The biggest problems that thousands of people have experienced with contractors are:
1. Using Unlicensed Contractors – they usually perform work that is not in compliance with the code. If the city or county finds out that you used an unlicensed contractor, all of the work may need to be performed again. Also, work that is not performed in accordance with the code, may pose a health or safety concern to your owners.
2. Contractors that have no insurance or had insurance that lapsed.
3. Contractors that fail to finish the job – or threaten to stop work unless more money is paid.
There are four simple things your association can do to reduce the chance of being ripped off by a contractor:
1.Ask to see a copy of the contractor’s license. Then call the state agency that issued the license to determine if it is valid; in good standing and whether any complaints have been filed against the contractor.
2. Ask to see a certificate of insurance. A contractor needs to have a minimum of liability and workman’s comp insurance. ASK HIM/HER TO PROVIDE A COPY TO YOU. In other words, do not trust any vendor who tells you that he/she is licensed and insured. Get proof. Once you get copies of the certificate of insurance, is it still valid and in force? Call the insurance agent and ask him to fax you or email a statement that the insurance is still in force.
3. Your attorney should go through the contract to make sure the contractor cannot pull any surprises during your job. Sometimes your condo attorney should have a construction law attorney assist in order that you are fully protected.
4. References are so important. Ask for references from several associations that the contractor performed work at. Talk to a board member rather than the person he/she directs you to.
5. If your management company directs you to a contractor – you still need to perform the same due diligence above.
Don’t settle for a verbal quote. Ask for the estimate in writing. In addition, require that the estimate detail out everything that will and will not be included in the price being quoted. Beware of contractors who will not provide this for you. The more detail you receive, the better.
Many times changes are required during the course of a job. It is important that these changes be handled as professionally as the contract itself. Whenever you ask for or agree to a change in the scope of work, ask for a written change order that states the details of the change and the price of that change. This should be done even if the change is being done at no cost or is a decrease in the contract amount. These written changes should be provided before the change on the project is accomplished, or at the very least, be provided the same day the change in work is agreed upon. Without this, clients receive many unexpected charges at the completion of the project. Make sure your contract addresses change orders and the requirements in writing for any change to be made.
This is one of the items that should be detailed in contract. Most professional contractors will include the price of all necessary permits in their contract price and they will apply for the permits themselves.
Chances are your contractor will sub out all or part of your work, particularly electrical and plumbing. If a firm uses subs, make sure the contractor has worked with them before. And ask for an affidavit or release of liens from the contractor ensuring that all subs have been paid—because an unpaid sub can place a lien on your property. MANY CONTRACTORS FAIL TO PAY THEIR SUB-CONTRACTORS. IF THIS HAPPENS – YOU CAN BE STUCK PAYING THE SUB-CONTRACTOR AS WELL. Talk to your attorney to structure the contract to avoid this happening.
Never pay the contractor in full before the work is 100% complete. A down payment on a contract is not unusual, however if they are asking for a large down payment of 50% or more, you need to consult with your attorney to determine how you can protect your down payment.
Request that your contractor provide lien waivers from their suppliers and subcontractors showing that they have used your payments to pay for the materials and labor that have been used on your project. It is best to hold your final payment on a project until you have received lien waivers from all subcontractors and companies that provided materials to your project. This protects you from having a lien placed on your property by a supplier who was not paid by your contractor. A final lien waiver should be received from the contractor themselves once you pay your final balance on the contract as well. THIS IS ONE OF THE MOST IMPORTANT THINGS THAT YOU NEED TO RECEIVE DURING YOUR JOB !
Ask to meet the person who will be supervising your crew. You need to learn his/her credentials. If no one is assigned, then you need to be concerned.