Hiring a Contractor

When you first begin the planning of any project requiring a professional you may feel overwhelmed. This is normal. Even the most educated and skilled person out there can be scammed. Scams can be deliberate or simply "situational" which I will explain as we go on. Whether your project is a modest bathroom update to building your dream house from the ground up- know the laws in your state, do a back-ground check on your contractor, ask questions and ask more questions during the process. Plan on spending a great deal of time on site or hire a professional "construction manager". (http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/05/27/REGSHQ1Q2E1.DTL) This is your money, your time and probably your biggest asset that you are risking. In California you can check the status of a contrator's license by going to http://www.cslb.ca.gov -that is the first step.

Here you can enter the business or owner's name and it will give you a brief description of the license held and other information such as currrent insurance binders. What this governing board does not tell you is more important. It does not list previous clients, nor does it record ANY ARBITRATIONS filed and the outcome of same. THIS IS IMPORTANT TO KNOW WHEN SIGNING A CONTRACT. Some contractors will add a stipulation to the contract that states "any disputes will be handled by ARBITRATION". When we signed such a contract, we were not thinking of disputes- much like entering into a marriage; you don't plan on how it will all "end badly later" at the wedding do you? No, you are only thinking of the wonderful new experience and planning on enjoying this new "contract" for years. The CSLB also does not tell you that you have just 2 years to report unlawful activity or lawsuits filed (won or lost) against the contractor. In our case, we filed a lawsuit, it went to an arbitration panel and the defendants took just over two years to finally get to the table (delays can be devastating) which at the time seemed outrageous but now, looking back, we understand why. TWO YEARS. It can take a year just to get everyone served, expert witnesses located and hired and calendars between the attorneys in sync just to begin the discovery.

Research the laws governing contractors in your state. Remodel laws are much different than "new build" laws. How long is the "warranty" on the work being done? How long do you have to go back to a sub-contractor for inferior work or materials? How important are lien releases? Who is insured under "Contractors General Liability"? Who is supposed to pay for this?  (We agreed to pay and found out later it covered the CONTRACTOR only and we weren't required to pay this!)  Is it necessary for the sub-contractors to have their own insurance as well? (A good way to find out if they are licensed!)  What are lien releases?  Are they important?  If you contractor fails to pay a sub-contractor that sub can put a lien on your home- which is public record, can be sued for and will stop the County from allowing a completion of the project to be filed and therefore -NO OCCUPANCY!

Before signing a contract, you need all of the above information so that you are well informed and can spot any deviance from the law that may be written into the contract. (Yes! It does happen!) Next, pay an attorney, practicing in Contract Law or Construction Law to review the contract- before you sign it! Had we done that, we would have saved ourselves thousands of dollars and years of grief!

Be on site. I know, you are busy with work, family and life but this is your job too. You will be the one living with decisions made in your absence. Hundreds of questions can and will arise during the process. Some can be answered on the phone but most will require you looking at the area in question. It may simply be a design disagreement or it may be as important as where the light switches will be located. Unless you have a trained "site manager" who knows exactly what you want and need on the job- YOU NEED TO BE THERE. (see photos!)

Get it in writing! Every change to the plan is called a "change order" and must be written, signed by the owner and the contractor with any cost changes -plus or minus for the change. For example, a material you requested is "substituted" with a more expensive brand (remember situational scams?) and you did not give prior approval-but it is there, installed and can not be changed.  Some of these can be minor but one cost us over $8,000!  Keep in mind, during a house construction, there could be hundreds of change orders. Do not accept anything verbally! Do not let materials or labor begin until you have a written change order! Be tough!

Lastly, do not pay the bills yourself. Before the first deposit is made (again, check your state's laws on the legal amount of a deposit) hire a bank, a financial manager or your construction site manager -any third party you can trust- to actually pay the bills. This prevents any pressure being put on you directly to pay for something you did not approve or is not completed. This prevents paying for something that does not have a written change order. It takes you out of the "middle" and lets you concentrate on the actual build or remodel and allows any financial disagreements to happen with a third party and not become personal.

Research the laws, do your homework, talk to previous clients (ask for a list of clients and YOU choose who to call), have the contract legally reviewed, hire a site manager, hire a funds manager and BE ON SITE as much as possible. Things will still go wrong, but you will be prepared!