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FTC Report
Facts
for Homeowners
Home Sweet Home Improvement
Whether you’re planning an addition for a growing family or
simply getting new storm windows, finding a competent and
reliable contractor is the first step to a successful and
satisfying home improvement project.
Your home may be your most valuable financial asset. That’s
why it’s important to be cautious when you hire someone to
work on it. Home improvement and repair and maintenance
contractors often advertise in newspapers, the Yellow Pages, and
on the radio and TV. However, don’t consider an ad an
indication of the quality of a contractor’s work. Your best
bet is a reality check from those in the know: friends,
neighbors, or co-workers who have had improvement work done. Get
written estimates from several firms. Ask for explanations for
price variations. Don’t automatically choose the lowest
bidder.
Home Improvement Professionals
Depending on the size and complexity of your project, you may
choose to work with a number of different professionals:
 | General Contractors manage all aspects of your project,
including hiring and supervising subcontractors, getting
building permits, and scheduling inspections. They also work
with architects and designers.
| Speciality Contractors install particular products, such
as cabinets and bathroom fixtures.
| Architects design homes, additions, and major renovations.
If your project includes structural changes, you may want to
hire an architect who specializes in home remodeling.
| Designers have expertise in specific areas of the home,
such as kitchens and baths.
| Design/Build Contractors provide one-stop service. They
see your project through from start to finish. Some firms
have architects on staff; others use certified designers. |
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Don’t Get Nailed
Not all contractors operate within the law. Here are some
tip-offs to potential rip-offs. A less than reputable
contractor:
| solicits door-to-door;
| offers you discounts for finding other customers;
| just happens to have materials left over from a previous
job;
| only accepts cash payments;
| asks you to get the required building permits;
| does not list a business number in the local telephone
directory;
| tells you your job will be a "demonstration;"
| pressures you for an immediate decision;
| offers exceptionally long guarantees;
| asks you to pay for the entire job up-front;
| suggests that you borrow money from a lender the
contractor knows. If you’re not careful, you could lose
your home through a home improvement loan scam. |
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Hiring a Contractor
Interview each contractor you’re considering. Here are some
questions to ask.
| How long have you been in business? Look for a
well-established company and check it out with consumer
protection officials. They can tell you if there are
unresolved consumer complaints on file. One caveat: No
record of complaints against a particular contractor
doesn’t necessarily mean no previous consumer problems. It
may be that problems exist, but have not yet been reported,
or that the contractor is doing business under several
different names.
| Are you licensed and registered with the state? While most
states license electrical and plumbing contractors, only 36
states have some type of licensing and registration statutes
affecting contractors, remodelers, and/or specialty
contractors. The licensing can range from simple
registration to a detailed qualification process. Also, the
licensing requirements in one locality may be different from
the requirements in the rest of the state. Check with your
local building department or consumer protection agency to
find out about licensing requirements in your area. If your
state has licensing laws, ask to see the contractor’s
license. Make sure it’s current.
| How many projects like mine have you completed in the last
year? Ask for a list. This will help you determine how
familiar the contractor is with your type of project.
| Will my project require a permit? Most states and
localities require permits for building projects, even for
simple jobs like decks. A competent contractor will get all
the necessary permits before starting work on your project.
Be suspicious if the contractor asks you to get the permit(s).
It could mean that the contractor is not licensed or
registered, as required by your state or locality.
| May I have a list of references? The contractor should be
able to give you the names, addresses, and phone numbers of
at least three clients who have projects similar to yours.
