| When Hiring A Contractor
Whether you’re planning an addition for a growing family or simply
getting new storm windows, finding a competent and reliable contractor
is the first step to a successful and satisfying home improvement
project.
Your home may be your most valuable financial asset. That’s why it’s
important to be cautious when you hire someone to work on it. Home
improvement and repair and maintenance contractors often advertise in
newspapers, the Yellow Pages, and on the radio and TV. However, don’t
consider an ad an indication of the quality of a contractor’s work. Your
best bet is a reality check from those in the know: friends, neighbors,
or co-workers who have had improvement work done. Get written estimates
from several firms. Ask for explanations for price variations. Don’t
automatically choose the lowest bidder.
Home Improvement Professionals
Depending on the size and complexity of your project, you may choose to
work with a number of different professionals:
General Contractors manage all aspects of your project, including hiring
and supervising subcontractors, getting building permits, and scheduling
inspections. They also work with architects and designers.
Speciality Contractors install particular products, such as cabinets and
bathroom fixtures.
Architects design homes, additions, and major renovations. If your
project includes structural changes, you may want to hire an architect
who specializes in home remodeling.
Designers have expertise in specific areas of the home, such as kitchens
and baths.
Design/Build Contractors provide one-stop service. They see your project
through from start to finish. Some firms have architects on staff;
others use certified designers.
Don’t Get Nailed
Not all contractors operate within the law. Here are some tip-offs to
potential rip-offs. A less than reputable contractor:
solicits door-to-door;
offers you discounts for finding other customers;
just happens to have materials left over from a previous job;
only accepts cash payments;
asks you to get the required building permits;
does not list a business number in the local telephone directory;
tells you your job will be a "demonstration;"
pressures you for an immediate decision;
offers exceptionally long guarantees;
asks you to pay for the entire job up-front;
suggests that you borrow money from a lender the contractor knows. If
you’re not careful, you could lose your home through a home improvement
loan scam.
Hiring a Contractor
Interview each contractor you’re considering. Here are some questions to
ask.
How long have you been in business? Look for a well-established company
and check it out with consumer protection officials. They can tell you
if there are unresolved consumer complaints on file. One caveat: No
record of complaints against a particular contractor doesn’t necessarily
mean no previous consumer problems. It may be that problems exist, but
have not yet been reported, or that the contractor is doing business
under several different names.
Are you licensed and registered with the state? While most states
license electrical and plumbing contractors, only 36 states have some
type of licensing and registration statutes affecting contractors,
remodelers, and/or specialty contractors. The licensing can range from
simple registration to a detailed qualification process. Also, the
licensing requirements in one locality may be different from the
requirements in the rest of the state. Check with your local building
department or consumer protection agency to find out about licensing
requirements in your area. If your state has licensing laws, ask to see
the contractor’s license. Make sure it’s current.
How many projects like mine have you completed in the last year? Ask for
a list. This will help you determine how familiar the contractor is with
your type of project.
Will my project require a permit? Most states and localities require
permits for building projects, even for simple jobs like decks. A
competent contractor will get all the necessary permits before starting
work on your project. Be suspicious if the contractor asks you to get
the permit(s). It could mean that the contractor is not licensed or
registered, as required by your state or locality.
May I have a list of references? The contractor should be able to give
you the names, addresses, and phone numbers of at least three clients
who have projects similar to yours. Ask each how long ago the project
was completed and if you can see it. Also, tell the contractor that
you’d like to visit jobs in progress.
Will you be using subcontractors on this project? If yes, ask to meet
them, and make sure they have current insurance coverage and licenses,
if required. Also ask them if they were paid on time by this contractor.
A "mechanic’s lien" could be placed on your home if your contractor
fails to pay the subcontractors and suppliers on your project. That
means the subcontractors and suppliers could go to court to force you to
sell your home to satisfy their unpaid bills from your project. Protect
yourself by asking the contractor, and every subcontractor and supplier,
for a lien release or lien waiver.
What types of insurance do you carry? Contractors should have personal
liability, worker’s compensation, and property damage coverage. Ask for
copies of insurance certificates, and make sure they’re current. Avoid
doing business with contractors who don’t carry the appropriate
insurance. Otherwise, you’ll be held liable for any injuries and damages
that occur during the project.
Checking References
Talk with some of the remodeler’s former customers. They can help you
decide if a particular contractor is right for you. You may want to ask:
Can I visit your home to see the completed job?
Were you satisfied with the project? Was it completed on time?
Did the contractor keep you informed about the status of the project,
and any problems along the way?
Were there unexpected costs? If so, what were they?
Did workers show up on time? Did they clean up after finishing the job?
Would you recommend the contractor?
Would you use the contractor again?
Understanding Your Payment Options
You have several payment options for most home improvement and
maintenance and repair projects. For example, you can get your own loan
or ask the contractor to arrange financing for larger projects. For
smaller projects, you may want to pay by check or credit card. Avoid
paying cash. Whatever option you choose, be sure you have a reasonable
payment schedule and a fair interest rate. Here are some additional
tips:
Try to limit your down payment. Some state laws limit the amount of
money a contractor can request as a down payment. Contact your state or
local consumer agency to find out what the law is in your area.
