Hiring a Contractor - Use caution

NBC's "Dateline" news program had a poignant story on contractors last night which prompted me to write the following caution this morning.

NBC told of two California contractors who had been hired to build or remodel different homes. The owners had paid the contractors hundreds of thousands of dollars to get their work underway. Both contractors got "upside down" as one put it. He took the owners' money but either spent it on his personal bills, or to keep another project going, which he was also "upside down" on. He ultimately declared bankruptcy.

The second contractor simply took that owner's money and left their home in an incomplete condition; worse, he had not properly performed his construction and it had to be torn out and redone.

To add insult to injury, each homeowner was sued by the project's subcontractors and materials providers whom the contractor had not paid. In other words, the homeowners had to pay for the same service twice (plus attorneys fees for fighting all the claims).

These owners made the same mistake thousands of us do each year. Someone refers a craftsman to us and we simply accept that recommendation without doing our own due diligence.

Anytime you hire a contractor, take these steps at a minimum:

1. Get the contractor's license number and call your state contractors board
to see if he/she has any complaints filed. Sometimes the state will only have
knowledge of a complaint. Dig deeper; ask the state for names and contact
information on the complainants. Ask the contractor for an explanation. If
he makes the complaint seem trivial, ask him for the name and number of the
complainant(s) to confirm his statements.


2. Ask the contractor for references. Call those owners and ask if the contractor
was timely, thorough, and clean.

3. Once you select your contractor, make your checks payable to both him and the
subcontractor/materials provider. That way, you won't end up like the owners
above with double billings for services and materials. Be sure the contractor
gets a building permit for the project and that the local inspectors approve
his/her work (foundation, electrical, plumbing, etc) as the project proceeds.
Don't assume the inspectors will automatically do their duty - I heard of a
new home in which the contractor had failed to install attic insulation. The
owner discovered it during winter months when her heating bills skyrocketed.
No inspection had ever been performed.

4. Never give the contractor more than 10 percent down. Then make the payments
in increments as the contractor proceeds.

5. Oregon requires all contractors to pay a $5000 bond in the event they have
complaints filed against them. This bond helps only in small claims...thus
the importance of being diligent in your own investigation of the contractor.