|
You want to build your dream home, you have a vision and you have the financing you need to start, but do you have the right contractor? One of the saddest cases I have had is one where a happy couple sets out to remodel their home, hires a contractor and one year later they are living in a nightmare; roofs are leaking, mold is settling in, there is mud and debris everywhere and the contractor is nowhere to be found.
On top of the costs associated with fixing this mess, these poor homeowners are now accumulating legal fees associated with suing the unlicensed, deadbeat contractor.
Sadly, these cases are quite common. The Contractor State Licensing Board (CSLB) gets more than 20,000 complaints filed each year against both licensed and unlicensed contractors.
Here are a few important things you should consider when selecting a contractor:
• Hire contractors with an active license. Check license status at www.cslb.ca.gov or call 1-800-321-CSLB (2752).
• Get at least three references from past clients. Call them and ask specific questions regarding level of workmanship, timelines of work, professionalism, etc.
• Get at least three bids from different contractors in order to get a range of prices and timelines.
• Get a written contract and don’t sign anything until you completely understand the terms. Be clear and concise on timelines, terms of payment, deadlines, construction materials, laborers, insurance, etc.
• Pay 10% down, or $1,000, whichever is less. Don’t pay cash.
• Don’t let payments get ahead of work. Keep records of payments and don’t make final payment until you’re satisfied with the job.
• Keep a job file of all paperwork and receipts.
Bonds
The Contractor State Licensing Board (CSLB) requires contractors to have a contractor's license bond of $12,500. A bond is a contract in which a surety company promises the State of California that the contractor will comply with the Contractors’ State License Law (CSLL). The contractor’s obligation is to not commit any violation of the CSLL that are grounds for disciplinary action against the license. If the contractor does not comply with the conditions of the bond, a consumer, supplier or an employee may file a claim against the bond. The surety company will investigate any claim filed against the bond, and the CSLB will investigate any complaint filed against the license. The surety company will determine if it will pay the claim, and the CSLB will decide if disciplinary action or resolution is appropriate.
However, this bond is often not enough ($12,500) to cover the complaints made against it if the complaint(s)/damage is worth more than the value of the bond. That is where insurance kicks in and a surety bond should not be confused with an insurance policy.
Insurance
In California, if a contractor has employees, they're required to carry workers' compensation insurance. This is essential because if a worker is injured working on your property and the contractor doesn't have insurance, you could be liable for injuries to workers. Your homeowner's insurance may or may not cover those costs and you should check with your insurance carrier to make sure the workers’ compensation insurance coverage provided is adequate.
Commercial general liability insurance is not required; however, it covers damages to your property. If the contractor does not carry general liability insurance, they should be able to explain how they would cover losses. If your contractor damages your property and doesn't carry commercial general liability insurance, you or your insurance policy could end up paying. A licensed contractor must provide you with information regarding insurance and coverage of damages in your contract.
Before entering into a contract, verify the contractor's license, surety bond, and workers’ compensation and commercial general liability insurance coverage. Remember you can ALWAYS include incentives and penalties in your contract with the Contractor. For example, you can draft your contract to include a built in bonus structure for work performed early or on time and penalties for delays.
Farnaz Kashefi is an attorney with the firm of Tyler & Wilson, LLP. She can be reached at: fk@tyler-law.com
|
