Whether
you're 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. That's why it's 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, don't consider an ad an indication of the quality of
a contractor's 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.
Don't automatically choose the lowest bidder.
Home
Improvement Professionals
Depending
on the size and complexity of your project, you may choose to work with a
number of different professionals:
" General Contractors manage all
aspects of your project, including hiring and supervising subcontractors,
getting building permits, and scheduling inspections. They also work with
architects and designers.
" Speciality Contractors install
particular products, such as cabinets and bathroom fixtures.
" Architects design homes, additions,
and major renovations. If your project includes structural changes, you may
want to hire an architect who specializes in home remodeling.
" Designers have expertise in specific
areas of the home, such as kitchens and baths.
" Design/Build Contractors provide
one-stop service. They see your project through from start to finish. Some
firms have architects on staff; others use certified designers.
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
up-front;
" 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.
" 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 contractor's license. Make sure
it's 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.
" 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. This way, 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.
" 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.
For
More Information
o
Federal Trade Commission: www.ftc.gov
o
National Association of Home Builders Remodelors™ Council: www.nahb.com
To
order a free copy of How to Find a Professional Remodeler, send a
self-addressed stamped envelope to:
NAHB
Remodelors Council
Dept.
FT
1201 15th Street, NW
Washington , DC 20005
o
National Association of Consumer Agency Administrators: www.nacaanet.org
1010
Vermont Avenue, NW
Suite
514
Washington,
DC 20005
E-mail:
nacaa@erols.com
The
FTC works for the consumer to prevent fraudulent, deceptive and unfair business
practices in the marketplace and to provide information to help consumers spot,
stop, and avoid them. To file a complaint or to get free information on
consumer issues, visit www.ftc.gov or call toll-free, 1-877-FTC-HELP
(1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing,
identity theft, and other fraud-related complaints into Consumer Sentinel, a
secure online database available to hundreds of civil and criminal law
enforcement agencies in the U.S. and abroad.
