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Contingency Agreements: Are they enforceable? Legal and binding? What are my options if a homeowner backs out? I share my experience and opinion in this video.
See the Blog and transcript here: https://blog.theroofstrategist.com/are-contingency-agreements-enforceable/
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Grab your popcorn for this one
are contingency agreements.
Enforceable.
I've been getting this question a lot.
I've responded in the comments by the way.
Thank you for dropping comments on
the videos, constructive comments like
this lead to new videos, and it helps
enrich the community in each one of
our lives, because I respect your time.
You're spending valuable time and
resources being here with me today.
And my mission is to help you leave in
a better position than you were with
actionable strategies to use in the field.
So you can do.
Smash your income goal and give
every customer an amazing experience.
Welcome or welcome back.
My name is Adam Benjamin, and
today I'm gonna open the can of
worms on contingency agreements.
And if they're enforceable, I'd like
to hear your input on this as well.
Listen, I learned regularly
every single training I run.
I learned from people who are
there including brand new reps.
I'm going to share my experience
in this video, my learnings, in
my point of view, whether you
agree or disagree is totally fine.
All I ask is that you be
cognizant and respectful of
supporting the growth of others.
And if not, that's okay too.
You can keyboard command to a way, and
I'm sure people will be entertained.
All right, now let's get to it.
Our contingency agreements, enforceable.
First part of this, it depends on who.
You ask, what I'd like to do first
is lay the foundation of what a
contingency agreement is and why it is
used before we get caught in the weeds.
Excuse me, about the legal side.
So what is the contingency agreement?
Contingency agreement is essentially
a glorified handshake that says we're
going to get your roof approved or help
you get it approved by the insurance.
And if it is, we get to do the work cool.
That's the contingency agreement.
Now in a playlist, I've done,
which I'm going to make really
easy for you to get off.
If you click on the link in the
description for the pitch, like a pro
roofing sales training video library, or
you can go to the roof, strategist.com.
It'll bring you right to this page in
here in my pitch, like a pro roofing
sales training video library, I've done
an entire playlist, which you can click
and binge through on the contingency
agreement and its use as a closing.
Now I highly recommend you check that out.
And again, it's available for
free@theruthstrategist.com or
you can click the link in the
video or podcast description.
The reason I bring that up is it's
my belief that the contingency
agreement is first a closing tool.
Okay.
Now what do I mean by that?
It is a way to lock in the deal, have
that handshake say, we're going to do this
work for you, and we're going to be the
contractor of choice to actually do the.
Next it is again,
contingent upon approval.
Meaning if the insurance company says no.
We're not replacing it.
They don't owe you anything.
So it removes a risk.
Okay.
So contingent upon approval.
And I've done another video a couple of
weeks back on risk reversal by removing
people's fear of signing the thing.
And when used as.
Closing tool in, um, contingent upon
approval to, to use risk reversal.
We end up earning more business.
So what it is not quite yet is a contract.
Okay.
It is not yet a contract by law.
And again, this is where, uh, if
you're every state law is different.
Okay.
And if you disagree with this
or your legal counsel has been
different, drop a comment.
But my understanding is it's not
a contract until money changes.
Now you go through and do this work.
Yeah.
It's not billable.
All right.
So if they cancel on you, it's not a
contract yet until money changes hands.
So here's where it gets interesting.
Most people on their contingency
agreement have a 10 to 20% cancellation,
meaning let's say we get the insurance
company approved for $10,000 roof.
We have a 20% cancellation.
If you decided to work with
someone else, it's on the fine
print on the back or on the front.
And if you back out, you owe us 2000.
Okay.
Now let's loop back to the,
is it enforceable number
one, depends who you ask.
Now let's get into the weeds.
In my opinion, the number one reason
to have a contingency agreement
is to act as a closing tool.
Our particular attorney
wanted it to be 900.
Federal myself, homeowners season nine
pages are going to think they're signing
their entire life away in their firstborn.
We're never going to
get deal sign on this.
So we made a decision as a company
to say, I'm more interested in this
acting as a closing tool to help
us secure deals in lock in deals on
good faith, because we will earn the
business than I am of having it be.
Bulletproof.
So we elected for a single
one page contingency.
That was double-sided
the terms for, for them.
And then all the fine print on the back.
What this allowed us to do was increase
the volume of people who were excited
to sign it because of how we positioned
it, which by the way I teach in that
free video library, the pitch like a
pro roofing sales stream, video library.
And if you want to learn like my
whole in-home sales system, I do that.
My program called the roofing
sales success formula, which is
an all-in-one sales training,
sales strategy and sales system.
That's being used by thousands as we
speak from the smallest companies that
started yesterday to some of the top
hundred roofing companies in America.
And it plans for individual
reps or for owners with a team.
And in my closing strategy, which I
cover for storm and retail, I discuss
how to position the contingency
agreement as the closing tool.
And I teach the entire process now.
There is a sample contingency
agreement included in my program.
Uh, but I just want to be crystal clear.
