I was pleased with the response of my last Council Corner entitled Working Together to Get It Right. It dealt with avoiding the many mistakes that can occur if you hire unlicensed contractors. Many people responded with more questions so I am now writing a follow up article that hopefully will help.
As we have learned, a contractor must be licensed if the job exceeds $500 or more, which includes both material and labor. If you have any doubt as to their license status, go to the California Consumer Affairs/Contractors State Licensing Board web site at www.cslb.ca.gov and check to see if the individual or company is licensed. It is simple, you can either check by entering the contractor’s license number or their company name.
You will quickly learn if they are licensed and the status of their license. Never let somebody tell you they do not need a license because you are acting as the “owner-builder.” The CSLB can take action against an unlicensed contractor, however, they cannot compel them to make repairs or provide restitution.
It is important to obtain personal references of the contractors you select and get at least three bids. If someone’s bid is really low there may be a bad reason for it and you need to listen to your “gut feeling.”
Contractors have special licenses and it is important for you to make certain your contractor is properly licensed for the work you want done. Also, make sure you check their workers’ compensation insurance. Remember you are personally liable for all injuries on the job if your contractors do not have workers’ compensation insurance or if the policy is inadequate. Your liability can potentially include foreclosure on your home to settle a claim.
Once you have checked all the basics, make certain you have a contract. The one thing I have learned as a licensed real estate broker is that if it is not within the margins and four corners of the page it is written on, then it does not exist. Put everything in writing and be as specific as possible.
List all the terms and conditions and specify the type and quality of the materials. Identify the clean up that will take place and the warranties. List the product names and any special requests you desire. Get signed written change orders if you agree on additions or deductions. An excellent rule of thumb is to NEVER LET PAYMENTS GET AHEAD OF YOUR WORK and whatever you do, NEVER PAY BY CASH.
By state law, your down payment must not exceed $1,000 or 10% which ever is less. Remember you have 3 days after a contract is signed to cancel the contract if you experience buyer’s remorse and have a change of heart.
Pay attention to potential mechanic liens and how to resolve a dispute between you and your contractor. Make certain your contractor pays their sub-contractors.
If your contractor fails to pay their contractor, a sub-contractor may be able to use liens to force you to pay them directly, which can eventually also result in a foreclosure. If a dispute arises which cannot seem to be resolved, go to the CSLB web site and download a complaint form. The CSLB will investigate or mediate the problem.
It was not long ago the CSLB’s Fraud Team in conjunction with the San Mateo District Attorney’s office, the Internal Revenue Service and San Carlos Police Department performed a “sting operation.” The purpose was to identify unlicensed contractors and to shed light on this growing problem. During the operation, they cited 10 unlicensed contractors who came to give bids.
One of the cited individuals was posted in the Megan’s law website while another individual was arrested for a $100,000 outstanding warrant under section 288 of the California Penal Code (lewd and lascivious acts with a child).
We all need to be careful when dealing with anyone we bring into our homes. If you have any doubts or questions concerning a building project you are planning, use the resources available. It would be a good first step to check out the CSLB web site at www.cslb.ca.gov. The site has loads of information and resources and provides you with the ability to verify the integrity and standing of your potential contractor.
If you still have questions, call the Foster City Community Development Department. If you feel you are being set up as a potential victim of a “scam” call the Foster City Police Department. We are all here to help.
If you have, any questions or remarks please feel free to call me at 650-349-2316 or e-mail me at jkiramis@fostercity.org.
Thank you for giving me the opportunity to serve you.
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