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 upfront;
• 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.
• 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.
• 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. These ways, 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.
• A detailed list of all materials including color, model, size, brand
name, and product.
• 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. |