Selecting your Contractor
What Kind of contractor?
There are approximately 41 different types of contractors, each of which requires a separate specialty contractor's license. The project should be done by a licensed General Contractor if the job requires three or more types of work.
One of the best ways to select a contractor is to seek out personal recommendations from friends or relatives who recently had work of the type you want completed by a licensed contractor. If you contract with someone who does not have a license, the Contractors Board may not be able to assist you with a complaint. A remedy in a complaint against an unlicensed contractor may only be available in civil court. This is one more good reason to work only with licensed contractor
Check the contractor's License
Is the contractor properly licensed? In California, any job that costs $300 or more for material with labor must be performed by a contractor with a current and valid license from the Contractors State License Board, in the specialty for which he or she is contracting. Ask to see the contractor's pocket license and some additional form of identification. The name on the pocket license should be the same as the name of the contractor or the business name under which the contractor is working.
It is illegal for a contractor to use another contractor's license just as it is for someone to use another's drivers license.
Check the contractor's references
Ask the contractor for local references and call them to see if they were satisfied with the contractor's work. If possible, go out and look at finished projects. Some consumers even try to find jobs in progress to see how the contractor works and to speak with the home owner about work habits, inconveniences, and the sensitivity of the contractor to the living needs of the home owner.
When speaking to the contractor's customers, ask such questions as:
- Did the contractor keep to the schedule?
- Were you pleased with the work and the way it was done?
- Did the contractor listen to you when you had a problem, and seem concerned about resolving it?
- Did the contractor willingly make any necessary corrections?
In addition to talking with customer references, obtain references from material suppliers, subcontractors, and financial institutions, if possible, to determine whether the contractor is financially responsible.
Ask the contractor for the address of his/her business location and business telephone number, and verify them. A contractor who operates a business out of the back of a pickup truck with a cellular telephone may be difficult to find to complete a job or fix something that has gone wrong after the last bill is paid.
Workers Compensation and Liability Insurance coverage
Ask the contractor if the company is insured against claims covering workers' compensation, property damage, and personal liability in case of accidents. Verify if the contractor has his current Worker's Compensation Insurance registered with the city or county that you are to build in.
This is important for you as a homeowner because if a worker is injured while working on your property and the contractor does not have insurance, you are the one who is having to have to pick up the bill on an injured worker's injuries and rehabilitation if necessary.
Anyone who talks you into being your own general contractor, or "Owner/Builder," may be doing you no favor. "Owner/Builder" describes a situation in which the homeowner becomes the general contractor. As an "Owner/Builder," you, not the person you hire, assume responsibility for the overall job, which may include such things as state and federal taxes, worker's compensation, and other legal liabilities. Unless you are very experienced in construction, it is best to leave these types of matters to your contractor.
A bid is an offer to do work. It is advisable to get at least three written bids using identical plans and specifications so you can compare prices and contractors.
Get Competitive Bids for the Project
Solicit at least three bids for the work you need; do not automatically accept the lowest. Make sure all bids are based on the same set of specifications. Discuss the bids in detail with each contractor and make sure you understand the reasons for any variations in price. Sometimes a higher price may be worth it, if the materials to be used are of higher quality or the work is more extensive.
Beware of any bid substantially lower than the others. It probably indicates that the contractor has made a mistake or is not including all the work quoted by his competitors. You may be headed for a dispute with your contractor if you accept an abnormally low bid.
Make Sure Everything is In Writing
Assume nothing! Although you might assume that a "contract" should look like a contract the contractor could use anything you sign as authorization to go forward with your project. This means that any bid you sign may become the contract. Do not sign anything until you completely understand what you are signing and agree to all the terms.
Have It In Writing. The contract binds you and the contractor to the project. Since a written contract protects both you and the contractor, all agreements should be put in writing. It should include everything you have agreed upon and the extent of the work to be done. Get all oral promises in writing and spell out exactly what the contractor will and will not do. If you intend to do some of the work yourself or hire another contractor to do it, this also should be written into the contract.
Get a copy of the contract as soon as you sign it and keep it for your records. If you have any questions or don't understand something, ask before you sign. Be sure the financial terms of the contract are clear. The contract should include the total price, when payments will be made and whether there is a cancellation penalty.
After you have a signed contract, and even after work has already begun, your contractor may offer suggestions that will change your original ideas for the work. The contract should clearly state your final agreement and accurately reflect everything involved in the work being done by your contractor. If you have discussed added work, substitutions of materials or equipment, or changes in the completion date, make sure that clearly worded and signed "change orders" reflect this.
The Three-Day Cancellation Period
The law requires a contractor to give you written notice of your right to cancel a contract within three business days of signing it, provided that itwas solicited at some place other than the contractor's place of business or appropriate trade premises; your home, for instance. Use those three days to review the contract again. If something bothers you, don't be afraid to cancel the contract. If you do cancel, by all means call the contractor; then make sure your cancellation is in writing.
Make Sure Everything You are Paying for is in the Contract
The contract should specify all materials to be used, such as the quality, quantity, weight, color, size, or brand name as it may apply.
If a warranty is offered on any work, appliances, or other parts of the job, get it in writing and read it carefully.
Scheduling the Work
Your contract should specify an approximate starting date and completion date for your project. However, external factors such as the weather or the availability of supplies might cause delays.
Scheduling the Payments
Make sure the payment schedule is based on the contractor's performance. Never let your payments get ahead of the contractor's work, and make sure the contract provides for a "retention." A "retention" is a percentage of each payment or of the total job, ordinarily 10 percent, which you retain until the job is completed.
Never sign a completion certificate until all the work called on in the contract has been properly completed. Lenders usually require a signed completion certificate before they will release the last payment.