With home improvement fraud and scams on the rise in the United States, homeowners should take the necessary precautions to avoid becoming a victim of “flying contractors.” For those who still own their properties after seeing the rise in foreclosures in this nation, it behooves you, the homeowner, to do the following before looking for a home improvement contractor.
Home improvement contractors (HICs) in most jurisdictions in the United States are regulated by city, state, or county agencies. For example, in New York City, Nassau, and Suffolk County in New York, the Department of Consumer Affairs regulates the operations of home improvement contractors and home improvement salespeople (HIS). These are representatives or vendors who negotiate contracts on behalf of home improvement contractors (HICs).
There are basically three (3) stages of the home improvement process, namely: the negotiation stage; The Contract Stage and the Work in Progress and Completion Stage. In the negotiation stage, a homeowner must perform “due diligence” on potential home improvement contractors and home improvement sellers, hereinafter referred to as HICs and HISs, respectively. This is where you investigate and verify if HIC is a bona fide and legitimate operator. Start by calling the Agency that regulates HIC and HIS in your area. Ask HIC and HIS for proof of licenses, workers’ compensation, general liability insurance, performance bonds, and references.
You should also check with the Better Business Bureau (BBB) regarding the reputation of such businesses. Check to see any history of complaints and how they were expedited. Make sure HIC/HIS has a physical business address, business phone, fax, email address, website, etc. Beware of “flying contractors” operating out of their trucks, vans, SUV’s. It is also very important that homeowners get at least 3-5 free written estimates from HIC and HIS. Some HICs/HIS may charge a reasonable fee based on the size of the estimated job. For example, those budgets that involve specifications of plans, plans, zoning, etc. However, you should attempt to negotiate a free quote in writing that expressly states in black and white prices, brands, colors, designs, start date, end date, etc. Keep in mind that “word of mouth” is the best recommendation. Get HIC/HIS references and spend the time checking out jobs and speaking directly with owners. Ask questions!
At the contract stage, before signing or executing a contract, be sure to obtain copies of HIC/HIS licenses, workers’ compensation, general liability insurance, performance bond (applicable to large projects), and ask if HIC participates in a Home Improvement Trust Fund. This is a trust fund that the Agency requires HIC to pay out to protect HIC homeowners who leave before a job is completed. You should also ensure that all brand names, styles, colors, any oral promises (some high powered HIC/HIS promise you the moon to get your signature), along with any manufacturer and labor warranties, will be expressly written on your contract. . Most importantly, make sure that HIC/HIS expressly puts a start date and an end date in writing, as well as grants you your right to cancel (rights of withdrawal).
Most contract laws allow you three (3) business days from the date of a contract to rescind or cancel the contract without penalty or obligation. So if you made a deposit to HIC/HIS, you are entitled to a full refund within a reasonable period of time not to exceed 10 days. Check with your jurisdiction to ensure this right. With respect to deposits, some HIC/HIS may require a deposit at the time of execution of a contract. Be very careful with HIC and HIS that ask for large deposits up front. Beware of HICs and HISs who want cash or checks made out to you. Make checks payable to the business only. It is advisable to pay by credit card. If HIC is a legitimate operator, it is very likely that they will accept credit cards as a Merchant. However, the Rule is: Do not deposit more than you can afford to lose. In other words, give a very, very small deposit. A bona fide, reputable and legitimate HIC will not require an advance deposit. Such a HIC has credit accounts with Home Depot, Lowe’s, and other vendors that will not rely on your money/deposit to purchase materials.
If you are not financing the work through HIC or a third party lender, it is recommended that you pay progress payments to HIC. Progress payments are incremental payments. In other words, you pay as the job progresses. For example, if you’re doing roofing work, you may want to give a percentage down payment (one-third of the contract price) only on delivery of materials and start of work. Then, you pay another one-third payment when the roof is complete and the final third when construction debris is removed from your property. It is advisable to retain at least 10 percent of the total contract price for at least 90 days to ensure that the work has been done correctly. For those homeowners who wish to finance their projects through HIC or a third party lender, please be sure not to sign any blank bank documents. You should also ask HIC/HIS if the amount you finance will create a lien or second mortgage on your property. Make sure the bank performs a visual inspection of the job before you sign a certificate of completion that allows the bank to pay the HIC.
Finally, the Stage of Work in Progress and Completion; this is the most crucial stage of the work. The HIC is ready to back out of your project, but wants to make sure the work was done in accordance with municipal building codes and that all your manufacturer’s warranties, labor warranties, etc., are given to you in writing. . This is where HIC or HIS will ask you to release the final payment. If you finance the work, HIC/HIS will ask you to sign a certificate of completion which you will take to the bank to obtain a release of the funds with your permission. Some banks will do a visual inspection to make sure the job was done. However, it is very important that you make sure that the municipal building inspectors give your project the green light. In other words, they must sign the job stating that all work was done professionally and in accordance with municipal building codes. Some jobs may require a certificate of occupation (CO).
Make sure you have this CO in hand before releasing final payments to a HIC/HIS. Last but not least, if HIC hires subcontractors, such as an electrician or plumber, to work on your property, make sure HIC pays them. Failure to pay may result in subcontractors filing a mechanical lien against your property. This is legal. While the work is in progress, make sure the workers are on site on time. A normal work day for construction workers is 8:00 am to 6:00 pm. Some industrial workers will work until dark. Beware of the workers who appear for a few minutes and leave. There are many HICs who start 20 jobs and can’t finish one. Some HICs take from “Peter to pay Paul” and paralyze their work in the process. That’s why it’s crucial that you get a start date and end date in writing.
If HIC does not complete the work within that time, you, the homeowner, can legally withhold money or charge HIC for each day that has elapsed. If your job is outside work involving ladders, scaffolding, etc., make sure they are set up correctly and that workers exercise a reasonable standard of care. In other words, if a scaffold or ladder falls and injures a neighbor or bystander, they may have a civil lawsuit or lawsuit against you, the owner. This is why you should ensure that HIC has adequate insurance, such as general liability insurance, before beginning work on your project. If you, the homeowner, allow HIC to advertise your business by placing a sign on your property, you may request a discount on your contract for this favor.
I hope this post will help you select the right home improvement contractor for your project and most of all help you not fall victim to criminals posing as home improvement contractors.