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16 WAYS TO SAVE THOUSANDS OF DOLLARS AND AVOID REMODELING,REPAIR AND CONSTRUCTION PROBLEMS

BEFORE A PROJECT:

FINDING AND SELECTING A CONTRACTOR

NEGOTIATING A CONTRACT

DURING AND AFTER A PROJECT:

AVOIDING PROBLEMS

PAYING WISELY

PREVENTING & RESOLVING DISPUTES

- The time you spend now amounts to your saved dollars later!

Finding and Selecting a Contractor:

Most construction projects will go smoothly if you do your homework. Check out your contractor, set realistic expectations and make wise decisions during the project. These tips can help:

1 – Develop a list of potential contractors

Ask friends, neighbors, and co-workers for names of contractors they used. Good contractor’s names will come up more than once. Find out if their experiences were good or bad. Ask if they would use this contractor again.

Ask a Contractor (And yourself) these questions:

What experience, expertise, and certifications do you have?

Do you specialize?

Who is doing the actual work? You, subcontractors,or employees? (You may like the owner of the business,but that person may not be the one doing or supervising the work.)

If you get the job and permits are required, who is responsible for the permits?

How many jobs are you working on the same time as mine?

What written warranties do you offer?

Who can I call when the project starts?

How can I contact you if there are problems?

Can your insurance company send me a certificate of insurance?

• Are you required to have a license?
• What type of license?
• What is your license number?
• Do you carry workers comp.? Liability Insurance?

Ask a Contractor (And yourself) these questions:

Does hiring this contractor feel right – use your intuition – and if you don’t feel comfortable, get someone else.

Do you have rapport with this contractor?

Do you feel confident with this contractor, their ideas and expertise – ?

• Does the contractor care about your concerns?
• Will this contractor be reliable, keep appointments, and return your calls?

• Can you communicate with this contractor?
• Does this contractor seem honest and forthright?

(A contractor may be a skilled crafts-person, but if you can’t seem to communicate and the final job isn’t what you wanted, you won’t be happy.)

• Can you be reasonable and let your contractor work

without calling all the time?

• Do you realize that your contractor may not be able to return your calls within minutes because of other jobs and a personal life?

• Can you be flexible if the job takes longer ?
• Are your expectations so high that you will never be satisfied ?

• Can you be reasonable about unexpected costs that arise and let your contractor make a profit ?

2 – Ask for references.

Check with previous customers. Were they satisfied with the work? Was the work finished within a reasonable time frame? Did the contractor return phone calls? If the person had problems with the contractor, ask how the contractor responded to complaints. Look at examples of the contractors work.

3 – Ask what trade associations the contractor belongs to.

Home building and remodeling is professional work. Membership in a professional association is one sign that a contractor recognizes the responsibilities of being a professional.

4 – For bigger jobs get more than one written bid. This can help you understand what your project will entail. Make sure you understand ANY wide variations in bids.

Be aware of hidden costs.

TIP: A large number of complaints filed against contractors are the result of homeowners taking the lowest bid and then being unhappy with the poor quality of work.

5 – Do not automatically accept the lowest bid.

The old saying, “you get what you pay for applies here. A higher bid may be worth the price in better materials, workmanship and reliability. If you get a very low bid,the contractor may have made a mistake or forgotten to bid everything, or they may have deliberately low-bid the job in order to get it. If they have a bid that is too low to make a profit, they may use cheaper materials, or take shortcuts.

6 – Verify your contractor is properly licensed through your state.

A license is required for any business or individual that advertises, offers, bids, arranges for, or actually does any construction, alteration, home improvement, remodeling or repair work. This includes painting, roofing, carpentry, siding, plumbing, electrical, floor covering, windows, insulation, land development, concrete, inspection services, heating and air conditioning, and most other construction and repair services.

Ask for a current license number or get it from their business card or advertisement. Check with the current license board to make sure the license is currently active. Also check the business' complaint history, disciplinary actions and size of the contractor’s bond and insurance. Licensed contractors have a surety bond and a general liability insurance policy.

TIP: Illegal contractors will lie and say they are licensed hoping you won’t check up on them.