Try to make payments during the project contingent upon completion of a
defined amount of work. This way, if the work is not proceeding
according to schedule, the payments also are delayed.
Don’t make the final payment or sign an affidavit of final release until
you are satisfied with the work and know that the subcontractors and
suppliers have been paid. Lien laws in your state may allow
subcontractors and/or suppliers to file a mechanic’s lien against your
home to satisfy their unpaid bills. Contact your local consumer agency
for an explanation of lien laws where you live.
Some state or local laws limit the amount by which the final bill can
exceed the estimate, unless you have approved the increase. Check with
your local consumer agency.
If you have a problem with merchandise or services that you charged to a
credit card, and you have made a good faith effort to work out the
problem with the seller, you have the right to withhold from the card
issuer payment for the merchandise or services. You can withhold payment
up to the amount of credit outstanding for the purchase, plus any
finance or related charges.
The "Home Improvement" Loan Scam
A contractor calls or knocks on your door and offers to install a new
roof or remodel your kitchen at a price that sounds reasonable. You tell
him you’re interested, but can’t afford it. He tells you it’s no problem
— he can arrange financing through a lender he knows. You agree to the
project, and the contractor begins work. At some point after the
contractor begins, you are asked to sign a lot of papers. The papers may
be blank or the lender may rush you to sign before you have time to read
what you’ve been given to sign. You sign the papers. Later, you realize
that the papers you signed are a home equity loan. The interest rate,
points and fees seem very high. To make matters worse, the work on your
home isn’t done right or hasn’t been completed, and the contractor, who
may have been paid by the lender, has little interest in completing the
work to your satisfaction.
You can protect yourself from inappropriate lending practices. Here’s
how.
Don’t:
Agree to a home equity loan if you don’t have enough money to make the
monthly payments.
Sign any document you haven’t read or any document that has blank spaces
to be filled in after you sign.
Let anyone pressure you into signing any document.
Deed your property to anyone. First consult an attorney, a knowledgeable
family member, or someone else you trust.
Agree to financing through your contractor without shopping around and
comparing loan terms.
Getting a Written Contract
Contract requirements vary by state. Even if your state does not require
a written agreement, ask for one. A contract spells out the who, what,
where, when and cost of your project. The agreement should be clear,
concise and complete. Before you sign a contract, make sure it contains:
The contractor’s name, address, phone, and license number, if required.
The payment schedule for the contractor, subcontractors and suppliers.
An estimated start and completion date.
The contractor’s obligation to obtain all necessary permits.
How change orders will be handled. A change order — common on most
remodeling jobs — is a written authorization to the contractor to make a
change or addition to the work described in the original contract. It
could affect the project’s cost and schedule. Remodelers often require
payment for change orders before work begins.
A detailed list of all materials including color, model, size, brand
name, and product.
Warranties covering materials and workmanship. The names and addresses
of the parties honoring the warranties — contractor, distributor or
manufacturer — must be identified. The length of the warranty period and
any limitations also should be spelled out.
What the contractor will and will not do. For example, is site clean-up
and trash hauling included in the price? Ask for a "broom clause." It
makes the contractor responsible for all clean-up work, including spills
and stains.
Oral promises also should be added to the written contract.
A written statement of your right to cancel the contract within three
business days if you signed it in your home or at a location other than
the seller’s permanent place of business. During the sales transaction,
the salesperson (contractor) must give you two copies of a cancellation
form (one to keep and one to send back to the company) and a copy of
your contract or receipt. The contract or receipt must be dated, show
the name and address of the seller, and explain your right to cancel.
Keeping Records
Keep all paperwork related to your project in one place. This includes
copies of the contract, change orders and correspondence with your home
improvement professionals. Keep a log or journal of all phone calls,
conversations and activities. You also might want to take photographs as
the job progresses. These records are especially important if you have
problems with your project — during or after construction.
Completing the Job: A Checklist
Before you sign off and make the final payment, use this checklist to
make sure the job is complete. Check that:
All work meets the standards spelled out in the contract.
You have written warranties for materials and workmanship.
You have proof that all subcontractors and suppliers have been paid.
The job site has been cleaned up and cleared of excess materials, tools
and equipment.
You have inspected and approved the completed work.
Where to Complain
If you have a problem with your home improvement project, first try to
resolve it with the contractor. Many disputes can be resolved at this
level. Follow any phone conversations with a letter you send by
certified mail. Request a return receipt. That’s your proof that the
company received your letter. Keep a copy for your files.
If you can’t get satisfaction, consider contacting the following
organizations for further information and help:
State and local consumer protection offices.
Your state or local Builders Association and/or Remodelors Council.
Your local Better Business Bureau.
Action line and consumer reporters. Check with your local newspaper, TV,
and radio stations for contacts.
Local dispute resolution programs.
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