.

Construction Lawyers In Gainesville, FL

Construction fraud is a white collar crime that unfortunately affects construction projects of all size. When you contact Warner, Sechrest & Butts, P.A., you'll speak with attorneys who are board-certified in Florida construction law. Their in-depth knowledge of the industry and understanding of regulations and statutes provides the foundation to thoroughly investigating the situation. To schedule a consultation and put your construction project back on schedule, contact Warner, Sechrest & Butts, P.A. today.