Negative Contractor Experience

In many instances a negative contracting experience can be easily avoided by knowing the warning signs associated with less-than-professional contractors. Here are eight warning signs to look for when interviewing a contractor:

1. The contractor's name, telephone number, address, business directory listing or other credentials cannot be verified. A contractor who does not have legitimate business listings, such as a telephone number or address, may not be running a legitimate business.

2. The contractor pressures you to sign a contract today, using scare tactics such as a "today only discount," or a "model home discount." A contractor who tells you his price is "good only for today" and will increase tomorrow, or gives you a special discounted price based on using your home as a "model home," may be pressuring you into signing a contract immediately. Contractors who pressure you to sign on the spot are not looking out for your best interest. While there is no problem with signing a contract the same day a contractor comes to your home, you should not feel any pressure to do so. Also remember that the Federal Trade Commission's three day right of rescission allows you to cancel a construction contract within three days of signing it.

It is important to choose a contractor you feel comfortable with. Check references before signing a contract, and ask the contractor to accompany you to a reference's residence to ease any uncertainties you may have. See "Contractor Hiring Tips - A Checklist for Homeowners #2: References" for greater detail on utilizing this valuable resource.

3. The contractor does not quickly respond to your request for references. Or once you do you receive references from the contractor, the contractor's references give him a less than favorable review.

4. Licensing. This is less clear than it may seem. Some states do not require contractors to obtain a license. Check with your state's licensing department or local building department. Accordingly, if your state requires a license, make sure your contractor's license is valid and up to date. See "Contractor Hiring Tips - A Checklist for Homeowners #12: Licensing" for more information.

5. Insurance. Each contractor should have Workman's Compensation Insurance, General Liability Insurance, and Auto Insurance. Be aware of the form in which the contractor shows you his insurance certificate. Do not accept a photocopy or fax document. Insist that the certificate of insurance be mailed directly to you from the contractor's insurance company and that the certificate names you as a co-insured. See "Contractor Hiring Tips - A Checklist for Homeowners #8: Insurance" for more information.

6. The contractor asks you to pay for the entire job in advance or pay cash to a salesperson. Your payment schedule should relate to the total dollar amount of the job and the risks involved for the contractor (i.e. special orders for material). Check state laws concerning limitations on down payments, as well. For more information see "Contractor Hiring Tips - A Checklist for Homeowners #14: Contracts and Contract Elements".

7. The contractor asks you to pull (buy) the necessary permit(s). The person who purchases the building permit is responsible for ensuring the job is done according to local building codes. This is the contractor's responsibility, not yours. If you pull the permit and your project does not meet local building codes, you will have less legal recourse against the contractor. Also, if the contractor asks you to pull the permit, it may signal that the contractor is in bad standing with the local building department and cannot pull the permit himself.

8. A contractor should not ask you to sign a completion certificate for any reason before the job is completed to your satisfaction. Once you sign a completion certificate you are stating that the job has been finished and that you are satisfied. If your project is being financed by a third party, the financing company usually will not release funds to the contractor until you sign the completion certificate. The delay in funds protects you and the financing company by ensuring your project is completed to your satisfaction. If your contractor pressures you to sign the completion certificate before the project is completed to your satisfaction, the contractor may be trying to receive payment before he has finished the job.