It is a sample cause every
state law is different.
Some company or some states say,
you know, your cancellation clause
has to be in this type font.
This typeface this size on the
first page with this number of days,
the next one has it differently.
So you just got to make sure that you're
compliant with your local laws now.
So let's get back to it.
Number one, main mission
act as a closing tool.
Number two.
Question is it enforceable?
I saw a comment on one of the
videos and someone said, Hey,
it is according to my attorney.
And the reality is it
depends on your contingency.
If you have everything listed
out, could it be enforceable?
The answer is, yes.
My next question to you is
this, is it worth going in?
Do you know what an attorney
is going to cost you?
If you have a cancellation and
you're going to collect 20%,
here's what most people do.
Most of the people that I work with
will send an invoice for this 20%.
Okay.
The last company I trained, it's
funny, we actually talked about this.
They send invoice.
I had done this.
I did in fact, collect this on a
commercial project I did when the property
owner decided last minute, not to do
the work because he needed the money
and we collected that 20% cancellation.
There are times if you see shaky feet
with people, you can communicate this.
Okay.
Now what happens?
You send the invoice.
Some people will pay it.
It is true.
They will.
And there are other people that won't
now let's say at 20%, uh, if you have
a, a $15,000 roof, you're going to
collect 30 grand or excuse me, $3,000.
Someone double check my math and
horrible at it, but you can drop a
link in or drop a comment in my maths.
So you can collect three grand.
By the time you invest all of your
time, energy, resources, and effort to
collect your job file, submit it to the
attorney, pay your attorney's fees, have
them chase the homeowner in for all of
your emotional energy to go into it.
My guests, if you are lucky, you may
get paid and you might make $1,500.
Versus reallocating all those time and
resources to just go find a customer
you actually want to serve and let
bygones be bygones, because let me
tell you this principle is expensive.
And the other threat that you have
is that by pursuing the legality
side of the contract means your
contract must be buttoned up.
I ended up in an, in an arbitration
with a customer and his attorney, even
though this was not the cause they
thought that we damaged the gutters,
which we didn't I had before pictures.
He signed off.
It's a story for another day.
The attorney thought we doctored
the pictures we literally had before
pictures and after pictures and
the gutters were damaged in both.
He'd signed off on them.
They were timestamped his attorney,
this absolute, I'm going to say it.
Total slime ball attorney literally says
to me, those pictures were doctored.
So what do I do?
I started laughing and then
I realized he was serious.
And then Mr.
Slimeball attorney starts diverting
all this attention about the gutter
damage to the terms of our contract and
pokes holes in all of these different.
Now, the funny thing is this was an $800
discrepancy that I ended up solving by
kicking both attorneys out of the room
and having a man to man with the gentleman
sitting across the table from me.
And we got it solved right there.
Did I get what was due and right.
No, but principle is expensive and
he was willing to drag his feet
with his little contingency lawyer.
Poking holes at all this, for hopes of
some massive thing to just say, we'll
eat the 800 bucks to be done because he
was ready to take this thing to court.
Principle is expensive.
So I want to wrap this up
with an action plan for you.
I'm going to give you my perfect.
Uh, feedback and you can
run with this or not.
In my opinion, number one, contingency
agreements should be positioned
as a closing tool and it should
be advantageous for the homeowner
because you will sign more deals.
I'd rather sign 20% more deals
because the contingency agreement is
positioned and communicated the right.
And lose a couple rather than making
it bulletproofs and no one can back
out and screw me over and I'm just
going to be a grump ball and I'm going
to make sure they're Bulletproof.
And what will happen is you're going
to sign less deals because homeowners
are going to look through that.
It'd be scared.
So I would rather deal with that.
The next.
First course of action is to send
the invoice in compliance with
the cancellation details of your
contingency agreement in some people,
by the way, do teach that you can
review this with the homeowner.
So they're aware of that.
Penalty.
So you do lock that deal
in, send the invoice.
Many people will pay it some won't.
You can always of course follow up with
a phone call and then it is up to you.
Should you choose to go the legal route?
I'll tell you mine, unless it was
an absolute monster project, a
commercial project, unless we had
exorbitant amount of time, energy and
resources getting something approved.
That is the only time.
And there were a couple of
them that we did that for, but
it's a very selective position.
Otherwise to me.
Friends out there and to owners.
Remember sign more deals.
Principle is expensive.
Send that invoice, move on and go sign
a customer that you are meant to serve.
Hey, thanks for joining
me in today's video.
If you haven't yet done it, I'd love
for you to join me, to learn more
about this contingency agreement,
how to position it as a closing tool.
And you can do that for free
and my pitch like a pro roofing
sales training video library.
And if you want.
I'd love to chat with you, or you can
chat with my team about our all-in-one
sales training, sales strategy and
sales system to learn the entire system
to rock it out with your homeowners.
All right, there's a link
in the description below.
You can always give us a call at
(303) 222-7133 color text, and I
will see you on the next video.