5 ways to avoid getting duped by a bad contractor
If a contractor is licensed, mediation is available from the California Contractors State License Board depending on the case and the circumstances. There’s no limit on the amounts settled on as a result of mediation.
If the dispute is not settled at that juncture, a CSLB representative has several options for resolution, including arbitration, which can be used to decide disputes alleging damages up to $50,000.
“I do want to stress that neither mediation nor arbitration is an automatic way that people can use to settle contractor-related disputes,” said Steve Breen at the CSLB.
With a rise in home remodeling, the destruction that fire season poses and an abundance of misleading, online handyman ads, consumers must be increasingly savvy about dealing with contractors, especially unlicensed ones.
A recent law enforcement sting at a home in Dana Point nabbed a dozen Orange County contractors, all arrested on suspicion of operating without a license or advertising illegally.
Despite statewide stings and consumer-friendly websites such as Angie’s List, problems persist. You can lose thousands of dollars if the contractor you hired does sub-par work or skips out on the job. And if an uninsured worker happens to, say, fall off a ladder, you could be legally liable.
Here’s how to avoid trouble:
1) Don’t be fooled by snazzy photos
Under California law, an unlicensed contractor can only perform jobs with an estimated cost, including labor and materials, of up to $500. Jump on Craigslist or some other sites, though, and you’ll see contractors without license numbers displaying nifty photos of projects that obviously would carry higher price tags. Or there may be a line saying the contractor’s license is in the works. Imagine pulling that one on a police officer who stops you in traffic.
State Sen. Ted Lieu of Torrance wants to amend the state law to prohibit unlicensed contractors from including photos of work that costs more than $500. “Contractors should only be allowed to advertise for jobs that they can legally perform,” he said.
Misleading online ads also undercut those who play by the rules. “These people are able to advertise side-by-side with the legitimate guys,” said Rick Lopes of California’s Contractors State License Board. “It puts our licensed people at a disadvantage.”
If legislation passes, it could take effect in 2015. Until then, caveat emptor.
2) Get the correct license number
Contractors must display their license number wherever they advertise their business – even on the side of a truck. You want to get the number issued by the Contractors State License Board – not another number a contractor may offer instead: the city business license.
You can check a contractor’s license number and status at cslb.ca.gov or 800-321-2752.
Orange County Deputy District Attorney James Young, who prosecutes illegal contractors, suggests that you ask to see the actual contractor’s license and compare it with the person’s driver’s license or I.D.
“We get a lot of impersonation cases,” Young said of illegal contractors.
Among them: Alec Damos, who in 2011 was sentenced to 16 months in jail and ordered to make full restitution after posing as a licensed contractor and defrauding Orange County homeowners out of more than $635,000. One was his own relative; the other was a Yorba Linda family who lost their house in the 2008 Triangle Complex fire that destroyed 200 Orange County homes.
3) Talk is cheap
Do not strike a verbal agreement. You want a legally binding contract, with everything related to the work spelled out. That includes start and end dates, and even model names of, say, the cabinets or faucets. And a payment schedule.
Homeowners should beware of dealing with anyone other than the actual contractor or registered salesperson named on the license, Young said, and the bid and contract terms should always be in writing. The documents should include the contractor’s name, contact, and licensing information corresponding to the CSLB website.
Most home improvement contracts are required by law to include special consumer protection language, he added. “If a homeowner is hiring someone who doesn’t follow these rules, then it’s likely they are probably not dealing with a licensed and legitimate operator,” he said.
Said Lopes: “You want to have the contract. Some of these people, they’re good crafts people, but they’re not necessarily the best business people. A lot of times you get things scribbled on a notepad. You don’t have a contract that really protects both sides.”
Among other things, the contract should require written work orders for any changes.
4) Check on worker’s compensation
A contractor may have worker’s comp insurance for a few of his workers, but might show up with more workers.
Do not hesitate to check policy by calling the carrier and verifying all information.
In the event of an injury, and the contractor is unlicensed your homeowner;s policy may not help with a worker’s medical bill.
“It’s conceivable the (insurance) company could say that it’s not covered … (because) it was illegal for people to be out there on your property doing that job,” Lopes said.
Also make sure you understand the limits of your own homeowner’s policy.
“Always know what’s excluded,” said Nancy Kincaid, spokeswoman for state Insurance Commissioner Dave Jones. “People say you should read what’s covered. No, you should read what’s not covered.”
The same goes for umbrella policies, she said.
5) Hold on to your money
With the economy improving and more people regaining equity in their homes, spending on remodeling is expected to continue on an upswing this year.
Make sure you’re not overspending. Under California law, the downpayment should be no more than 10 percent or $1,000, whichever is less. Don’t succumb to demands to pay half the money up front.
Payments should be incremental and not get ahead of the work. The total should not be paid until the job is complete.
In the end, a state contractor’s license doesn’t guarantee that a project will come off without a hitch.
“It’s not a silver bullet,” Young said. “However, when a homeowner risks using an unlicensed operator, chances are the cheapest home improvement contractor available might turn out to be the most expensive in the long run.”
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