Hiring a Home Improvement Contractor?

This is a must read before signing any contract for home improvements or giving someone money to perform work at your home.  I wrote this article to give homeowners information to help protect themselves when hiring home improvement contractors. 

 

Well, you finally decided that you want to remodel and now you need to hire a contractor, but where to begin? Sure you can ask friends and family for recommendations, or look in the yellow pages or even check out the local paper, but how do you know the person you hire will do the work as contracted to do so and not take your money and run in the process?

I am not going to tell you who to use as a contractor, but I will tell you a couple of things you can do to protect yourself through the process of hiring and then contracting with a home improvement contractor.

Protect yourself. Research your contractor. You will likely be entrusting your contractor with a large amount of your hard earned money. I advise checking your contractor’s credentials and contacting former customers. In Connecticut, there are a lot of recourses available we can use to research contractors credentials ourselves. Keep in mind, that all this information collecting is public record. You have a right to obtain this information.

First, make sure the person you hire is a licensed home improvement contractor. Ask to see their license. All home improvement contractors working in Connecticut must be registered with the Department of Consumer Protection (DCP), and they must display that registration number in all advertising. The State Department of Consumer Protection provides several licensing cards to the contractors, one of which is small enough to fit in a wallet. Be advised that plumbing, electrical and heating and cooling contractors require a separate license and registration with the DCP required by these trades is required. You can also check the license information directly on the web at the DCP website. Just select the Home Improvement Contractor choice and type in the name of the contractor. If the contractor has an unusual name, try typing in the first few letters of the last name and a list will pop up that should contain the correct spelling of the last name. This site should also report whether there have been any complaints or disciplines against the contractor. If you cannot find the contractor on this site, a red flag should pop in your head, and you should call the DCP directly and ask someone to check the contractor's name for you. The number is 1-800-842-2649. If you are given indication that the contractor has had any violations, you can request a copy of those violations and review them for yourself. You will need to file a Freedom of Information Act request with the DCP. There are guidelines in place for how long the DCP has to respond to your request.

I would also advise checking with the Better Business Bureau at 203-269-2700 to see if they have any complaints filed against the contractor you are considering hiring.

Here is the link to check the DCP for license information:
http://www.dcpaccess.state.ct.us/dcppublic/licenseLookup.asp

If you want to know if your contractor has a history of suits filed against him you can check this out too! Multiple suits would be a key indication that your contractor has been in financial trouble and may not be able to complete your job for whatever reason.
The following link is to the State's judicial website. From here you can select, case lookup, civil (or small claims) and party name inquiry. You will need to type in your contractor's name to see if any suits have been filed. You can also do the same for small claims actions. Small claims are filed for claims of less than $3500.

Here is the link to check for lawsuits: http://www.jud2.state.ct.us/civil_inquiry/GetParty.asp

You can go one step further and check the US Bankruptcy court to make sure your contractor is not currently in the process of filing for bankruptcy. You do not want to enter into a contract with someone who is about to file without first knowing what your rights will be if he can include your potential claims against him in his bankruptcy action. In the Hartford area; the court's number is 860-240-3675. Where the contractor files depends on which town he lives in, so the above number may be different if you are looking into a contractor elsewhere in the state.

After playing amateur sleuth, you finally decided to hire your contractor, now what should you do? You need to keep protecting yourself even after you checked out your contractor's credentials. Ask your contractor questions about how he performs his work and how he pays his sub-contractors. You will want to ask the contractor several key questions prior to actually hiring him or her:
• Do you carry workers’ compensation and liability insurance?
• Is your license in good standing?
• What are your working hours?
• Will you have your sub-contractors sign lien waivers for me?
• How long have you been a contractor and are you a full time contractor?

Be sure to ask the contractor which towns he has worked in and ask for the names of at least 3 jobs the contractor performed work. You can call the town's building department to see if there are other jobs he/she may be working on right now. This information is valuable in ascertaining a complete picture of the contractor's reputation. Let's face it, when you are asked to give recommendations, don't you give the names of 3 people you know will give you a glowing recommendation? Once you get the names of past clients of the contractor, take the next step and call them and ask about how the job went. Here are some questions you could use:

• Was the contractor on time with the schedule of your job?
• Were all the sub-contractors professional and clean up after the job?
• Did the contractor have any unforeseen cost overruns?
• Were you satisfied with the work performed?
• Were there any problems and were they resolved?
• Did your contractor provide you with lien waivers signed by all of the sub-contractors working on your job?

A few words about your contract:

You have checked out your contractor’s credentials, you called his past customers and you are satisfied with all the information you obtained. You are now ready to hire your contractor. Per Connecticut State statutes, there are specific guidelines in place requiring your contractor to have certain information added to the contract in order to make it valid and enforceable. If your contractor fails to add this information to your contract, the contractor would be subject to criminal and administrative actions.

