What You Need to Know About Hiring a Contractor

http://www.kiplinger.com/magazine/ar...ontractor.html

Find the perfect person for the job, then put the details in writing
to be sure you're on the same page.
By Thomas M. Anderson, Associate Editor
From Kiplinger's Personal Finance magazine, September 2010

1. Go online before you sign. Referrals from people you trust are your
best bet. But if you don't have that luxury, some Web sites can make
your hunt easier. ServiceMagic.com, which lists more than 79,000
providers, says that less than 0.1% of its referrals result in user
complaints. The site charges listees (your search is free) and screens
contractors to make sure they are licensed and have passed criminal-
background checks. Using an unlicensed contractor in a state that
requires a license is dangerous -- you'll have little legal recourse
if the job goes south. (To see which states license contractors, visit
www.contractors-license.org.)

Angie's List will connect you with contractors in more than 200
cities. The company says it monitors customer reviews for accuracy and
offers discounts to users who select contractors that advertise on the
site. Angie's fees vary, but in most cases you will pay $5 a month or
$40 for an annual subscription. At ContractorCheck.com, you can
scrutinize a builder's record, including bankruptcies, liens,
insurance coverage and credit information ($13 for each report).
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2. Take a field trip. To truly appreciate how a contractor operates,
you have to see him in action. So once you have narrowed your list to
at least three prospects, ask to visit other jobs in progress. You
will be able to see how he treats his crew, how tidy he is on site and
how well he works with clients.

3. Cross the T's and dot the I's. If the project involves a home built
before 1978, the contractor should be certified by the Environmental
Protection Agency to handle lead paint. Ask the contractor to have his
insurer send you proof of insurance. (In most states, the minimum
liability coverage is $300,000 per accident.) And the contractor
should get the permit for the job, not you. Otherwise, you are on the
hook if his work is not up to code.

4. Divide and conquer. Your best leverage for getting the job done
right is to pay in stages. Some states actually limit down payments to
10% of the contract price; others allow one-third down. If building
materials need to be ordered, you can arrange for early payments to
meet those costs. Schedule later payments based on project milestones
-- such as 15% when the foundation is laid, 10% when the walls are
framed and so on. Hold out 10% or more until the job is finished to
your liking.

5. Be precise. Don't just say you want windows -- specify that you
require, say, Andersen Tilt-Wash Double-Hung windows -- and eliminate
any "or equal" clauses in boilerplate contracts. Such language gives
contractors wiggle room to select materials you may not like. If the
project is big, such as building an addition on to your home, get a
lawyer to draft the contract.

6. Get it in writing. Document every change to the project with a
change order to avoid legal headaches and confusion over what you
wanted. Contractors, subcontractors and building-material suppliers
can issue a mechanic's lien against your property if payment is
disputed. To protect yourself, have the builder acknowledge in writing
that subcontractors and suppliers have been paid through the date on
the check for each phase of the project.