Contributed by Peter Dunn
To Protect Yourself from Unscrupulous Home Improvement Contractors, remember: Got To Check
February, 2015 – after a long day of clearing another couple of feet of snow and getting the kids down to bed, my wife and I finally sat down, exhausted, when one of our daughters reported that the toilet wouldn’t flush. Again. A feeling of dread came over us — another sewage back up in our basement. Another night up until 2 a.m. bleaching the basement. And the fourth time it happened since we started our home renovation the summer before. We found out later that the contractor had bent our sewage pipe when excavating the new foundation. He also left a live electrical wire in our yard where our children play, substituted cheaper materials in lieu of the ones called for by the contract, did loads of work incorrectly, requiring it to be redone at our cost, and simply just didn’t do thousands of dollars of other items required by the contract before riding off into the sunset.
Years and tens of thousands in repairs later…
…we’ve almost recovered, but we’re in court with the contractor with the prospect of an actual recovery with respect to all of our issues an uncertainty. This article goes over some simple steps to help avoid this from happening to you.
With property values soaring and home equities solidly back in the black, many Miltonians are hiring home improvement contractors (i.e. general contractors) to undertake renovations and additions to their homes. Buyer beware – as demonstrated by our experience, these contractors can be of very varying degrees of honesty and competency, so it is essential that you do your homework on the contractor and protect yourself when entering into your home improvement construction contract.
By Massachusetts law, all home improvement contractors must be registered with the state’s Office of Consumer Affairs and have a Construction Supervisor’s License from the division of public safety. The law defines a home improvement contractor (HIC) as “any person who owns or operates a contracting business who, through himself or others, undertakes, purports to have the capacity to undertake, offers to undertake, or submits a bid for residential contracting work to an owner, as such work.” A Construction Supervisor’s License evidences the fact that the HIC has passed exams required by the division thereby demonstrating his or her knowledge of the building code. If you’re doing an addition or renovation, then you’ll likely be dealing with an HIC.
Here’s some tips on doing your homework on an HIC (do these steps, even if you grew up with the guy, play softball with him and sing with him in the choir – we knew our HIC for years and still had a horrible experience):
- Check the HIC’s Construction Supervisor’s License registration with the division of public safety. You can check CSL registrations here: elicense.chs.state.ma.us/Verification/Search.aspx. Not registered? Go to the next guy on your list.
- Check the HIC’s home improvement contractor registration. All HIC’s must be registered with the state. You can check an HIC’s registration and Office of Consumer Affairs complaints history here: services.oca.state.ma.us/hic/licenseelist.aspx. Not registered or does he have complaints? Go to the next guy on your list. Dealing with an unregistered HIC will deprive you from access to the state’s HIC guaranty fund which can provide you with up to $10,000 should you get an arbitration decision or court judgment against the HIC in connection with the work and the HIC does not pay. Complaints to the Office of Consumer Affairs are a very bad sign. The consumer had to fill out forms and attend a hearing with any award being made as a fine that goes to the state and not the consumer. So, the consumer had to be very motivated by the contractor’s unscrupulous behavior to follow through with this (yes, we did this with our contractor and he was fined thousands of dollars).
- Check the HIC’s guaranty fund history which can be found here: www.mass.gov/ocabr/consumer-rights-and-resources/home-improvement-contract/check-a-contractor.html. Any history is bad. It means the HIC had an award against him for bad work and didn’t pay it. If you find any guaranty fund history, go to the next guy on your list.
- Check references. Check references. Check References! Get references from the HIC and check them. In addition, Milton’s permits are online and you can check by the HIC’s name. So, reviewing these allows you to see how long it generally takes the HIC to complete work, whether the inspectors are rejecting his work and the addresses of the projects. Drive by and see the HIC’s work or reach out to the owners. You can also check if someone has worked with him on Milton Neighbors or if he is on the Milton Scene’s list of home improvement specialists. What you principally want to know is whether the customer is happy with the work and whether it came in on time, on budget and within the contract’s specifications. You should also ask about unexpected surprises or anything else that is important to you (cleaning up, use of your home’s bathroom vs. porta-potty, etc.).
Once you have found that the HIC is licensed, has no guaranty fund history, has good references and are satisfied with the proposed pricing, then it is time to turn to the contract. In Massachusetts, home improvement contracts over $1,000 have to be in writing. A sample contract provide by the state can be found at www.mass.gov/ocabr/docs/sampcont.pdf. Use it. Some tips on the contract (hire a lawyer if you don’t thoroughly understand the terms):
- It is illegal for the HIC to require more than one third of costs up front unless it is for special order items.
- Reserve as much money as possible until the end so you can protect yourself against shoddy work.
- Pay against milestones completed to your satisfaction (ex. payment due on completion of framing, etc.). Require a release of claims and lien waiver from the contractor and all materialmen and subcontractors before you make a payment (you can find forms of this by using google or contacting an attorney). Otherwise, unpaid subcontractors and materialmen can place a lien on your home and you can end up having to pay twice.
- Ask for a certificate of insurance, review the coverage (if you don’t understand the coverage, speak with your own insurance agent or design professional) and get yourself named as an additional insured on the certificate with a requirement of at least 30 days prior notice being given to you before the policy can be cancelled or non-renewed.
- Put specifics about the type and grade of materials to be used in the contract. Assume if you don’t specify, you’re getting the lowest grade of material possible. If you have plans, do not forget to reference the plans in the contract so that those standards are part of the contract.
- Put all change orders in writing. If you want to add work or change something with respect to the project, memorialize the addition or change with a change order that lays out the specifics, pricing, completion date for the new work and whether or not it changes the overall completion date. Do this before the work is done.
- Make sure you have a clear completion date. Many HIC’s will give you a rosy timetable when trying to win your work, but waffle on this when it’s time to sign on the dotted line – don’t let them. Give your HIC a reasonable amount of extra time beyond the date the he told you that they would finish as things can come up, but make sure you have a hard date for completion and hold them to it. A 1% per week reduction in the contract price after the completion date can be a good motivator.
Finally, use your own independent professionals to inspect the work prior to payment such as your architect or another construction professional you hire just for this purpose. While they’re good, don’t exclusively rely on the town’s inspectors as inspectors only check to see that the project meets code, not the terms of your contract. Also, you can check the HIC hiring guide and FAQs from the Office of Consumer Affairs for common questions and answers.
Using the simple vetting steps, using the state form of contract, incorporating the contract terms discussed above and having an independent professional inspect the work prior to payment can save you a lot of heartache and money.
About the Author:
Milton resident Peter Dunn is a corporate and contracts lawyer at Casner & Edwards in Boston.