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| Whether
you’re planning an addition for a growing family or simply getting
new storm windows, finding a competent and reliable contractor is
the first step to a successful and satisfying home improvement project.
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| Your
home may be your most valuable financial asset. That’s why it’s important
to be cautious when you hire someone to work on it. Home improvement
and repair and maintenance contractors often advertise in newspapers,
the Yellow Pages, and on the radio and TV. However, don’t consider
an ad an indication of the quality of a contractor’s work. Your best
bet is a reality check from those in the know: friends, neighbors,
or co-workers who have had improvement work done. |
| Get
written estimates from several firms. Ask for explanations for price
variations. Don’t automatically choose the lowest bidder. |
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| Home
Improvement Professionals |
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| Depending
on the size and complexity of your project, you may choose to work
with a number of different professionals: |
| General
Contractors manage all aspects of your project, including hiring
and supervising subcontractors, getting building permits, and scheduling
inspections. They also work with architects and designers. |
| Speciality
or Sub Contractors install particular products, such as cabinets
and bathroom fixtures. |
| Architects
design homes, additions, and major renovations. If your project includes
structural changes, you may want to hire an architect who specializes
in home remodeling. |
| Designers
have expertise in specific areas of the home, such as kitchens and
baths. |
| Design/Build
Contractors provide one-stop service. They see your project through
from start to finish. Some firms have architects on staff; others
use certified designers. |
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| Not
all contractors operate within the law. Here are some tip-offs to
potential rip-offs. A less than reputable contractor: |
- solicits
door-to-door;
- offers
you discounts for finding other customers;
- just
happens to have materials left over from a previous job;
- only
accepts cash payments; asks you to get the required building permits;
- tells
you your job will be a "demonstration;"
- pressures
you for an immediate decision;
- offers
exceptionally long guarantees;
- asks
you to pay for the entire job up-front;
- suggests
that you borrow money from a lender the contractor knows. If you’re
not careful, you could lose your home through a home improvement
loan scam.
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| Interview
each contractor you’re considering. Here are some questions to ask.
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| How
long have you been in business? Look for a well-established company
and check it out with consumer protection officials. They can tell
you if there are unresolved consumer complaints on file. One caveat:
No record of complaints against a particular contractor doesn’t necessarily
mean no previous consumer problems. It may be that problems exist,
but have not yet been reported, or that the contractor is doing business
under several different names. |
| Are
you licensed and registered with the state? While most states license
electrical and plumbing contractors, only 36 states have some type
of licensing and registration statutes affecting contractors, remodelers,
and/or specialty contractors. The licensing can range from simple
registration to a detailed qualification process. Also, the licensing
requirements in one locality may be different from the requirements
in the rest of the state. Check with your local building department
or consumer protection agency to find out about licensing requirements
in your area. If your state has licensing laws, ask to see the contractor’s
license. Make sure it’s current. |
| How
many projects like mine have you completed in the last year? Ask for
a list. This will help you determine how familiar the contractor is
with your type of project. |
| Will
my project require a permit? Most states and localities require permits
for building projects, even for simple jobs like decks. A competent
contractor will get all the necessary permits before starting work
on your project. Be suspicious if the contractor asks you to get the
permit(s). It could mean that the contractor is not licensed or registered,
as required by your state or locality. |
| May
I have a list of references? The contractor should be able to give
you the names, addresses, and phone numbers of at least three clients
who have projects similar to yours. |
| Ask
each how long ago the project was completed and if you can see it.
Also, tell the contractor that you’d like to visit jobs in progress.
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| Ask
each how long ago the project was completed and if you can see it.
Also, tell the contractor that you’d like to visit jobs in progress.
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| Will
you be using subcontractors on this project? If yes, ask to meet them,
and make sure they have current insurance coverage and licenses, if
required. Also ask them if they were paid on time by this contractor.
A "mechanic’s lien" could be placed on your home if your contractor
fails to pay the subcontractors and suppliers on your project. That
means the subcontractors and suppliers could go to court to force
you to sell your home to satisfy their unpaid bills from your project.
Protect yourself by asking the contractor, and every subcontractor
and supplier, for a lien release or lien waiver. |
| What
types of insurance do you carry? Contractors should have personal
liability, worker’s compensation, and property damage coverage. Ask
for copies of insurance certificates, and make sure they’re current.
Avoid doing business with contractors who don’t carry the appropriate
insurance. Otherwise, you’ll be held liable for any injuries and damages
that occur during the project. |
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| Talk
with some of the remodeler’s former customers. They can help you decide
if a particular contractor is right for you. You may want to ask:
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- Can
I visit your home to see the completed job?
- Were
you satisfied with the project? Was it completed on time?
- Did
the contractor keep you informed about the status of the project,
and any problems along the way?
- Were
there unexpected costs?
- If
so, what were they?
- Did
workers show up on time?
- Did
they clean up after finishing the job?
- Would
you recommend the contractor?
- Would
you use the contractor again?
