|
Scholefield Associates, P.C.
IMPORTANT
INFORMATION!
Don't Get Ripped-off
by Unlicensed Contractor Scams!
At the end of this section
are useful links to guides and pamphlets. They are provided
for your use.
The recent firestorms in Southern California have been
unfortunate. Most people are genuinely interested in
helping those in need, but there will always be the
few that are looking for the opportunity to take advantage
of the situation. Unfortunately there are those who
prey on the misfortune of others in unscrupulous and
often illegal ways
Our goal is to help you protect yourself with enough
information and advice to avoid the scams. Because many
situations require emergency service to restore your
electricity, plumbing, gas lines or structural integrity,
you may feel rushed into making agreements with contractors.
Don't do this.
It is in the best interest of both homeowners and
legitimate, licensed contractors to protect homeowners
from scams by unlicensed contractors.
Things to remember:
Over $500.00 requires
a licensed contractor. Work
done on your home for over $500.00 for the total project
price requires a licensed contractor. NO EXCEPTIONS!
There are some very good reasons to use a licensed
contractor, even if you think you can save a few dollars
by accepting an unlicensed contractor's offer. It is
cheap insurance using a licensed contractor.
Exposure to unexpected
liability. If the homeowner contracts
with an unlicensed person or company, then the homeowner
can be held liable for on-the-job injuries sustained
by that unlicensed person's or company's employees.
This does not seem fair, but this is the way the law
works. Sometimes even homeowner's insurance will not
cover this, all because the contractor is unlicensed.
This exposes you, the homeowner to liability you never
dreamed of, all because the contractor lied to you about
being licensed.
Protection.
Using a licensed contractor offers protection
to the homeowner in the following ways:
A. The contractor knows his or her trade,
and has been tested and is bonded for this.
B. They must post a $12,500 bond, which is some monetary
protection against violations of State Contractor's
laws.
C. The California State Contractor's License Board
(CSLB) will help investigate claims and disputes
against licensed contractors at no cost to
the homeowner.
BBB is no guarantee.
Some people recommend checking the Contractor's
Name and license number with the Better Business Bureau
(BBB). This WILL NOT protect you against being scammed
by illegitimate contractors. Also, many legitimate licensed
contractors are not member of the BBB.
Homeowners need to understand
that the BBB is NOT a government agency, and
has no power to enforce any laws. They are a private,
not-for-profit organization that requires businesses
to pay a membership fee in order to join. The same thing
applies to local Chamber of Commerce groups. These groups
are useless when it comes to verification of contractors
as being licensed or not.
The
Scam
What has been happening lately is that scam contractors
present credentials (license numbers, business cards,
etc.) of legitimate licensed contractors, even
though they are not affiliated with these businesses.
When a homeowner checks on the legitimacy of the business
with the BBB, they check out ok, and the scammer has
been able to pull off the first part of the con. The
homeowner now feels comfortable working with a "legitimate"
contractor.
From there, the scam contractor will try to get money
up-front for work to be done. There will be excuses
such as needing materials, supplies and such. There
may be promises of getting at the top of the list, or
discounts because their equipment is already in the
area if you act immediately, and of course hand over
money. Once the money is in their hands, you have lost.
Confirm the contractor
The best way to confirm that a contractor is who he
says he is, is to follow the procedures outlined below:
A. Verification.
Go directly to the California State Contractor's License
Board and verify first that they are a licensed contractor.
http://www.cslb.ca.gov/consumers/default.asp either
by the contractor's license number or the name of the
company. You can try calling the CSLB number, but getting
through is difficult because of recent budget cutbacks.
This alone is not good enough.
B. Name and telephone.
At the CSLB site, you will be able to get information
on whether or not they have up-to-date insurance and
bonding, and usually the owner or contact person as
well as a telephone number that is legitimate.
C. Confirm the contact
person. Call the telephone number that
you obtained from the CSLB site and confirm that the
person you are dealing with is a legitimate employee
of the company.
D. Expect additional
documentation. Sometimes the information
on the web site is not up to date (such as insurance
or bonding information), so it is still best to require
the contractor to produce a copy of both the contractor's
bond and workers' compensation insurance (only if they
have employees).
MAKE THE FOLLOWING DEMANDS.
To protect yourself, you as a homeowner MUST DEMAND
that the contractor prove to you:
A. Bona Fide Employee or Owner.
That the person you are dealing with is truly an employee
or owner or authorized agent of the contractor.
