What rights do consumers have if a contractor fails to perform the work?

If a contractor breaches a contract provision, the consumer can file a civil lawsuit for breach of contract.  If you think the contractor committed fraud, you can also file a lawsuit for fraud.  Many states also have consumer protection statutes that allow you to recover attorney’s fees and, in some states, up to three times the actual loss.  You can also file a consumer complaint with the Office of the Attorney General for your state.

What to look for in a contract?

First, you must make sure that the contractor you hire is properly licensed in your particular state.  Ask for proof of a license.  This is very important.  The in the District of Columbia it is a violation of the D.C. Consumer Protections Act (CPPA) for an unlicensed contractor to perform home improvement work.   You can find out whether your DC contractor is licensed here.  Similarly, under the Pennsylvania Home Improvement Consumer Protection Act (HICPA), a contractor cannot perform home improvement work in excess of $5,000 per year without registering with the Attorney General’s Office.  You can perform a search for registered Pennsylvania contractors here. 

Second, you should ask the contractor for proof that the contractor has workers’ compensation and liability insurance. Many contractors list “fully-insured” on websites and in advertising materials, but often do not carry the proper insurance or have allowed it to lapse.  Finally, in the contract you want to make sure that the contractor agrees to obtain all necessary permits to perform the work.  If the contractor fails to obtain the permits, the homeowner can be fined or it can cause problems in the future when you try to sell your home.

Are there any contract red flags?

Homeowners need to make sure they know who they are contracting with.  Make sure the name on the contractor’s license and insurance match the name on the contract.  Contractors often set up different LLCs and do business under different names.  Never pay the contractor the full contract price up front.  Typically, the homeowner will pay for the work in three stages.  When you make payment, always pay by check or credit card to create a paper trail and to avoid any potential tax issues.  Make sure everything you agree to is in writing and in the contract.  Make sure the contractor signs the contract so there is not dispute later as to the original contract.  If the contractor refuses to put something you agreed to in writing and sign the document, that is a big red flag that they may be untrustworthy. 

How should consumers look for a contractor?

Angie’s List is a good starting point.  Contractors on Angie’s list are, at the very least, concerned with public perception.  Bad reviews on Angie’s List can really harm a contractor’s prospects.  If you have a bad experience and post a bad review, the contractor will often work with you to try to fix the issue, so you remove the review.  After you have narrowed down contractors, perform a Google search to see if the contractor has been sued or if there is any negative information about the contractor on the internet.  Before signing a contract with the contractor, ask the contractor for at least three references.  Call the references and ask them about their experience with the contractor.  Make sure the contractor is licensed and fully insured.

If you were defrauded by a contractor, contact Klaproth Law for a free, confidential consultation.