WOW, I read this the other day and it just confirms what I have been advising my clients for years. Read this article that was printed in the local paper just 2 days ago 

Now check out the "Helpful Hints" document I give to my clients who either just bought a home and are excited about getting it "fixed up" or sellers who are getting their home ready to put on the market and are taking care of all that "deferred maintenance" that has been piling up over the years.

HIRING A CONRACTOR

Question - How do I find the right licensed contractor?

€ Make sure the contractor is licensed

€ You should check out any contractor's license information before hiring.  You can do this at the following website:

€ http://www.cslb.ca.gov/ and enter the license number

€ Get at least 3 written bids on your projects.  Make sure you are comparing bids based on identical plans, specifications and scope of work.  Do not automatically accept the lowest bid.  In fact, you should beware of any bid that is substantially lower than the others. It probably indicates that the contractor made a mistake or is not including all the work quoted by competitors.  It is also possible that this contractor will cut corners or do substandard work in order to make a profit on the job. 

€ Ask for personal recommendations

€ Verify the contractor's workers' compensation and commercial general liability insurance coverage.

Question - Contracts, Do I need one?

€ A contract is required for all home improvement projects over $500.  The contract and any changes made to that contract must be in writing.

€ The contract should inform the consumer of their rights to cancel or rescind the contract.  It should also tell how the work will be done, when it will be done, what materials will be used and how much it will cost.

Question -What should the contract contain?

€ Detailed description of products to be used

€ Detailed written payment schedule.  The payments to the contractor cannot exceed the value of the work performed (with the exception of the down payment)

€ Written directions on who will get the necessary permits and provide a date of completion

€ Any changes require a written change order to be signed by the customer

€ The contract should also include the contractors address and license number

€ Liability and worker's comp insurance information should be provided as part of the contract

€ Down payment - cannot be more than $1000 or 10% of the total contract price whichever is less. 

Question - what about Mechanics Liens?

€ Consumers are required to receive a "Notice to Owner" warning about property liens. 

Question - Can I cancel? 

€ Consumer has the right to cancel within 3 days of executing the contract. 

Additional Information; Illegal Contractors

€ It is illegal for an unlicensed person to perform contracting work on any project valued at $500 or more in labor and materials.  Besides being illegal, unlicensed contractors lack accountability and have a high rate if involvement in construction scams.  They are also unfair competition for licensed contractors who operate with bonds, insurance and other responsible business practices.

€ There is a statewide fraud team to set up to monitor and combat illegal activity.  If you run into an illegal contractor you can turn them in to the Contractors State Licensing Board

Owner/Builder

€ An owner/builder is what the term indicates.  The person owns the property and acts as their own general contractor on the job.  They can do the work themselves or use subcontractors.

€ As an owner/builder you assume full responsibility for all phase of your project and its integrity.  You must pull all building permits.  The owner/builder is responsible for ordering materials and making sure all suppliers are paid. 

€ An owner/builder is responsible for supervising, scheduling and paying subcontractors.  If you use anyone other than your immediate family or a licensed subcontractor for work, you may be considered an employer and be obligated to participate in state and federal income tax withholding, federal ss taxes workers comp and disability. 

Downside of being an Owner/Builder

€ Unless you are knowledgeable about construction, mistakes can be costly and take additional time to repair.  If your workers are injured or your subcontractors are not licensed or do not carry liability insurance or worker's compensation and they are injured, you could be asked to pay for injuries and rehabilitation through your homeowner's insurance policy or face lawsuits.

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