Avoiding a Home Renovation Nightmare
Repaving your driveway? Replacing your furnace? Repairing your roof? Sound like easy jobs, especially when a contractor comes knocking at your door. But take your time before you agree to the work. Complaints about unscrupulous home improvement and repair contractors rank second with consumer protection officials across the country.
Will you get stung if you hire a door-to-door contractor? Take this quiz to find out.
Questions:
(Click on your answer. Use your browser's back button to go to the next question.)
1. |
The most common home repair scams involve: |
a. roofing |
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2. |
You shouldn't do business with someone who urges you to sign a contract before you've had a chance to review it. |
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3. |
An advertisement in the "home improvement" section of the Yellow Pages is your assurance that a contractor is licensed and reputable. |
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4. |
A less than reputable contractor: |
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5. |
If you decide to hire a contractor, get a written estimate and contract. A well-written contract should include the contractor's name, address, and phone number. If a license is required in your state, the contractor's license number also should appear. Your contract also should specify: |
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6. |
What kind of insurance should a contractor carry? |
a. personal liability |
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7. |
Your payments should be made by credit card or check. |
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8. |
Avoid making the final payment or signing an affidavit of final release until you are satisfied with the work and have proof that the subcontractors and suppliers have been paid. |
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9. |
If you use your home as security for a home improvement loan, and you don't repay the loan as agreed, you could lose your home. |
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10. |
If you sign the contract in your home or at a location that is not the seller's permanent place of business, you have three business days to cancel the deal. |
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Answers:
10. True. The Federal Trade Commission's Cooling-Off Rule gives you three days to cancel the contract signed 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.
9. True. The lender can take your home and sell it, using the proceeds to pay off the loan and any foreclosure costs.
8. True. Lien laws in your state may allow unpaid subcontractors and suppliers to "attach" your home through a "mechanic's lien". 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.
7. True. Your credit card statement or cancelled check give you proof of payment, in addition to the contractor's receipt. Paying with a credit card also may give you extra protections. For example, 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. However, because state laws vary on your right to stop payment on checks, it's best to get legal advice before doing so.
6. D. All of the above. 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.
5. E. All of the above. The contract also must spell out what jobs will and will not be performed.
4. E. All of the above. You also should be wary of contractors who tell you your job will be a "demonstration;" pressure you for an immediate decision; offer exceptionally long guarantees; and ask you to pay for the entire job upfront.
3. False. Anyone can advertise in the Yellow Pages. An ad should not be considered an indication of the quality of a contractor's work. It's still best to get recommendations from friends, neighbors, and coworkers who have had repair and maintenance work done. Contractors who are required to be licensed often list their license number in their ads. Check out the contractor with the Better Business Bureau and state and local consumer protection officials. They can tell you if there are unresolved consumer complaints on file. One caveat: No record of complaints against a particular remodeler doesn't necessarily mean no previous consumer problems. It may be that problems exist but have not been reported, or that the contractor is doing business under several names.
2. True. High pressure sales tactics usually indicate you're dealing with an unscrupulous salesperson. A reputable contractor doesn't pressure you to sign a contract, and accepts the fact that you need time to review a contract or consult a trusted friend or relative.
1. E. All of the above. Other home repair scams often involve chimneys, windows, electrical wiring, tree pruning, and pest extermination.