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| Payment
Options & Arraingements |
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| You
have several payment options for most home improvement and maintenance
and repair projects. For example, you can get your own loan or ask
the contractor to arrange financing for larger projects. For smaller
projects, you may want to pay by check or credit card. Avoid paying
cash. Whatever option you choose, be sure you have a reasonable payment
schedule and a fair interest rate. Here are some additional tips:
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| Try
to limit your down payment. Some state laws limit the amount of money
a contractor can request as a down payment. Contact your state or
local consumer agency to find out what the law is in your area. |
| Try
to make payments during the project contingent upon completion of
a defined amount of work. This way, if the work is not proceeding
according to schedule, the payments also are delayed. |
| Don’t
make the final payment or sign an affidavit of final release until
you are satisfied with the work and know that the subcontractors and
suppliers have been paid. Lien laws in your state may allow subcontractors
and/or suppliers to file a mechanic’s lien against your home to satisfy
their unpaid bills. Contact your local consumer agency for an explanation
of lien laws where you live. |
| Some
state or local laws limit the amount by which the final bill can exceed
the estimate, unless you have approved the increase. Check with your
local consumer agency. If you have a problem with merchandise or services
that you charged to a credit card, and you have made a good faith
effort to work out the problem with the seller, you have the right
to withhold from the card issuer payment for the merchandise or services.
You can withhold payment up to the amount of credit outstanding for
the purchase, plus any finance or related charges. |
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| The
"Home Improvement" Loan Scam |
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| A contractor
calls or knocks on your door and offers to install a new roof or remodel
your kitchen at a price that sounds reasonable. You tell him you’re
interested, but can’t afford it. He tells you it’s no problem—he can
arrange financing through a lender he knows. You agree to the project,
and the contractor begins work. At some point after the contractor
begins, you are asked to sign a lot of papers. The papers may be blank
or the lender may rush you to sign before you have time to read what
you’ve been given to sign. You sign the papers. Later, you realize
that the papers you signed are a home equity loan. The interest rate,
points and fees seem very high. To make matters worse, the work on
your home isn’t done right or hasn’t been completed, and the contractor,
who may have been paid by the lender, has little interest in completing
the work to your satisfaction. |
| You
can protect yourself from inappropriate lending practices. Here’s
how. |
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- Agree
to a home equity loan if you don’t have enough money to make the
monthly payments.
- Sign
any document you haven’t read or any document that has blank spaces
to be filled in after you sign.
- Let
anyone pressure you into signing any document.
- Deed
your property to anyone.
- First
consult an attorney, a knowledgeable family member, or someone
else you trust.
- Agree
to financing through your contractor without shopping around and
comparing loan terms.
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| Always
Get a Written Contract |
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| Contract
requirements vary by state. Even if your state does not require a
written agreement, ask for one. A contract spells out the who, what,
where, when, and cost of your project. The agreement should be clear,
concise and complete. Before you sign a contract, make sure it contains:
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- The
contractor’s name, address, phone, and license number, if required.
- The
payment schedule for the contractor, subcontractors and suppliers.
- An
estimated start and completion date.
- The
contractor’s obligation to obtain all necessary permits.
- How
change orders will be handled. A change order—common on most remodeling
jobs—is a written authorization to the contractor to make a change
or addition to the work described in the original contract. It
could affect the project’s cost and schedule. Remodelers often
require payment for change orders before work begins.
- A
detailed list of all materials including color, model, size, brand
name, and product.
- Warranties
covering materials and workmanship. The names and addresses of
the parties honoring the warranties—contractor, distributor or
manufacturer—must be identified. The length of the warranty period
and any limitations also should be spelled out.
- What
the contractor will and will not do. For example, is site clean-up
and trash hauling included in the price? Ask for a "broom clause."
It makes the contractor responsible for all clean-up work, including
spills and stains.
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Oral promises also should be added to the written contract.
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A written statement of your right to cancel the contract within
three business days if you signed it in your home or at a location
other than the seller’s permanent place of business.
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During the sales transaction, the salesperson (contractor) must
give you two copies of a cancellation form (one to keep and one
to send back to the company) and a copy of your contract or receipt.
The contract or receipt must be dated, show the name and address
of the seller, and explain your right to cancel.
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| Keep
all paperwork related to your project in one place. This includes
copies of the contract, change orders and correspondence with your
home improvement professionals. Keep a log or journal of all phone
calls, conversations and activities. You also might want to take photographs
as the job progresses. These records are especially important if you
have problems with your project—during or after construction. |
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| Completing
the Job: A Checklist |
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| Before
you sign off and make the final payment, use this checklist to make
sure the job is complete. |
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- All
work meets the standards spelled out in the contract.
- You
have written warranties for materials and workmanship.
- You
have proof that all subcontractors and suppliers have been paid.
- The
job site has been cleaned up and cleared of excess materials,
tools and equipment.
- You
have inspected and approved the completed work.
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| If
you have a problem with your home improvement project, first try to
resolve it with the contractor. Many disputes can be resolved at this
level. Follow any phone conversations with a letter you send by certified
mail. Request a return receipt. That’s your proof that the company
received your letter. Keep a copy for your files. |
| If
you can’t get satisfaction, consider contacting the following organizations
for further information and help: |
- State
and local consumer protection offices.
- Your
state or local Builders Association and/or Remodelors Council.
- Your
local Better Business Bureau. Action line and consumer reporters.
- Check
with your local newspaper, TV, and radio stations for contacts.
- Local
dispute resolution programs.
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