George Bernard Shaw has a quote we use a lot in my family: “The single biggest problem in communication is the illusion that it has taken place.” This is pertinent to contractors and homeowners alike because the cost of failing to get proper signatures on documents like construction contracts, and particularly, change orders, is heavy. Both contractors and homeowners are in the same boat as far as wanting to complete a job as swiftly as possible: contractors go on to their next job and homeowners can return to peace in their home. This is prime territory for either party to suggest the work be completed today and the contract or change order executed tomorrow, or even later. However, without a contract, there is no memorialization of the communication between the parties, which can lead to confusion and missed expectations on both sides.
Construction plans are rarely as neat and tidy as they originally seem to be. A contractor may uncover unforeseen conditions, an owner may request additional work or changes that require additional work, or weather interferes with project schedules or the work itself. Unfortunately, the signature that never gets collected can become one of the most expensive omissions on a project – for both sides.
As a litigator, I frequently see disputes that begin with a simple statement: “We agreed to it.” Or “That’s what they said they would do.” The problem is that often months – or even years – later, the parties no longer agree on what was approved, who approved it, or how much it was supposed to cost. If we believe George Bernard Shaw, it may be the case that the parties never really even agreed on the scope of the work to be done in the first place.
Many contractors perform additional work based on a verbal conversation at the jobsite, a quick phone call, or an informal text message. At the time, everyone may be on the same page (or not). The project moves forward, the work gets completed, and the parties focus on finishing the job.
The dispute often arises later when payment becomes due or when the homeowner is finally presented with a copy of the change order or contract. At that time, the contractor has made his or her case more difficult for receipt of payment. It may be the case that actual materials cost may have been underestimated, leading up to a surprise amount to pay for the owner.
By the time many of these issues come home to roost, key project personnel may have moved on to different jobs. Memories fade. Documents become difficult to locate. What was once a likely straightforward conversation becomes a costly disagreement.
In fact, as of January 1, 2026, California law added a statute to control the way construction payment disputes are handled. (Civ. Code, §8850.) After an owner gets his or her final invoice, they must review it within thirty days and reply with a written statement outlining which costs are undisputed and which are not. If the owner fails to do so, or the parties fail to agree, the contractor may request an informal conference, which must take place within thirty days. Within the ten days following, the owner must send another written statement within ten days again outlining the portions of the demanded amount disputed and undisputed. If, following the meet and confer conference, the parties still do not agree on a payment amount, the parties must attend nonbinding mediation[1]. Under this section, homeowners who do not comply with this payment scheme may lose their claims as against the disputed portion of the claim. For any undisputed portion of the claim not paid, it shall incur interest at a rate of 2% per month.
These types of issues are not limited to change orders. Handshake agreements at the outset can create similar problems. While oral contracts may be enforceable under certain circumstances, proving the exact terms of an unwritten agreement can be challenging, and claims for breach of an oral contract have – generally – shorter statutes of limitation. Parties frequently remember the same conversation very differently when significant amounts of money are at stake. (Thank you, George Bernard Shaw.) These issues are compounded when there may be concerns with the quality of work performed and the owner may now be frustrated and unsatisfied with everything the contractor has done.
The best way to avoid these disputes is simple: document the agreement before the work is performed. A signed change order should clearly identify the additional work, the associated cost, and any impact on the project schedule. If circumstances require immediate action, a follow-up email confirming the discussion can provide valuable evidence if questions arise later, but this should not take the place of a formal change order. While it may be tempting for both the homeowner and the contractor to plow forward with the work and settle up later, it is important to take the time to hash out the details. While a pause of the work for even a day or two on the job may be costly, it will likely not amount to the cost both parties will spend on court fees, mediators, and attorneys if the matter needs to be litigated. This is to say nothing of the cost of how long litigation can take; matters that need to go to trial can wait for years before a judgment is issued.
Good documentation is not about mistrust. It is about clarity and managed expectations. A written agreement protects everyone involved by ensuring that expectations are understood before disputes develop. Construction litigation is often expensive because courts are asked to reconstruct conversations that occurred months or years earlier. Signed contracts and change orders, by contrast, takes only minutes. Those few minutes may save thousands of dollars in legal fees and countless hours of uncertainty down the road.
Experienced mediators in California can charge $500 to $3000 per hour and, often, minimums are set that both sides must pay.