Any licensed construction business, no matter how good, may have a complaint filed against it. What may be a red flag is a high number of complaints within a relatively short period of time. Other considerations may be the business’ volume of work and how it resolves disputes. If the business is using workers, check if the license allows employees.

A “Nonexempt” license means the contractor carries workers compensation insurance covering employees in case of an injury. An “exempt” license means they do not carry workers compensation insurance covering employees. Contractors can be exempt and use licensed subcontractors or employees from temp agencies.

TIP: Illegal contractors will lie and say they are licensed hoping you won’t check up on them.

If a worker on your project is injured, his or her employer workers compensation insurance will cover the costs and prevent you – as the owner of the property – from having to pay for the injury. Information on a contractor’s license is available by calling your state licensing board, or visit their website. Most states offer a place on their website to click on ‘Check a Contractor’s License’ and enter the license number. If you do not have the number, you can enter the name of the business.

An Active License Means:

• The contractor can legally work in your state
• The Contractor has a surety bond and liability insurance – both offer some financial protection if problems develop later.

• You have access to your states licensing board dispute resolution services.

7 – Plan your project carefully.

Consider your budget. Find pictures of styles and products you like if you can’t get samples. Write down brand names and models. Show them to your contractor. “High quality faucets” or “ivory paint” may mean something different to you and your contractor. Walk your contractor through a FINISHED project and explain what you like AND don’t like. Get plans or blueprints and MAKE SURE they show your project accurately. Approve the completed plans BEFORE work begins.

8 – Think carefully before becoming an owner-builder.

If the work requires more than two specialty contractors, you may consider hiring a licensed general contractor (Remodeling a kitchen, for example, usually requires a plumber, electrician, floor layer, and carpenter.) Unless you are an experienced builder with the time and skills to do it right, you’d be wise to hire a licensed general contractor to build your home.

TIP: Beware of Repair Scams!

Stay away from repair businesses that:

• Market door-to-door with ‘special deals’
• Offer to use leftover, cheap materials from another job which they claim will save you money
• Want 100 percent of payment up front – in cash
• Use high pressure sales tactics including intimidation

9 – Use a written contract.

Most states require written contracts for projects over $2,000. The recommendation is for a written contract on all projects. A written contract protects you and the contractor. Put all agreements, including all changes to the contract, in writing. Generally the more detailed a contracts is, the fewer problems that will come up later. A big contract should have a detailed contract, not “remodel master bedroom $19,450.” Verify that the name on the contract matches the name on the contractor’s license record. Don’t sign a contract until you understand everything Make sure that your contract does not include a provision that says that you cannot file a complaint with the states license board.

Get all warranties in writing as part of your contract. Make sure you understand what is and is not covered. In Oregon, as of July 1, 2008, contracts with an owner to build a new, residential structure must contain an offer of warranty. The law does not specify how long the warranty is in place or that it is at no cost to the homeowner. Be sure you understand WHO is providing the warranty (it could be your contractor or a third-party) and

HOW LONG the warranty lasts.

TIP: What is the BIGGEST cause of homeowner-contractor disputes?

• No written contract
• A Poorly written contract
• A contract everyone ignores

10 – Make changes in writing.

People change their minds during a project. If changes are made at the right time, the cost and length of the job may not be affected. Delay, however, can mean costly changes. For new homes and remodeling projects, allow at least a ten-percent increase for changes from the contract. If changes in the plans occur during the project, put them in writing as amendments to the contract, including any differences in cost and who will pay for them. These “change orders’ should be signed by BOTH you AND the contractor.

11 – Communicate.Talk to your contractor during the project. Many disputes happen

when people fail to communicate at every step of the project.

TIP: Don’t Hire Unlicensed Contractors . . .

• You lose the protection of a licensed contractor’s general liability insurance and you assume liability for accidents on the job site. Most unlicensed contractors are not insured.
• You lose access to the resolution dispute services in your state.

12 – Obtain building permits.

New home construction and most remodeling projects require building permits from the local building department. Usually contractors obtain these permits because they know which permits are required. But ultimately, the owner is responsible for making sure proper permits are obtained. Make sure a final inspection is done when the work is completed.

For more information visit www.permitsprotect.info.

