Tell Us About Your Upcoming Project
Please tell us about your upcoming home improvement/home repair project. The information you provide will help us work to prevent contractor fraud and help other homeowners avoid victimization.
Complaints against home improvement and home repair contractors are one of the most common complaints consumer organizations and federal consumer agencies receive. With over $200 billion spent in America each year, home repairs and improvements make an attractive target for scam artists.
Here are some things to consider before you begin any home improvement or home repair project.
- Have a complete set of plans showing exactly what you are going to build before you start looking for a contractor.
- Consider your budget, timeline and insurance options before meeting with the contractor.
- Get written estimates from several companies for identical project specifications and get a second opinion from an impartial source, like a professional home inspector, before authorizing the work.
- Remember the lowest bid is not always the best deal.
- Ask questions of everyone involved in the project.
- Don’t ever deed your property to anyone. First consult an attorney.
- Always secure your valuables when you are going to have someone in or near your house.
- Know the lien laws in your state before you begin a project. If you don’t know where to begin,click here for resources, or hire an attorney on your own.
- Do not provide the contractor with your personal information, such as your social security number.
- Be cautious when someone offers you a lifetime warranty, or long-term promises.
Check out our “Before Your Project” Helpful Links for more resources.
To avoid the possibility of becoming a contractor fraud victim, there are several things to remember. Never accept offers from any door-to-door salesmen and definitely do not fall for the “Free” Inspection. This is probably the biggest home repair scam around. If you are being pressured into signing a contract for repairs, DON’T! Give yourself time to read and understand the offered contract and then get a second quote. And remember: If you are offered a “one-day” deal you are probably already in the presence of a fraudulent contractor.
Finding a “Reputable” Contractor
The most important thing to remember when looking for a reputable contractor: it’s best to work with someone who has a history of good performance and good service. As with other types of referrals, your friends, neighbors and coworkers may know where to start. Ask around and do some research before you even spend time interviewing a contractor. More information>>
Using Pre-Screened Contractor Referral Resources
Although using a web site or service that provides pre-screened contractors may minimize the risk of contractor fraud, it does not guarantee against it. There is no written guarantee that the contractor will perform as expected or that his license, insurance coverage, credentials, and references are still in good standing. Use the Contractor Checklist below no matter where you found your contractor.
Interviewing a Contractor
When you interview a contractor, don’t be afraid to ask questions. If your contractor is legitimate, he won’t have a problem answering them. Make sure you have the following information and ask the questions listed below.
Your Contractor Checklist:
(download the PDF)
Make sure the contract you sign is well-written, without overly complicated legalese and includes this information:
Check your contract for the following
- Contractor’s full legal name. If a business entity, be sure it is the name of the entity listed with the your state’s Secretary of State and that the party’s signing full name (legibly printed) and title is stated.
- Business address — a physical address not just a PO Box. If you have to serve a lawsuit, you will need a physical address.
- Contact information such as business phone, Cell phone and email
- If the work requires a state contractor’s license, Contractor’s state license number and not just a local business license.
- Clear scope of work, the plans and materials.
- Written warranty.
Get the following information for your own protection
- Vehicle make, model, license plate state and number. (Get a photo or two if you can)
- Download all of the information from the company website and keep any ads. You want proof of their advertising and web claims now so that it does not disappear later.
- Copy of bond, insurance information, business license. Confirm with the insurance and bond agents that the insurance/bond is in place. Discuss being named an additional insured for purposes of the project.
- How many years of experience do you have?
- If this is an insurance claim, do you have experience dealing with insurance adjusters and companies? Will you be billing my insurance company or me? Make sure your insurance agent is aware of this before you file a claim and discuss with your agent any issues or concerns before you authorize anyone to contact your insurance company.
- Can I see a breakdown list of costs? (i.e. labor, insurance, materials, overhead).
- Will the estimate detail the plans and specifications? (This will allow you to compare several estimates based on identical project specifications.)
- How long before you will be able to begin work?
- How long will the project take? Is the completion date stated in the contract.
- Is your company bonded? Do you have a copy of the bond and have you verified it is still in place with the bonding company.
- Is your company state licensed? (Check with your state licensing agency, local building inspectors or consumer protection officials to find out about licensing requirements in your area.)
- Do you carry the following types of insurance: Personal liability, Worker’s compensation, Property damage?
- Can you provide a Certificate of Liability Insurance?
- Will you arrange for any subcontractors for cleaning or repairing, and guarantee in writing that they are licensed (if required), bond (when appropriate), insured and experienced?
- What is your warranty? Remember the warranty is only good as long as the contractor is in business. Understand what is covered by the manufacturer and what is covered by the contractor. A manufacturer’s 20 year shingle warranty typically covers only the cost of the shingles and not the installation.
- What procedures for corrective action will be in the contract if I am not happy with any portion of the project?
Contractor “Do’s”, “Do Nots” And Things To Beware Of
Requests for Payment
- NEVER EVER PAY CASH! Pay your contractor by check or credit card so you have documentation and recourse should you need it. Do not give your debit card number.
- Never pay for the job upfront or you may never see this “contractor” again. No reputable contractor will ask for most—or all—of his payment immediately. Most legitimate contractors only bill AFTER the job is done to your satisfaction.
- Never prepay more than $1,000 or 10% of the job total, whichever is less. That’s the legal maximum in some states, and enough to establish that you’re a serious customer so the contractor can work you into his schedule—the only valid purpose of an advance payment. As to the materials and backhoe rentals, if he’s a professional in good standing, his suppliers will provide them on credit.
- Never fork over a large down payment for materials.
- Define and set up payment terms in conjunction with completed stages of the job. If a contractor makes a mistake or says he needs more money from you, DON’T give it to him. It’s his responsibility to fix his error. Make sure your contract references this issue.
- Never pay a contractor the balance of the job, or sign a completion certificate, until all work has been finished.
Building Plans and Permits
Make sure you have a complete set of plans for your project and a building permit is secured by your contractor, not you. If you get the building permit in your name, you are on the hook for everything.More information>>
When it comes to financing, don’t agree to financing through your contractor without shopping around and comparing loan terms. “Sign on the Dotted Line” Scam artists can also victimize consumers with special financing offers for home improvement repairs. And if you don’t have enough money to make the monthly payments, don’t agree take out a home equity loan. You may end up losing your house altogether. More information>>
No matter how small the job, make sure you have a written and signed contract. This in itself can be a deterrent from contractor fraud. Don’t let your conversation with a contractor serve as a valid or binding agreement for the service he/she is to provide. Oral agreements mean it’s your word against theirs! Depending on the size, complexity and cost of your job, it might be a good idea to have an attorney review your contract. But remember, even a perfect contract does not guarantee the quality of a contractor’s work or that he or she is honorable. More information>>
There are many items that need to be included in your contract to protect you and your home.Download our Contract Check List (pdf).
Remember to call your insurance agent and check to ensure that your own homeowner’s insurance policy provides appropriate coverage during and after your home improvement or home repair project. It’s also a good idea to ask your insurance agent to look at the contractor’s insurance policy to ensure that there are no coverage gaps between your policy and the contractor’s. Make sure that they have enough insurance and liability coverage. If you use people who don’t have any or enough coverage, make sure to get liability waivers and lien waivers to protect yourself and your property. More information>>