Hiring a contractor to work on your home? Recently, our partner, Rosie on the House, talked to Jeff Fleetham, the director of the Arizona Registrar of Contractors, about how to avoid problems when you hire a contractor to do remodeling or repairs.
Here are seven suggestions based on what Director Fleetham said, plus some additional recommendations:
1 | Check all the Basics
Check out the contractor’s license at http://www.azroc.gov/roc/contractorsearch.html to ensure that that person can actually do the work you want done on your house. Call the phone number listed online with the registrar for the business. That’s how you verify that the person doing the estimate at your house is actually the same person or company with the license. Why is the licensing requirement so important to you? To get that state license, a business or contractor must have the necessary experience working in the field and has passed a business management test and trade exam. Applicants also go through a criminal history check and must not have contracting complaints outstanding. Contractors also have to be bonded. The bond protects you if the contractor fails to finish the job, doesn’t pay for the permits, or doesn’t pay subcontractors. Contractors also need workman’s compensation insurance.
2 | Get a Detailed Estimate
Then get a very detailed estimate for your project, including the price, the responsibility for obtaining building permits, and other items. The registrar recommends getting three estimates.
3 | Get a Very Detailed Contract
The contract should include all items discussed in the estimate. Who is going to get the permits and what will they cost; are there HOA or covenant rules to follow; are temporary power and water needed; who removes the trash; what sanitary facilities will be used? If you have any concerns, put them in the contract. (It’s our opinion at Rosie on the House that all estimates and contracts should include not only a detailed list of what’s included, but also a detailed list of exclusions. Having this conversation before signing the agreement will eliminate most future confusion and disagreement.)
4 | Understand the Payment Schedule
The contract should outline a payment schedule. And find out what happens if you need to change the project. Make sure you know how to do a change order and how that order will affect the cost and the timeline of the project. Both you and the contractor should sign the contract.
5 | Take Your Time Deciding
Don’t hurry. Take your time making decisions and reviewing your contract.
6 | Cash is a No, No.
Never pay in cash. If you write a check, make it payable to the name of the company or contractor listed in the contract.
7 | Supervise. Keep Records. Take Notes.
Along the way, supervise what the contractor is doing and how work is progressing. Keep detailed records -- copies of your contract and checks, receipts for payments. Take notes on issues that come up along the way.
To learn more, check online as well at https://roc.az.gov/before-hire.
Hiring licensed contractors is important because you, the consumer, have an opportunity for recovery if your licensed contractor fails to perform. You can then file a complaint against the contractor’s license within a two-year period from the date of occupancy or the last date when work was performed. After reviewing your complaint, the registrar will investigate and the residential contractors’ recovery fund can grant damages of up to $30,000 to have work corrected or completed. The recovery fund gets its money from fees charged to the contractors.
There are nearly 37,000 licensed contractors in Arizona; last year, there were 1,994 complaints about license holders. “Most of these are resolved by investigators who look into the allegations,” according to Fleetham. “But sometimes there are payouts and discipline hearings.”
Last year, there were 1,535 complaints about unlicensed entities as well. Although the registrar will investigate those complaints and may submit them for prosecution, no money will be paid out from the recovery fund. Homeowners have to take legal action themselves to recover any lost money from unlicensed workers they hired.
A couple of other Rosie suggestions about your job:
- Ask yourself: Was the contractor always on-time and prepared for each of the meetings needed before contract signing? Showing up late and unprepared should be a major warning.
- Ignore the dollar figures as you make your final decision. Instead, ask yourself which candidate you want walking up to your door on the first day that things go wrong. After all, remodeling is not an exact science.
If you have equity in your home that you would like to use to help pay for your remodel, fill out the form below to contact a loan officer near you to see if a cash out refinance home loan might be the right solution.