13 – Pay wisely.

Legitimate contractors often require a down payment – a fourth to a third of the total cost of the contract is common. Find a balance where the contractor has enough money to buy materials and begin the work, and you have enough at the finish date to ensure satisfactory completion. Make payments in stages, as work is completed and has passed inspections. For bigger projects, you can establish an escrow account at a bank. Do not pay in cash. Unfortunately, a few scam businesses have no intention of starting or completing the work. Make checks out to the contractor as the contractor’s name appears in the contract.

14 – Avoid construction liens.

Homeowners are ultimately responsible for payments to subcontractors and suppliers even if they have paid the general contractor in full. Do not allow construction to start until your contractor gives you a copy of,

“Information Notice to Owner About Construction Liens.”

The two-page notice explains liens and how to protect yourself. Read it carefully and follow its advice. You can find a copy in most construction bureau websites under ‘Consumer Publications.’

15 – Keep good written records.

Keep a log of conversations and copies of all documents, correspondence, canceled checks, change orders, etc. If problems develop later or you sell your home, the project is documented.

16 – Get help resolving disputes.

First try to work disputes or problems out with your contractor. If you can’t work it out, call your local license board for information about their dispute resolution services. Thousands of complaints against contractors are filed each year. Most are settled by an mediator/investigator meeting at the job site with the homeowner and contractor. The mediator/investigator looks at the issues in the complaint and tries to resolve the dispute. If the dispute continues, a hearing and appeal process is offered. If the contractor refuses to cooperate or pay an amount ordered, payment is covered by the contractor’s bond to the limits provided by the law. Homeowners can file a complaint with their states construction board if they believe the contractor has done poor or negligent work, breached the contract, allowed liens to be filed, or otherwise caused damage. You can file a complaint if you have a direct contract with a licensed contractor. You must notify the contractor in writing of your intent to file a complaint in 30 days before filing the complaint. Generally, the deadline for filing is one year from when the work was substantially completed. This one year filing deadline does not mean you are guaranteed, payment from the bond. It means you have one year to file the paperwork for a complaint. Complaints filed against unlicensed businesses are sent to an Enforcement Section. They assess civil penalties for violations and work to get contractors to comply with the law to protect future customers.

If you choose to pursue a lawsuit or other court action against a contractor you need to make yourself aware of important requirements you must follow before starting a court action against any contractor, subcontractor or supplier for construction defects. Contact an attorney for more information if you continue to have problems you can’t resolve.

TIP: Get help Resolving Construction Related Disputes If your contractor is properly licensed, you can get help resolving construction-related disputes within a year from the time the work was substantially completed or stopped.

• For a newly constructed house, you can get help within a year from occupancy. This protection is ONLY available if the contractor is licensed.

TIPS :

Landscaping businesses must also be licensed. You have one year in some states from the time the work was substantially completed or stopped to resolve a dispute. For new construction, you can get help from within one year from occupancy.

• An inspection report is not a warranty. It does not guarantee that the house is sound or that you will never encounter any problems with your home. Read your contract for disclaimers. Reports from buyers and sellers sometimes differ – the reason is that these reports are only an educated opinion.

What should be in a contract:

• A Materials list that includes quality, quantity, weight, color, size, brand names, etc . . .

• A list of “allowance items” list and the budgeted amount. (An allowance is a specific amount of money to buy something that has not yet been selected. When the fixtures, etc. exceed the allowance, the homeowner pays the additional amount.)

• A list of permits and who will be obtain them.
• A starting and completion date. You might want to add an incentive clause if the work is completed ahead of schedule.

• Total price, payment schedule, and cancellation penalties.
• Be careful about paying for everything up front.
• Consider partial payments upon completion of portions of the work.

• A list detailing what the contractor will and will not do.
• Warranties or workmanship, length of warranty, and what is and is not covered by warranties.

• The Contractors name, address (physical address, not PO Box), and license number as it appears on their contractor license records.

• Other items to include: cleanup and removal of debris, workday restrictions, smoking in the living area, special requests, etc . . .
• For information on contractor requirements for all 50 states please visit Contractors License Reference Site and click on your state:

http://www.contractors-license.org/