 Research
Helpful Tips on Selecting the Right Contractor
page
1 | page
2 | page 3
Resources: State
Licensing Boards
Preliminary Lien Notices
You may receive a preliminary lien notice from a subcontractors
or material supplier. This does not mean that a lien has been
filed against your property. The law requires you to be furnished
with these notices to alert you that subcontractors or material
suppliers may have lien rights.
Energy efficiency must be a consideration with new and remodeled
buildings.
Some states have laws requiring newly and remodeled buildings
to meet or exceed certain energy efficiency standards. Some
financial agencies offer lower-interest loans for remodeling.
One such Utility company, Pacific Gas and Electric company
(PG&E), offers rebates on purchase for energy efficient
appliances. Check with your local Gas/Electric Utility Company
or visit their websites for additional information and to
see if they offer similar rebate programs. Also, lending institutions
may offer energy efficient mortgages.
Obtain building permits
Construction of new homes and many home improvements require
building permits from the local building department. Usually
contractors obtain these permits because they know permits
are required. Ultimately it's the owner's responsibility for
making sure the required permits are obtained, and that the
final inspection is done when the work is completed. A good
way to insure this is done is by including this in the contract.
Pay in installments
Depending on the work required, contractors are entitled
to a sizable down payment. One state for example California's
law requires that the amount of the down payment for any home
improvement contract (except for swimming pools) may not exceed
$1,000, or 10 percent of the contract price (excluding finance
charges), whichever is less. Swimming pool down payments shall
not exceed $200 or 2 percent of the contract price (excluding
finance charges), whichever is less.
The initial installment should cover the contractor to have
enough money to buy the materials to finish the work, and
also allow the owner to have enough money left on the last
installment to ensure the finish date has a satisfactory completion.
For larger projects escrow accounts are typically available
at your local bank.
Mechanic's Liens
If you do hire a general contractor, be aware that a subcontractor
or supplier could file a "Claim of Lien" or "Mechanic's
Lien" against your home even if you paid the contractor.
Potentially you could pay the bill twice to avoid foreclosure
proceeding. Ask your contractor about any liens. Have a clause
within your contract guaranteeing against any liens that the
contractor may have outstanding. Some states such as California
have an Information Notice to Owner about Construction.
Check with your local jurisdiction if there is any such required
notice where you reside. If so, do not allow construction
to start until your contractor gives you a copy of the Information
Notice to Owner about Construction Liens.
Hire a general contractor for larger improvements like additions
or kitchen remodeling.
If the work requires more than two specialty contractors,
you should hire a registered general contractor. (Remodeling
a kitchen, for example, usually requires a plumber, electrician,
and carpenter.) This is not required, but it's highly recommend
if you do not have the time and the skills to cover the task
thoroughly. This job includes responsibilities of state and
federal taxes, workers' compensation, and other legal liabilities,
and you are to assume responsibility for the overall job (not
the person you hire). Do your homework before jumping into
an unknown arena; it is best to leave these matters to your
licensed general contractor.
Arbitration Clause
A contractor may have an arbitration clause to settle disputes
in the contract. This clause could enable you to resolve disputes
more quickly and enforce your warranty without litigation.
Small claims court and advice from an attorney should be considered
before arbitration for larger sums of money.
page
1 | page
2 | page 3
Resources: State
Licensing Boards
|
