Whether youíre 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. Thatís
why itís 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, donít consider
an ad an indication of the quality of a contractorís 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. Donít automatically choose the lowest bidder.
Donít Get Nailed
Not all contractors operate within the law. Here are some
tip-offs to potential rip-offs. A less than reputable contractor:
- offers you discounts for finding other customers;
- just happens to have materials left over from a previous job;
- only accepts cash payments;
- 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
youíre not careful, you could lose your home through a home improvement loan
Hiring a Contractor
Interview each contractor youíre 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.
- 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 contractorís license. Make sure itís 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.
- 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 youíd 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
"mechanicís 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
- What types of insurance do you carry? Contractors should have
general liability coverage. Ask for copies of insurance certificates, and make
sure theyíre current. Avoid doing business with contractors who donít carry
the appropriate insurance. Otherwise, youíll be held liable for any injuries
and damages that occur during the project.
Talk with some of the remodelerís former customers. They can
help you decide if a particular contractor is right for you. You may want to
- 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
- 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.
- Donít 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 mechanicís 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.
You can protect yourself from inappropriate lending
practices. Hereís how.
- Agree to a home equity loan if you donít have enough money to make the
- Sign any document you havenít 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 contractorís name, address, phone, and license number, if required.
- The payment schedule for the contractor, subcontractors and suppliers.
- An estimated start and completion date.
- How change orders will be handled. A change order ó common on most
remodeling jobs ó 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 projectís 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,
- Warranties covering materials and workmanship. The names and addresses of
the parties honoring the warranties ó contractor, distributor or manufacturer
ó 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?
- 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
sellerís permanent place of business.
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 ó 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 have been paid.
- The job site has been cleaned up and cleared of excess materials, tools
- 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. Thatís your proof that the company received your letter. Keep a copy
for your files.
If you canít 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.
For More Information
ē Federal Trade Commission:
ē National Association of Home Builders Remodelorsô