A lawyer discusses interior design contracts: Addressing all major issues that can arise - by C. Jaye Berger

November 19, 2019 - New York City
C. Jaye Berger

Interior designers these days are working on increasingly large, complex projects with very large budgets. They may work directly for buildings or for individual co-op and condominium apartment clients. They may also be retained by developers and co-ops decorating lobbies, hallways and other areas of the buildings. Developers frequently retain interior designers when they want to have a “special look” or “brand” for their lobbies and units to aid in marketing. Many times interior designers are hired by clients to work in tandem with architects, so that the interior designers can assist with the “concept” of the space involved, while an architect may be retained to fill in the technical details of the project, which will be worked on by the general contractor. It involves different types of services and requires different types of contracts.

There are a variety of sources for interior design contracts. There are professional organizations, such as the American Society of Interior Designers (ASID) and the American Institute of Architects (AIA)which all have versions of form contracts for interior design services. Since they are generic, one size fits all, they must be used with caution because they may not apply to the particular situation, geographic location and needs. They will likely require a lot of editing by an attorney and customization and tailoring like a suit off the rack. As a general matter, I find such forms to be too long, with a lot unnecessary language and provisions. Clients want to be able to read the contracts and understand them.

The most common source of contracts are from the interior designers themselves. When I am representing an interior designer, I prepare such contracts myself. Most of the contracts I see from the interior designers have been contracts they have “retained” from prior employers. They are well-advised to have them reviewed by knowledgeable legal counsel before they are actively used, since you do not know the special circumstances of their prior employers and certain provisions may not apply. Many residential clients sign such contracts without having them reviewed by legal counsel, which is not a good idea.

Every project has to start with at least a preliminary budget from the client, so that the interior designer has a starting place and can come up with ideas about how to best allocate the money the client has available to spend. It is common for clients to have bigger “wish lists” than their budgets will allow. The designer should not be wasting time on designs that have no chance of being implemented due to budgetary constraints. 

Designers must be transparent with their clients about fees and expenses. For example, clients may have to pay for sales tax and tax on design services, They should be billed promptly for this, so there are no surprise invoices later on when memories have faded and records have been misplaced.

A frequent source of controversy is when designers give advice on possible furnishings and clients purchase the items themselves, without paying the designer any fees for their advice. Most contracts try to cover such possibilities, so that designers receive their well-earned fees.

Another controversial topic is when items are put in storage for a long period of time. This occurs when the project is not ready to receive the item. Someone has to make sure to document that the items were  in good condition when they went into storage, so that any damage occurring in the process can be pinpointed. Items can be in storage for years and the storage company may have moved the items within the warehouse. When they are taken out of storage, there may be damage. One interior design client had money on account to pay the storage company fees, but couldn’t locate the client for a while to have the items delivered. Part of my job was to track down the client, which I did. 

It is important to be billed regularly by the designer so there are no late invoices and no surprises. Clients do not like receiving invoices for unpaid sales tax and design fees after the project is complete. Designers should send out their invoices promptly. Fees should be easy to understand and have any necessary back up attached to explain it. Anything that has the word “net” in it by necessity involves needing backup to understand. More and more designers require that items be paid for in full before the order is placed, to eliminate the possibility of clients not paying the balance due. 

The degree of observation of the work needs to be spelled out so that expectations are met. The designer will not be there daily. Contracts need to strike a balance between addressing all the major issues that can arise, while still not being too long and hard for the client to understand. Both clients and interior designers need to consult with legal counsel before signing contracts.

I have reviewed many of these contracts and have never seen two that are the same.

C. Jaye Berger, Esq., is the principal of Law Offices C. Jaye Berger, New York, N.Y.

Tags:

Comments

Add Comment


More from the New York Real Estate Journal