I have this guy -- I got new work since the drywall was removed.
Can I cut the excess rail (past the nail) so it fits the joists, which are 12" apart? Or does that mean they're isn't enough space and I need to go smaller?
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You can trim the rails so they will fit in a tighter space. Look close there are usually indents in the metal to help with cutting and snapping the rail to a shorter length. This is part of a normal install.