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Home Sweet Home
Improvement
Whether you’re planning an
addition for a growing family or simply getting new storm windows,
finding a competent and reliable contractor is the first step to a
successful and satisfying home improvement project.
Your home may be your most
valuable financial asset. That’s why it’s important to be cautious when
you hire someone to work on it. Home improvement and repair and
maintenance contractors often advertise in newspapers, the Yellow Pages,
and on the radio and TV. However, don’t consider an ad an indication of
the quality of a contractor’s work. Your best bet is a reality check
from those in the know: friends, neighbors, or co-workers who have had
improvement work done. Get written estimates from several firms. Ask for
explanations for price variations. Don’t automatically choose the lowest
bidder.
Home Improvement Professionals
Depending on the size and
complexity of your project, you may choose to work with a number of
different professionals:
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General Contractors manage all aspects of
your project, including hiring and supervising subcontractors, getting
building permits, and scheduling inspections. They also work with
architects and designers.
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Speciality Contractors install particular
products, such as cabinets and bathroom fixtures.
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Architects design homes, additions, and
major renovations. If your project includes structural changes, you
may want to hire an architect who specializes in home remodeling.
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Designers have expertise in specific
areas of the home, such as kitchens and baths.
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Design/Build Contractors provide one-stop
service. They see your project through from start to finish. Some
firms have architects on staff; others use certified designers.
Don’t Get Nailed
Not all contractors
operate within the law. Here are some tip-offs to potential rip-offs. A
less than reputable contractor:
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solicits door-to-door;
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offers you discounts for finding other
customers;
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just happens to have materials left over
from a previous job;
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only accepts cash payments;
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asks you to get the required building
permits;
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does not list a business number in the
local telephone directory;
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tells you your job will be a
"demonstration;"
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pressures you for an immediate decision;
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offers exceptionally long guarantees;
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asks you to pay for the entire job
up-front;
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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.
Hiring a Contractor
Interview each contractor
you’re considering. Here are some questions to ask.
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How long have you been in business?
Look for a well-established company and check it out with consumer
protection officials. They can tell you if there are unresolved
consumer complaints on file. One caveat: No record of complaints
against a particular contractor doesn’t necessarily mean no previous
consumer problems. It may be that problems exist, but have not yet
been reported, or that the contractor is doing business under several
different names.
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Are you licensed and registered with
the state? While most states license electrical and plumbing
contractors, only 36 states have some type of licensing and
registration statutes affecting contractors, remodelers, and/or
specialty contractors. The licensing can range from simple
registration to a detailed qualification process. Also, the licensing
requirements in one locality may be different from the requirements in
the rest of the state. Check with your local building department or
consumer protection agency to find out about licensing requirements in
your area. If your state has licensing laws, ask to see the
contractor’s license. Make sure it’s current.
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How many projects like mine have you
completed in the last year? Ask for a list. This will help you
determine how familiar the contractor is with your type of project.
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Will my project require a permit?
Most states and localities require permits for building projects, even
for simple jobs like decks. A competent contractor will get all the
necessary permits before starting work on your project. Be suspicious
if the contractor asks you to get the permit(s). It could mean that
the contractor is not licensed or registered, as required by your
state or locality.
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May I have a list of references?
The contractor should be able to give you the names, addresses, and
phone numbers of at least three clients who have projects similar to
yours. Ask each how long ago the project was completed and if you can
see it. Also, tell the contractor that you’d like to visit jobs in
progress.
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Will you be using subcontractors on
this project? If yes, ask to meet them, and make sure they have
current insurance coverage and licenses, if required. Also ask them if
they were paid on time by this contractor. A "mechanic’s lien" could
be placed on your home if your contractor fails to pay the
subcontractors and suppliers on your project. That means the
subcontractors and suppliers could go to court to force you to sell
your home to satisfy their unpaid bills from your project. Protect
yourself by asking the contractor, and every subcontractor and
supplier, for a lien release or lien waiver.
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What types of insurance do you carry?
Contractors should have personal liability, worker’s compensation, and
property damage coverage. Ask for copies of insurance certificates,
and make sure they’re current. Avoid doing business with contractors
who don’t carry the appropriate insurance. Otherwise, you’ll be held
liable for any injuries and damages that occur during the project.
Checking References
Talk with some of the
remodeler’s former customers. They can help you decide if a particular
contractor is right for you. You may want to ask:
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Can I visit your home to see the
completed job?
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Were you satisfied with the project? Was
it completed on time?
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Did the contractor keep you informed
about the status of the project, and any problems along the way?
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Were there unexpected costs? If so, what
were they?
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Did workers show up on time? Did they
clean up after finishing the job?
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Would you recommend the contractor?
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Would you use the contractor again?
Understanding Your Payment Options
You have several payment options for most home improvement and
maintenance and repair projects. For example, you can get your own loan
or ask the contractor to arrange financing for larger projects. For
smaller projects, you may want to pay by check or credit card. Avoid
paying cash. Whatever option you choose, be sure you have a reasonable
payment schedule and a fair interest rate. Here are some additional
tips:
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Try to limit your down payment. Some
state laws limit the amount of money a contractor can request as a
down payment. Contact your state or local consumer agency to find out
what the law is in your area.
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Try to make payments during the project
contingent upon completion of a defined amount of work. This way, if
the work is not proceeding according to schedule, the payments also
are delayed.
