Home improvement contractors: the “Do”s and “Do Not”s

When contemplating home improvement projects, it pays to be wary as you consider who to hire. Questionable contractors usually don’t like written contracts. They say things like “we don’t need a contract; we understand each other.” They want to avoid permits and building inspections (“they’re just a money grab by the government”), don’t like explaining how they plan to do aspects of the job, and aren’t keen on showing you proof of liability insurance.

Contractor “Do”s

When the work requires a professional license, work with licensed contractors, one who is licensed to do that particular business. All contractors should have a business license, but not all contractors have a state contractor’s license. Other licensed construction professionals include electricians, utility, low-voltage contractors, plumbers and conditioned air (heat and A/C), architects and engineers. State licensed contractors have a “pocket card” to show you and you should make a copy. Be sure the license is valid and current. You can call the jurisdiction to confirm or verify online with the Secretary of State or the local jurisdiction, as appropriate. Be sure to verify the information on the card.

Always get the contractor’s full name and complete business name, physical office address (not a PO Box), business phone, cell phone number, truck license plate state and number. If they won’t give you this – DON’T USE THEM! If they are not a state corporation registered with the Secretary of State, get a physical address and verify it. Check their driver’s license for the correct name.

Verify the business phone and address, and check online in search engines such as Google, Bing or others for complaints and lawsuits by or against them. Also check with the Better Business Bureau, and with your state consumer agency or attorney general’s office to see if previous customers have reported complaints.

Make sure the contractor has proof of general liability insurance and workers compensation coverage (when required by the State). Verify the coverage is sufficient and that the policy is valid and will not expire during the project. You should always contact your insurance agent for information and advice.

Get final or conditional lien waivers to protect yourself.

Contractor “Do Not”s

Do not use a contractor who:

1. Is going door to door or who is calling because they are “in the neighborhood.” Often they are not “in the neighborhood.” Selecting a contractor on the basis of them coming to your door or via phone call is always a questionable selection method. Would you pick a doctor for surgery who comes to your door?
2. Wants to “inspect” your property when you are not home. Take photos before, during and after an “inspection.” Some contractors have been known to cause damage intentionally during an inspection.
3. Asks you to get any required building permits. The party pulling a building permit is responsible, among other things, to assure code compliance.
4. Offers you a discount because they have “leftover materials.” This may be a signal that another consumer paid for the materials and the contractor failed to leave the materials or give proper credit, or that the materials may be stolen. You may find that you are the next one to be subjected to unethical practices.
5. Only accepts cash. Please do not pay cash. If you do pay cash, be sure to get a clear written receipt.
6. Claims you will get a great rate because you project will be a “demonstration.”
7. Offers exceptionally long guarantees or warranties.
8. Asks you to pay for the entire job up front.
9. Tries to scare you into repairs claiming they are urgent.
10. Asks you to “deed” or “transfer title” to your property or sign a promissory note secured by your home.

Being Your Own Contractor

Does the thought of a shady contractor scare the heck out of you?  Maybe you have decided to become your own contractor for your home improvement or home repair project. Here are some things you should know:

You may be responsible for local, state and federal taxes and may need to register with these entities as an employer. Be sure to have a clear understanding of the employment laws in your state.

You may be required to get worker’s compensation insurance, disability insurance and make unemployment compensation contributions. It is always a good idea to check with your insurance agent and accountant for advice.

–National Center for the Prevention of Home Improvement Fraud

Be aware of these tax scams