Home Improvement – Consumer Protection Topic

Hiring a Contractor

Most home improvement contractors provide skilled services, hire trained and licensed subcontractors, and use reliable materials. But not every person who purports to be a contractor is skilled, experienced, and qualified. Before embarking on your home improvement project, take the following steps:

Make sure the contractor is registered and has a bond and insurance. In Alaska, most contractors that perform residential home improvements must be licensed by the Division of Corporations, Business and Professional Licensing. Among other requirements, general contractors must post a bond for $25,000 and specialty contractors for $10,000. Visit the Division’s website to learn more about the requirements for contractors in Alaska, or search professional licenses online to find out if a contractor is licensed.

Warning: Sometimes people will say they are “licensed and insured” when they only have a business license and liability insurance — not a professional license and a bond. A bond may be a source of funds available to a homeowner if work is negligently performed.

Information about filing a claim against a surety bond.

2. Check references and get written estimates. Being licensed and bonded is not a guarantee of high quality performance. Interview and get bids from two or three contractors. Check their references and talk to friends, neighbors, or former clients who are familiar with the contractor’s work, reliability, and business practices. Estimates should be in writing and included detailed specifications for the job, the materials, labor, timeline, and the total charges for the work.

3. Research complaint history. Check with the BBB for complaints against the contractor. You may also want to check court records to see if lawsuits have been filed for incomplete or shoddy workmanship or for other unfair or deceptive practices.

4. Insist on a detailed written contract. A home improvement contract is a written agreement defining exactly what work will be performed, the materials used, the start and completion dates, the total cost of the project, and a payment schedule. Oral promises are very difficult to enforce; if a provision is not written in the contract, you’ll have a hard time proving it was part of the deal. A well-written, detailed contract will provide clear expectations for you and the contractor and help avoid many of the problems experienced by consumers. Ask for time to review the contract on your own and make sure you understand the contract terms. Don’t hesitate to ask for clarification or suggest modifications. Never sign a contract with blank spaces.

Tip: Alaska has a five-day cancellation period (five business days) when a seller solicits a sale and the agreement is signed in your home or at a place other than the contractor’s place of business. The contractor should provide written notice of this right.

5. Make partial payments as different stages are completed. Don’t pay a contractor in full before your project is completed. Most projects are paid for in installments, with partial payments made at different stages. Final payment should be contingent on satisfactory inspection of the project.

You should know the entire cost of your proposed project, including any interest charges, and then comparison shop for the financing you need from reputable lenders through personal, bank, or home equity loans.

Beware of Home Improvement Scams

Don’t do business with anyone who claims to be a contractor and who:

  • solicits door-to-door
  • asks you to pay for the entire job up-front
  • pressures you for an immediate decision
  • 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
  • offers exceptionally long guarantees
  • 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.

Federal Trade Commission Links

Home Improvement Checklist

  • Ensure that your contractor has complied with state licensing requirements.
  • Verify your contractor’s name, address, telephone number, credentials, and references before signing a home improvement contract.
  • Solicit two or three bids from contractors for your project, and get written estimates for the detailed specifications included in your home improvement plan.
  • Include in your contract all the terms, conditions, warranties, and verbal promises concerning your home improvement project.
  • Do not sign a contract until you have thoroughly read and understood all its provisions, notices, and terms. Never sign a written agreement that is not completely filled out.
  • Obtain and keep copies of every written document, including contracts and receipts from suppliers and others providing materials for your project.
  • Take your time, and do not hesitate to say no to high pressure sales tactics by a contractor or sales representative.
  • Know about your five-day cancellation rights for door-to-door sales, and don’t hesitate to cancel a home improvement contract within the time period if you have concerns.
  • Never pay for the entire job in advance or make scheduled payments before the agreed-upon terms are met and the work is completed to your full satisfaction.

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