Typical Scams by Independent Contractors

 

Perform Due Diligence before signing a contract.   Research the contractor thoroughly.

Some common scams by independent contractors include:

I need the Money Upfront, Before I Start the Job

  • Never prepay more than $1,000 or 10% of the total contract amount
  • Pay for the work as certain stages are complete.  Include this in the contract

Take My Word for It

  • All terms agreed to by the parties should be in writing and be part of the final contract
  • Although promised verbally, any agreed to extras/upgrades outside of the initial contract may not be performed.
  • If not in the written contract, there won’t be any legal recourse
  • Get everything in writing

I Don’t Need to Pull a Permit

  • It’s their legal duty to pull all building permits
  • As the homeowner, it’s important that YOU don’t pull the permits.  They may tell you that it’s cheaper/quicker.  If you do pull the permits, than YOU will be required to close the permit and monitor all the inspections. Even though a contractor did the work

Unforseen Circumstances 

  • The contractor may state that he’s encountered some unforseen obstacles.  This may require more work and additional cost
  • Lowest Bid?  Don’t simply accept the lowest big without due diligence – it may be a lowball offer to get the job and the price will be increased later
  • Ensure that any contracts include procedures for change orders.  Include some fixed prices as well.

I have Extra Material I Can Sell you Cheap

  • These materials will not have a manufacturer warranty
  • Any leftover products may not match your job properly
  • They may be selling you leftover materials from a previous job and cheating a previous customer

I Only Take Cash

  • Never pay in cash, even if you are given a discount
  • Be aware of contractors who won’t take checks or want a check payable to them personally
  • Never sign your insurance check over to a contractor

Avoid Door to Door Salesman and Out-of-State Contractors

  • Usually not licensed or insured
  • Good contractors are usually too busy to sell door to door

 I Can Provide Financing

  • Contractors may get kickbacks and you may be overcharged
  • If financing is needed, apply with multiple lenders and don’t just accept the contractor’s recommendation
  • This financing usually includes high interest rates and pre-payment penalties

I Need to be Paid Today

  • Don’t make the final (or full) payment until all the work is complete and the project has passed all inspections
  • Obtain a list of all the subcontractors that worked on the project before you make the final payment
  • Obtain a Lien Waiver.  This is a signed, written statement from the contractor that states that all the subcontractors have been paid in full.  Confirm this with the subcontractors.
  • If the subcontractors haven’t been paid in full, they can record a Mechanics Lien against your home.
0