Inside Money: Don’t get ripped off by a contractor

Rather than get duped, get smart. Before you hire anyone to do work in or around your home, make sure you hire wisely. Here’s what you need to do to increase your chances of finding a reputable contractor.

CHECK OUT YOUR CONTRACTOR

Most home improvement contractors are honest, but there are too many bad guys out there. Before you spend thousands of dollars with an unscrupulous businessman, do your homework. Here’s what to look for:

Registration with the state: New Jersey home improvement contractors must register with the division of consumer affairs, and the registration number must appear on all contracts. This includes those who work on basements, driveways, kitchens, swimming pools and more. To see if your contractor is registered, go to njconsumeraffairs.gov and click “licensee search.” Note that plumbers and electrical contractors are not required to register as home improvement contractors, but you can check them out with the proper licensing board (see box).

Check for complaints: If a homeowner has a dispute with a contractor, they may have filed a complaint with consumer affairs. You can check the status of any complaints by calling the agency at (973) 504-6200 or (800) 242-5846. Also check for complaints with the Better Business Bureau at bbb.org, and consider other services such as Angie’s List. Finally, do a Google search on the contractor and company name. You may be surprised at what you’ll find.

Get references: Many contractors hand a list of references to potential customers, but few people actually make the calls. Of course, no contractor is going to add an unhappy customer to a reference list, and you could get a list including the contractor’s best friend from high school or his sister-in-law. But it’s still worth calling every person on the list.

Insurance: The contractor should give you a copy of his commercial general liability insurance. Call the company and make sure the policy is valid and will not expire before your job is completed.

Get three estimates: Even if you think you’ve found a fantastic contractor with glowing references, you should get three estimates for every job. This will allow you to compare prices, materials and other items. Make sure you’re comparing like-jobs, and get the estimates in writing.

Ask about permits: If the contractor says he’ll take care of all the permits for the job, make sure he does so you can avoid headaches later. If you’re the one applying for the permit, make sure to put the contractor’s information on the application. Do not say that you are performing the work yourself if you are, in fact, using a contractor because you may forfeit the protections afforded by law, consumer affairs says.

CONTRACTS

Home improvement contractors are required to give a written contract for all jobs that cost $500 or more. Here’s what the contract needs to include, according to consumer affairs.

Must be in writing and include the legal name and business address of the contractor, the start date, a completion date, a description of the work to be done and the total price.

The contractor’s registration number.

A copy of the contractor’s commercial general liability insurance and the telephone number of the company.

All warranties and guarantees in writing, listing name brands or quality of materials to be used.

A lien waiver, that is a receipt that states workers and material suppliers will not ask you for money once you have paid the contractor. Beware if a contractor asks you to sign a statement that says you will cover the costs of materials and labor if the contractor does not pay.

A specific payment schedule. Never pay for an entire job up front. It’s common to pay one-third of the cost upon signing the contract. The remaining payments should be listed in the contract based on specific milestones for the job. Get receipts for every payment and use a check or credit card so you can document the transaction. Before you make a final payment, make sure all inspections have been done and the town approves the work.

In New Jersey, consumers have a three-day right of rescission, which means you have the right to cancel the contract for any reason before midnight of the third business day after you receive a copy of the contract. Make sure to put any cancellations in writing and either personally deliver it or send it registered or certified mail, return receipt requested. Save a copy for your records.

RED FLAGS

Run — don’t walk — if a contractor:

Insists on cash.

Asks for total payment before the job begins, even if the contractor says he needs it to pay for materials.

Knocks on your door saying he’s doing work in the neighborhood.

Says there’s no need for a contract.

Does not provide you with a registration number (if required) or insurance information.

Tells you there’s an emergency reason why you should hire him immediately for the job.

Only has a P.O. Box as a business address. This could be legit, but further research is required.

If you have a problem and you’re unable to negotiate a solution with the contractor, it may be time to report him to consumer affairs.

LICENSING BOARDS

Architects: (973) 504-6385

Burglar Alarm Installers: (973) 504-6245

Electrical Contractors: (973) 504-6410

Engineers: (973) 504-6460

Fire Alarm Installers: (973) 504-6245

Land Surveyors: (973) 504-6460

Landscape Architects: (973) 504-6385

Locksmiths: (973) 504-6245

Plumbers: (973) 504-6420

Source: Division of Consumer Affairs

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