B. Documentation. Be sure
that the contractor has all the proper insurance and
bonding documents.
**Keep in mind that any legitimate
contractor will NOT be offended if you demand (politely
of course) that they provide proof of license, bonding,
insurance and references before you enter into any type
of agreement. They expect this, and it is these requirements
that keep unlicensed contractors from taking advantage
of the unsuspecting homeowners.**
Now that you have taken the time to confirm that the
contractor that you are dealing with is legitimate and
passes the above listed requirements, you can move on
to the next phase.
GET IT IN WRITING.
Obtain a firm WRITTEN quote from the contractor detailing
the exact work to be performed,
the exact cost for the work,
the date the work will begin,
and the time it will take to complete the
work.
GET AN EXACT PRICE QUOTATION.
DO NOT sign any contracts or agree to pay a contractor
based on "open time and materials" needed
to perform the work. GET AN EXACT PRICE. Time and materials
is vague and unclear as to how much it will cost, and
the contractor has no incentive to finish quickly or
efficiently.
GET ALL CHANGES IN WRITING.
Just as with the original contract, DO NOT approve changes
in the price or scope of work verbally. Insist that
all changes in price or scope of work be in writing
signed by both the contractor and the homeowner.
YOUR RIGHT TO RESCIND.
DO NOT waive (give up) you 3 day right to rescind the
contract unless the work you need done is truly an emergency
that cannot wait to be started for 3 days. DO NOT fall
for "getting the work done at a discount because
the contractor just happens to be in the area".
This is an old trick that the homeowner falls for thinking
he will be getting a price break.
DOWN PAYMENT.
By law, the contractor cannot ask for more than 10%
of the entire contract price or $1000.00 (which
ever is less) for a down payment before any work is
done. DO NOT allow anyone to talk you into deviating
from this.
ADVANCE PAYMENTS.
By law, the contractor cannot ask for payments for any
work that has NOT YET BEEN DONE. DO NOT prepay for materials
not yet delivered either. As a requirement for getting
a contractors license, the CSLB requires that all contractors
have enough money or credit (at least $2500) to be able
to fund the project at the beginning. Also, any legitimate
contractor will have credit terms with suppliers, usually
30 days before they have to pay the invocies. It is
possible to pay for materials directly, which should
be a bargaining point since you are now financing the
contractors project.
WAIVERs AND RELEASES.
DEMAND that your contractor provide an "Unconditional
waiver and release" from all their material suppliers
and subcontractors used by the contractor for the work
you have already paid for BEFORE you pay for any more
work. Even if your contractor gives their own written
guarantee that its suppliers and subcontractors have
been paid, those suppliers and subcontractors may still
record a "Mechanics
Lien " against your property if your contractor
fails to pay them. This is very important, DO NOT let
the contractor talk you out of these. It is for your
protection.
PAYMENT and PERFORMANCE
BONDS. If the work to be done is significant,
the homeowner should consider requiring the contractor
to obtain a payment and performance bond This is
above and beyond the $12,500 bond required by the CSLB
for all licensed contractors. The principal cost
of the bonds may have to be paid by the homeowner (which
is a percentage of the value of the work to be performed
taking into consideration specific factors relating
to the contractor). However, it is a red warning flag
if the contractor has trouble qualifying for the payment
and performance bonds, or if the premium required is
higher than the average premium.
The list above is a MINIMUM that you should do to ensure
that you will not become prey to unscrupulous contractors.
If you have any questions, or would like us to verify
any contractors you may have in mind, contact us immediately.
USEFUL
LINKS
All Require Adobe Acrobat Reader Click
here to get Adobe Acrobat Reader
"Don't
Get Burned After a Disaster"
The California Department of Insurance guide:
for handling post disaster rebuilding: In addition to
contractor issues, this document also covers insurance,
adjusters, identifying scam artists, etc.
"What
You Should Know Before Hiring a Contractor"
CSLB booklet covering aspects of every construction
project. Written for the homeowner, it offers a detailed
overview of all the necessary elements.
Abbreviated version in Spanish
Abbreviated version in Chinese
Abbreviated version in Korean
Abbreviated version in Tagalog
Abbreviated version in Vietnamese
"After
a Disaster, Don't Get Scammed" CSLB tips
on how to prevent consumer scams attempted by unlicensed
contractors.
|
