Do you really know who your Contractor is?
Is your house a “Money Pit” like the Tom Hanks classic? Well, before you sign on the dotted line, always make sure you check off these 5, simple, easy items. If you do, you might just rest a little easier.
1. Check the Contractor’s License.
I know, this seems obvious, but we are constantly surprised to see otherwise intelligent and sophisticated people failing to take this incredibly simple step of checking their contractor’s license. Anyone acting in the capacity of a contractor in the State of California must have a California Contractor’s License. (Business & Professions Code § 7028) The Contractor’s State License Board (CSLB) allows consumers to check a contractor’s license on line here. It really can’t be any easier than that. If your contractor is not licensed, you can force them to pay back all of the money you paid them, also known as “disgorgement.” (Business & Professions Code § 7031)
2. Get at Least 3 Current, Local References
We have no doubt that your contractor is a nice guy – probably the nicest guy ever. However, even so, check out at least three of his last jobs. Be sure the references are not his brother, his drinking buddy and/or his dad. If at all possible, go check the jobs out. If he has other jobs going right now, go check them out. Ask about messiness, change orders, delays, clean ups, misunderstandings and the like. Don’t be afraid to ask the the hard questions. You can only regret it later if you don’t.
3. Get Copies of your Contractor’s Insurance Information
It’s one thing to be told, “Yeah, sure, I got insurance.” But, it’s another to get a copy of your contractor’s Commercial General Liability Insurance (CGL) declarations page to prove it. This type of insurance generally covers property damage and/or personal injuries the contractor may cause while working on your project. And, always, check the dollar limits. Additionally, only because we have seen it for ourselves in the past, you should also actually call the agent and confirm the policy. We have seen fake ones in the past and, on more than one occasion, to boot.
If the contractor has workers, day laborers or “subcontractors” (you have never seen or heard of before), it is also critically important to get proof of your contractor’s worker’s compensation insurance. Again, check the CSLB’s website to see if your contractors is claiming to have employees or not and whether he maintains worker’s compensation insurance. If your contractor does not carry workers compensation and one of his “workers” is injured on your property, you might be left holding the bag as the property owner. Failure to carry worker’s compensation insurance will result in the automatic suspension of the contractor’s license. (Business & Professions Code § 7125.2)
4. 10% down or $1,000, whichever is less.
That’s the law. (Business & Professions Code § 7159.5) You might hear a lot of sob stories about materials, labor, down payments and the like, but don’t be swayed. Never pay more than 10% down or $1,000 on the contract, whichever is less, to start. If your contractor is that broke, that might be a clue for you to consider. Don’t pay in cash and don’t let your progress payments get ahead of the completed work, regardless of the hard luck story.
5. Don’t Forget About Google and Yelp
Again, this seems obvious, but you will be surprised what a basic Google and a Yelp search will turn up. Don’t be hesitant to follow up on those leads and information. And, don’t be afraid to ask your contractor about what you find.
Keep these 5 simple and easy steps in mind before you sign the contract. As the old saying goes, “An ounce of prevention is worth a pound of cure.” This is especially true when it comes to hiring a contractor.
Eric Papp, Esq.