The Contractor Contract

10 Things to Know About Hiring a Contractor

1. Confirm the sales person works for the company

• Verify that the individual with whom you are speaking is an authorized agent of the company that you are considering for hire.

2. Ask for a copy of the company's license

• Ask the company to provide a copy of their license. It is important that you verify the license is still in good standing. Also keep in mind that certain states do not require licensing if the job is under a certain dollar amount.
• Before working with a service professional or home contractor, verify that the information presented is still current and/or acceptable to you. Obtain a copy of the service professional's insurance certificate where applicable.

3. Ask for proof of insurance

• Ask the company to provide a copy of their insurance certificate. Verify with the insurance agency or carrier that the policy is still in good standing. General Liability insurance generally covers a contractor for accidents that occur while the contractor is working, however there are exclusions to coverage, and you should confirm the actual scope of the contractors coverage directly with the contractor.

4. Finalize the contractor contract BEFORE starting on a project!

• Should be written on company letterhead.
• Should contain the company's name, address, phone numbers, and license number (if applicable).
• Should contain the consumer's name, address (where work is to be performed), and phone numbers.
• Is dated when it is written.
• Includes a detailed description of the work that is going to be performed.
• Provides dollar amounts associated with each item and task included in the project.
• Includes an anticipated start and finish date.
• Provides a payment schedule.
• Includes a termination clause.
• Contains a clause that protects you the homeowner from any potential mechanics liens once you have paid the contractor in full.
• Clearly states whether permits will be required, and who will be responsible for acquiring them. (Usually the Contractor) If you apply for the permit, you may not be eligible for compensation from the Guaranty Fund, should there be one in your state.

5. Document all changes to the contractor contract

• Make sure all changes to the original contractor contact, no matter how small, are documented and signed off by both parties.

6. Make payments to the Company that was hired

• Do not pay an individual who works for that company. Pay the company directly.

7. Avoid paying with cash

• Check and credit cards are preferable, and be sure to get a receipt for all payments.

8. Withhold final payment until you are satisfied with the project

• Don't pay in full until the project is completely finished and you have completed your final inspection.
• If sub-contractors or independent tradesmen were used, be sure to get signed releases from all sub contractors and tradesmen, clearly indicating that they have been paid in full by the general contractor.
• For larger projects, don't make the final payment until you have passed the final building inspection that clears the building permits.

9. Don't advance money for materials

• If absolutely necessary, make sure the materials are delivered to your house with a receipt showing that they have been paid in full.

10. Obtain and check multiple references for the home contractor or other professional services that you are hiring

• This is vital! Check references before you sign or agrree to anything.