Per the guidelines set forth by the DCP, your contract must:
• Be in writing, as well as any and all contract modifications;
• Be signed by both the homeowner and the contractor;
• Include both a start and completion date; and
• Include notice of the homeowner’s right to cancel within 3 business days (includes Saturdays)
Remember, the contract is not valid or enforceable against you unless it contains all the above information and is entered into by a registered contractor.

According to the DCP, if more than 30 days have gone by from the start date in your contract and the contractor has not performed a substantial amount of the work specified (or within 30 days after the date of the contract if no start date is listed), you may request a refund of your money. I recommend you have this request in writing and sent via certified mail, receipt required (you want a signature it was received) or fax (be sure to keep your confirmation receipt) in addition to hand delivering it to your contractor directly. If the contractor fails to refund your money within 10 days of your request, the contractor would be subject to criminal and administrative actions.

A few words about mechanic's liens:

Get lien waivers signed by all your contractor’s sub-contractors! If your contractor fails to pay the sub-contractors he hires or the businesses that provided materials for your job, they will be looking to you for payment. Yes, that is right; you could be liable for the amount he owes them even though you have not entered into any agreement with those sub-contractors or business directly. Not only could you lose the money you paid out to your contractor if he skips on your job, but, if your contractor did not pay any of the subcontractors, you could theoretically owe the same amount to the sub-contractors. It is like paying double for a job not done.

Be sure to have lien waivers signed by all sub-contractors prior to performing work on your property. Your attorney should have a standard form lien waiver. You could also check with your local building department to see if they can provide one to you. Your title insurance carrier also has standard lien waivers they use. Again, I cannot stress this enough, make sure anyone performing any work or providing any materials signs a lien waiver. This will protect you in the event they attempt to file a mechanic's lien against your property if your contractor fails to pay them or there is a dispute between the contractor and the sub-contractor. By statute, a mechanic's lien must be recorded within 90 days after the completion of services - or the last date the service was performed or materials provided at your property. The statute of limitation for commencing a foreclosure action is within one year after the filing of a mechanic's lien. If you attempt to sell your home or re-finance within that years time and you have a mechanic's lien filed against your property's title, you will be forced to address it at that time. Better to protect yourself first.

 

If a mechanic’s lien is filed on your property, you can file an application (per Connecticut General Statutes (C.G.S.) Sec. 49-35a) to have it discharged or reduced. Due to the complexity of this issue, you will want to hire an attorney to prepare and file all the necessary documents. A hearing will be scheduled by the court and the person that placed the lien on your property will first have to establish that there is probable cause to sustain the validity of the lien. In defending your property’s title against the lien, you must provide clear and convincing evidence that the validity of the lien should not be sustained or the amount of the lien claimed is excessive and should be reduced (per C.G.S. Sec. 49-35b).

Some important tips to remember:

•Obtaining building permits are ultimately the homeowner’s responsibility, double check that your builder has actually pulled a proper permit for your job.
Do not make any advance payments, outside the payment schedule detailed in your contract, without first notifying all of your contractor's sub-contractors (those that furnished materials or rendered services ) in writing at least five days before you make the payment. Without getting into giving legal advice, this “tip” is dictated by statute and is important in the event you need to defend your property's title against a mechanic's lien. Make sure you keep copies of the notices you sent.
•Keep copies of all checks or banks checks paid to your contractor.
•Make sure you understand your contract and if you do not, check with your attorney.
•Plan your payment schedule to correspond to the progress of the work and make sure to include the payment schedule in the contract.
•If the contractor demands all the money up front, or a large advance payment, this may sign the contractor is in financial trouble.
•Keep a daily record of all correspondence/conversations with your contractor, all work done, all materials delivered, any changes/additions and any problems encountered.
•Do not sign a certificate of completion or make your final payment until you are sure that everything in the contract is done and the entire job has been finished to your satisfaction, and if required by your local building official, their approval as well.
•Personally speak to all suppliers and subcontractors to verify (in writing) that they have been paid work.
•Warranties are usually good only if in writing, and the writing is only as good as the contractor behind it. Be sure to check for written warranties on materials.
•Your contractor should carry workers’ compensation and liability insurance. You should check with your own policy to see if you have enough coverage in case someone is injured while working on your property.

In the event that you find yourself faced with having to file a claim against your contractor; as long as the contractor was registered with the DCP within the last two years of the date of execution of your contract, you are eligible to file a claim with the Home Guaranty Fund (FUND) for reimbursement for up to $15,000, if you have obtained a judgment in civil court against the builder (and filed your claim within 2 years of obtaining that judgment), the work was for more than $200.00 and the work was performed on a residential property (single or multi-family dwellings of 6 units or less or condos). The contractor may be subject to arrest in addition to paying back any money you may have collected from the FUND.

The details for collecting from the FUND can be found at this web address: http://www.ct.gov/dcp/cwp/view.asp?a=1625&Q=273820

Remember, buyer beware. The above information is provided to assist you before commencing work on your home and through the process. For more information, visit the DCP's website and always consult your attorney in the event you need further information or assistance.

 

 © 2005 Linda Edelwich. All rights reserved.