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Don’t make the final payment or sign an
affidavit of final release until you are satisfied with the work and
know that the subcontractors and suppliers have been paid. Lien laws
in your state may allow subcontractors and/or suppliers to file a
mechanic’s lien against your home to satisfy their unpaid bills.
Contact your local consumer agency for an explanation of lien laws
where you live.
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Some state or local laws limit the amount
by which the final bill can exceed the estimate, unless you have
approved the increase. Check with your local consumer agency.
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If you have a problem with merchandise or
services that you charged to a credit card, and you have made a good
faith effort to work out the problem with the seller, you have the
right to withhold from the card issuer payment for the merchandise or
services. You can withhold payment up to the amount of credit
outstanding for the purchase, plus any finance or related charges.
The "Home Improvement" Loan Scam
A contractor calls or knocks on your door and offers to install a new
roof or remodel your kitchen at a price that sounds reasonable. You tell
him you’re interested, but can’t afford it. He tells you it’s no problem
— he can arrange financing through a lender he knows. You agree to the
project, and the contractor begins work. At some point after the
contractor begins, you are asked to sign a lot of papers. The papers may
be blank or the lender may rush you to sign before you have time to read
what you’ve been given to sign. You sign the papers. Later, you realize
that the papers you signed are a home equity loan. The interest rate,
points and fees seem very high. To make matters worse, the work on your
home isn’t done right or hasn’t been completed, and the contractor, who
may have been paid by the lender, has little interest in completing the
work to your satisfaction.
You can protect
yourself from inappropriate lending practices. Here’s how.
Don’t:
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Agree to a home equity loan if you don’t
have enough money to make the monthly payments.
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Sign any document you haven’t read or any
document that has blank spaces to be filled in after you sign.
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Let anyone pressure you into signing any
document.
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Deed your property to anyone. First
consult an attorney, a knowledgeable family member, or someone else
you trust.
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Agree to financing through your
contractor without shopping around and comparing loan terms.
Getting a Written
Contract
Contract requirements vary
by state. Even if your state does not require a written agreement, ask
for one. A contract spells out the who, what, where, when and cost of
your project. The agreement should be clear, concise and complete.
Before you sign a contract, make sure it contains:
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The contractor’s name, address, phone,
and license number, if required.
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The payment schedule for the contractor,
subcontractors and suppliers.
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An estimated start and completion date.
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The contractor’s obligation to obtain all
necessary permits.
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How change orders will be handled. A
change order — common on most remodeling jobs — is a written
authorization to the contractor to make a change or addition to the
work described in the original contract. It could affect the project’s
cost and schedule. Remodelers often require payment for change orders
before work begins.
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A detailed list of all materials
including color, model, size, brand name, and product.
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Warranties covering materials and
workmanship. The names and addresses of the parties honoring the
warranties — contractor, distributor or manufacturer — must be
identified. The length of the warranty period and any limitations also
should be spelled out.
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What the contractor will and will not do.
For example, is site clean-up and trash hauling included in the price?
Ask for a "broom clause." It makes the contractor responsible for all
clean-up work, including spills and stains.
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Oral promises also should be added to the
written contract.
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A written statement of your right to
cancel the contract within three business days if you signed it in
your home or at a location other than the seller’s permanent place of
business. During the sales transaction, the salesperson (contractor)
must give you two copies of a cancellation form (one to keep and one
to send back to the company) and a copy of your contract or receipt.
The contract or receipt must be dated, show the name and address of
the seller, and explain your right to cancel.
Keeping Records
Keep all paperwork related to your project in one place. This includes
copies of the contract, change orders and correspondence with your home
improvement professionals. Keep a log or journal of all phone calls,
conversations and activities. You also might want to take photographs as
the job progresses. These records are especially important if you have
problems with your project — during or after construction.
Completing the Job: A Checklist
Before you sign off and make the final payment, use this checklist to
make sure the job is complete. Check that:
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All work meets the standards spelled out
in the contract.
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You have written warranties for materials
and workmanship.
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You have proof that all subcontractors
and suppliers have been paid.
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The job site has been cleaned up and
cleared of excess materials, tools and equipment.
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You have inspected and approved the
completed work.
Where to Complain
If you have a problem with your home improvement project, first try to
resolve it with the contractor. Many disputes can be resolved at this
level. Follow any phone conversations with a letter you send by
certified mail. Request a return receipt. That’s your proof that the
company received your letter. Keep a copy for your files.
If you can’t get
satisfaction, consider contacting the following organizations for
further information and help:
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State and local consumer protection
offices.
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Your state or local Builders Association
and/or Remodelors Council.
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Your local Better Business Bureau.
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Action line and consumer reporters. Check
with your local newspaper, TV, and radio stations for contacts.
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Local dispute resolution programs.
For More Information
• Federal Trade
Commission:
www.ftc.gov
• National
Association of Home Builders Remodelors™ Council:
www.nahb.com
To order a free copy of
How to Find a Professional Remodeler, send a self-addressed stamped
envelope to:
NAHB Remodelors Council
Dept. FT
1201 15th Street, NW
Washington, DC 20005
• National
Association of Consumer Agency Administrators:
www.nacaanet.org
1010 Vermont Avenue, NW
Suite 514
Washington, DC 20005
E-mail: nacaa@erols.com
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