Written by Mike Frost
You thought you did all the right things before you hired a contractor, but now you have a problem. It starts out simple enough; something a bit queasy sets up in your stomach. You know, the little feeling that says something is wrong here. It then progresses to the point where you KNOW something is wrong but you don’t know exactly what it is. From there, everything looks bad and every day brings new concerns. That is if the contractor is still around.
Assuming you have done all the right things PRIOR to hiring a contractor and you want to minimize the damage caused by a contractor with problems, knowing the warning signs of a bad contractor and understanding some of the things that can go wrong will help you avert a potential disaster . While there are many reasons for a project to have problems, not all are because of a bad contractor. Knowing the difference is critical.
Some of the warning signs of a problem contractor:
Lack of communication.
It is an understatement to say that good communication usually leads to good results in contracting. If you are not able to consistently reach your contractor or have him return your call in a reasonable amount of time, be concerned. Are you getting progress reports on some pre-determined frequency? When a problem arises, are you made aware of it and what the solution will be? If you can answer no, you have a potential problem contractor.
Deviations from the contract or scope of work.
Changes happen, however you should know immediately, and approve of in writing, any changes requiring additional costs and/or delays in completion. If your contractor says he will tally up the costs later, or says don’t worry about it, look out. You could be on the hook for a lot of money and no easy way to fight it.
Lack of daily activity and progress. Some contractors have so much going on at one time that they don’t devote the time needed for every job. If you go days or weeks with no action and no explanation, watch out. Does he tell you he will be back (tomorrow, next week, etc) but never shows when he says? You don’t need this type of person. Some contractors are using the next job’s funding to pay for progress on your project so of course their priority is find other jobs. Every job then gets just enough activity to keep you quiet. Watch out for this business model.
Little or no consistent on-site supervision.
If you were led to believe that the top man, or the best employee was going to be on site all the time, are they? Are decisions being left to subordinates who aren’t qualified or capable of making these decisions? Are subs coming and going with little or no supervision? It doesn’t matter how qualified some employees and subs are, a large project requires capable, on-going, and competent supervision.
Requests for payments don’t correlate with the progress schedule in the contract.
Never let your payments get too far ahead of the schedule. While most contractors are not able to, and shouldn’t, finance the project out of their own pocket, you shouldn’t be financing their other projects either. If a draw or payment schedule was agreed to, both sides should adhere to it. Red flag a contractor who is always asking for more or larger disbursements than agreed to. Another issue to watch for is when the contractor asks you to make the check out to someone else rather than the company you contracted with. This may be an attempt to hide a financial problem with the company or a way to shield revenue from taxing authorities.
Licensing and insurance up to date?
Seems like a no-brainer but if the contractor’s license and/or insurance expires during your project, you are at risk. If you requested to be notified of cancellation and/or renewal of these items and haven’t received a notice of renewal, be very concerned if the contractor can’t or won’t verify a license renewal and continued insurance coverage. Another red flag, so stop the project immediately until these issues have been addressed. Also, any contractor who tells you not to worry about insurance since your homeowner’s policy will cover it is trying to absolve himself of any liability whatsoever. Any contractor who shows you someone else’s license or insurance policy should not be allowed to work on your project.
Lack of competent field personnel.
Do the people working on your project know how to read the plans? Do they seem to be building it as you thought? A contractor who deviates from the plans, especially with regards to structural issues, is definitely suspect. While there may be a very good reason to do so, at least for structural issues an engineer is usually required and the permitting authority must approve the changes. You should be made aware of these changes as well as the costs and other consequences of the changes. Many bad contractors will make cost savings changes to save themselves money, not you. When confronted with evidence of such a change, the response is usually along the lines ofÂ well it was over designed, or it wasn’t really needed, or it is better if done this way’. Red flag this one and have your design professional concur with the change or have the inspector out to check it out.
Working without a permit or having you pull permits.
You should never pull your own permits or authorize the contractor to pull them in your name. Any contractor who wants it done this way is definitely suspect. The person who pulls the permit is responsible for the work. Period. Every trade such as electrical, gas, plumbing, HVAC, and so on must have a permit pulled to allow that work to be done. One of the first questions an insurance company asks when a claim is made is, was a permit pulled? If the answer is no, then usually the next response is: Claim Denied. Of course not every job requires a permit, however, you can find out the requirements by contacting the Building Inspector’s office.
Sub contractors or employees coming to you for payment.
This too is a big red flag unless that process is specified in the contract. Any contractor who doesn’t pay his employees, subs, or suppliers is setting you up to be leined. Should the contractor never pay those people, you will be forced to pay twice; once to the contractor and once to the employee, sub, or supplier. You should never be paying his employees directly.
Not allowing you to make product selections or telling you he will only put in top quality materials.
No contractor will do this unless you are paying for top quality. As for product selections, when you tell him to select products for you, chances are you may get substandard, inferior, or very inexpensive materials and products. Products and materials that require your decision as to price level, quality, color, style, or brand should have been decided by you at the outset of the project. Once you allow the contractor to make those decisions for you, be prepared to live with the results. Any contractor who tries to discourage you from making those decisions is looking to go cheap at your expense.
Contractor challenges you to take legal action or threatens legal action if you don’t do it his way.
Any contractor with the arrogance to dare you to take him to court is not someone who should be working on your home. Any legal action costs way more than you want so try to avoid this at all costs. It is not necessary to capitulate to something you know isn’t right, however, not letting the situation get this far gone is better for everyone.
Contractor just plain disappears.
In most states, 30 days with no progress on the project is considered abandonment unless a justifiable reason was given in writing. Your rights at this point are spelled out in the state regulations; however, you must follow them exactly. Unfortunately, you may have to wait for 30 days before you can take remedial action. At this point, you have most likely contacted an attorney and it would be best to follow their advice.
The situations listed above are not the only signs of a potentially bad contractor, or a contractor with problems but they are the most common. Bad contractors and bad builders come in many shapes and sizes and some are very good at separating you from your money. These guys know the law and the regulations and how to skirt the rules. They will change company names in a heartbeat, shield personal assets, and potentially cost you your life savings. The better informed and educated you are about some of the pitfalls of bad contractors, the less likely you are to be taken.
Should some of these signs start becoming evident, take notes. Talk to the contractor, or go to his boss, about your concerns and put them in writing. E-mail correspondence is OK, but the written word is still more powerful. Give the contractor reasonable time so that his assurances of corrective action can be seen. Understand what your rights are under the contract to stop work or determine corrective action. Don’t give second chances. Approaching a problem the wrong way could be construed as a breach of contract thereby allowing the contractor to quit with your money.
Last point. Don’t let contractor problems go on too long. Seek legal advice if necessary, seek remedies under your contract, or become much more pro-active with regards to the work being done in your home. Get the press involved, if necessary. The more you know what is going on, the less likely the bad contractor or bad builder will be able to get away with ruining your life.
Guest post by Mike Frost of HOMESTEAD RENOVATIONS Manassas, VA.