Ask each how long ago the project was completed and if you
can see it. Also, tell the contractor that you’d like to
visit jobs in progress.
| Will you be using subcontractors on this project? If yes,
ask to meet them, and make sure they have current insurance
coverage and licenses, if required. Also ask them if they
were paid on time by this contractor. A "mechanic’s
lien" could be placed on your home if your contractor
fails to pay the subcontractors and suppliers on your
project. That means the subcontractors and suppliers could
go to court to force you to sell your home to satisfy their
unpaid bills from your project. Protect yourself by asking
the contractor, and every subcontractor and supplier, for a
lien release or lien waiver.
| What types of insurance do you carry? Contractors should
have personal liability, worker’s compensation, and
property damage coverage. Ask for copies of insurance
certificates, and make sure they’re current. Avoid doing
business with contractors who don’t carry the appropriate
insurance. Otherwise, you’ll be held liable for any
injuries and damages that occur during the project. |
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Checking References
Talk with some of the remodeler’s former customers. They
can help you decide if a particular contractor is right for you.
You may want to ask:
| Can I visit your home to see the completed job?
| Were you satisfied with the project? Was it completed on
time?
| Did the contractor keep you informed about the status of
the project, and any problems along the way?
| Were there unexpected costs? If so, what were they?
| Did workers show up on time? Did they clean up after
finishing the job?
| Would you recommend the contractor?
| Would you use the contractor again? |
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Understanding Your Payment Options
You have several payment options for most home improvement
and maintenance and repair projects. For example, you can get
your own loan or ask the contractor to arrange financing for
larger projects. For smaller projects, you may want to pay by
check or credit card. Avoid paying cash. Whatever option you
choose, be sure you have a reasonable payment schedule and a
fair interest rate. Here are some additional tips:
| Try to limit your down payment. Some state laws limit the
amount of money a contractor can request as a down payment.
Contact your state or local consumer agency to find out what
the law is in your area.
| Try to make payments during the project contingent upon
completion of a defined amount of work. This way, if the
work is not proceeding according to schedule, the payments
also are delayed.
| Don’t make the final payment or sign an affidavit of
final release until you are satisfied with the work and know
that the subcontractors and suppliers have been paid. Lien
laws in your state may allow subcontractors and/or suppliers
to file a mechanic’s lien against your home to satisfy
their unpaid bills. Contact your local consumer agency for
an explanation of lien laws where you live.
| Some state or local laws limit the amount by which the
final bill can exceed the estimate, unless you have approved
the increase. Check with your local consumer agency.
| If you have a problem with merchandise or services that
you charged to a credit card, and you have made a good faith
effort to work out the problem with the seller, you have the
right to withhold from the card issuer payment for the
merchandise or services. You can withhold payment up to the
amount of credit outstanding for the purchase, plus any
finance or related charges. |
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The "Home Improvement" Loan Scam
A contractor calls or knocks on your door and offers to install
a new roof or remodel your kitchen at a price that sounds
reasonable. You tell him you’re interested, but can’t afford
it. He tells you it’s no problem — he can arrange financing
through a lender he knows. You agree to the project, and the
contractor begins work. At some point after the contractor
begins, you are asked to sign a lot of papers. The papers may be
blank or the lender may rush you to sign before you have time to
read what you’ve been given to sign. You sign the papers.
Later, you realize that the papers you signed are a home equity
loan. The interest rate, points and fees seem very high. To make
matters worse, the work on your home isn’t done right or
hasn’t been completed, and the contractor, who may have been
paid by the lender, has little interest in completing the work
to your satisfaction.
You can protect yourself from inappropriate lending
practices. Here’s how.
Don’t:
| Agree to a home equity loan if you don’t have enough
money to make the monthly payments.
| Sign any document you haven’t read or any document that
has blank spaces to be filled in after you sign.
| Let anyone pressure you into signing any document.
| Deed your property to anyone. First consult an attorney, a
knowledgeable family member, or someone else you trust.
| Agree to financing through your contractor without
shopping around and comparing loan terms. |
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Getting a Written Contract
Contract requirements vary by state. Even if your state does
not require a written agreement, ask for one. A contract spells
out the who, what, where, when and cost of your project. The
agreement should be clear, concise and complete. Before you sign
a contract, make sure it contains:
| The contractor’s name, address, phone, and license
number, if required.
| The payment schedule for the contractor, subcontractors
and suppliers.
| An estimated start and completion date.
| The contractor’s obligation to obtain all necessary
permits.
| How change orders will be handled. A change order —
common on most remodeling jobs — is a written
authorization to the contractor to make a change or addition
to the work described in the original contract. It could
affect the project’s cost and schedule. Remodelers often
require payment for change orders before work begins.
| A detailed list of all materials including color, model,
size, brand name, and product.
| Warranties covering materials and workmanship. The names
and addresses of the parties honoring the warranties —
contractor, distributor or manufacturer — must be
identified. The length of the warranty period and any
limitations also should be spelled out.
| What the contractor will and will not do. For example, is
site clean-up and trash hauling included in the price? Ask
for a "broom clause." It makes the contractor
responsible for all clean-up work, including spills and
stains.
| Oral promises also should be added to the written
contract.
| A written statement of your right to cancel the contract
within three business days if you signed it in your home or
at a location other than the seller’s permanent place of
business. During the sales transaction, the salesperson
(contractor) must give you two copies of a cancellation form
(one to keep and one to send back to the company) and a copy
of your contract or receipt. The contract or receipt must be
dated, show the name and address of the seller, and explain
your right to cancel. |
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Keeping Records
Keep all paperwork related to your project in one place. This
includes copies of the contract, change orders and
correspondence with your home improvement professionals. Keep a
log or journal of all phone calls, conversations and activities.
You also might want to take photographs as the job progresses.
These records are especially important if you have problems with
your project — during or after construction.
Completing the Job: A Checklist
Before you sign off and make the final payment, use this
checklist to make sure the job is complete. Check that:
| All work meets the standards spelled out in the contract.
| You have written warranties for materials and workmanship.
| You have proof that all subcontractors and suppliers have
been paid.
| The job site has been cleaned up and cleared of excess
materials, tools and equipment.
| You have inspected and approved the completed work. |
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Where to Complain
If you have a problem with your home improvement project,
first try to resolve it with the contractor. Many disputes can
be resolved at this level. Follow any phone conversations with a
letter you send by certified mail. Request a return receipt.
That’s your proof that the company received your letter. Keep
a copy for your files.
If you can’t get satisfaction, consider contacting the
following organizations for further information and help:
| State and local consumer protection offices.
| Your state or local Builders Association and/or Remodelors
Council.
| Your local Better Business Bureau.
| Action line and consumer reporters. Check with your local
newspaper, TV, and radio stations for contacts.
| Local dispute resolution programs. |
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For More Information
• Federal Trade Commission: www.ftc.gov
• National Association of Home Builders Remodelors™
Council: www.nahb.com
To order a free copy of How to Find a Professional Remodeler,
send a self-addressed stamped envelope to:
NAHB Remodelors Council
Dept. FT
1201 15th Street, NW
Washington, DC 20005
• National Association of Consumer Agency
Administrators: www.nacaanet.org
1010 Vermont Avenue, NW
Suite 514
Washington, DC 20005
E-mail: nacaa@erols.com
The FTC works for the consumer to prevent fraudulent,
deceptive, and unfair business practices in the marketplace and
to provide information to help consumers spot, stop, and avoid
them. To file a complaint
or to get free
information on consumer issues, visit ftc.gov
or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY:
1-866-653-4261. The FTC enters Internet, telemarketing, identity
theft, and other fraud-related complaints into Consumer
Sentinel, a secure online database available to hundreds of
civil and criminal law enforcement agencies in the U.S. and
abroad.
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Services |
Roofing
Additions
Bathrooms
Kitchens
Decks
Basements
Siding
Windows
Garages
Painting
Pressure Washing
Gutter Cleaning |
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Message 2 |
This article was published in
The Hudson-Litchfield News on Friday, April 4th! |
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