Selecting a contractor? Beware of con artists Personal Finance

June 02, 1991|By Maria Mallory

'Tis the season for home improvements.

The weather is hot. The economy is cold. New construction is at a standstill. With the dearth of new home construction, many contractors are targeting the home improvement market. They're hungry for business. And they're cutting deals.

"There are a lot of refugees from new construction now trying to make a living however possible," says Robert L. Mead, a spokesman for the Maryland Improvement Contractors Association. Many contractors are reducing their fees in order to get more business on the books, he says.

For people opting to fix up their homes, rather than trade up to more expensive homes, "Now's the time to do it. You'll get your best price in years," Mr. Mead contends.

But homeowners beware.

Current conditions also provide fertile ground for home improvement swindles, botched jobs and dissatisfaction. Springtime can often bring a homeowners' nightmare: "gypsy contractors," who travel from town to town ripping off homeowners.

If you're thinking of adding on, renovating or refurbishing, you've got to protect yourself.

By following a few basic guidelines, you can avoid being duped bycon artists and can ensure that the work you envision is the work you receive.

The cardinal rule in hiring a home improvement contractor is to work with state-licensed firms and individuals -- only.

The Maryland Home Improvement Commission issues wallet-sized licenses to contractors who have registered with the state and are therefore legally permitted to do work in your home.

The license is given to individuals or to an official at a firm, says Vernon L. Simms, executive director of the Maryland Home Improvement Commission, a part of the state Department of Licensing and Regulation.

The commission issues licenses to contractors, subcontractors and salespersons involved in home improvement, Mr. Simms says. It also can revoke or suspend licenses and levy fines against a contractor proven guilty of wrongdoing.

Most importantly, all licensed home improvement contractors contribute to a state pool, the Guaranty Fund. That money is set aside to settle disputes that may arise, so that if you're burned by a licensed contractor, at least a portion of your losses may be paid back by the state.

Don't accept any substitutes for that license, advises Mr. Simms.

Here is a list of additional helpful hints from MHIC:

Decide exactly what kind of work you want done, and what your budget can cover. Write down details on what you want before you talk with a contractor.

* Obtain estimates from three or more licensed contractors with experience in doing the work you want. Always comparison-shop. Be sure to ask -- in advance -- if there is a fee for the estimate. Be aware that the lowest bid may not be the best. Check to make sure the proposed materials meet your specifications.

* Always ask contractors to show you their home improvement license card. Check the license number and the expiration date. Ads for home improvement work should also include the license number of the firm.

* Check the validity of a contractor's license by calling MHIC (301) 333-6309 or (800) 492-7521. Is the license genuine? Is it up ++ to date? Are there complaints registered against the contractor? If so, what are they, and have they been resolved?

* Ask your contractor to provide names and phone numbers of past clients. Call these references. Ask them about the quality of the contractor's work. Was the job completed on time? Did the work fall within the projected budget? Visit a former work site. See for yourself what the final product looked like.

* Ask your contractor to furnish proof of insurance. If a worker is injured on your project and the contractor isn't carrying proper insurance, you may be held liable.

* Taking into consideration the bids, references and information provided by the Home Improvement Commission, choose the contractor who can do the best work at a price you can afford.

* Always insist on a written contract. The document should include the contractor's license number, the date the work will begin, the type of project, the quality of materials to be used, estimated completion date and the payment schedule. Read the entire contract CAREFULLY before signing it. Make sure it includes everything you and the contractor agreed upon.

* Ask your contractor to write a warranty to cover workmanshi and materials. Contractors who are members of the Home Builders Association of Maryland may be able to offer a limited written warranty through the group's Remodeler Program, which guarantees work and materials according to HOW's Approved Standards. HOW also publishes several informational pamphlets. Call 265-7400 for further information.

* Check with your local licensing and permit department to see if your project requires a building permit. If so, make the contractor show you the permit before work begins.

MHIC also warns:

* Never use unlicensed home improvement contractors. You will not be protected by Maryland home improvement laws if you hire unlicensed contractors.

* Stay away from any contractor who lacks experience in the type of work you want. A bargain price doesn't guarantee a job well done.

* Don't use a contractor who you believe violates local building laws.

* Never pay a contractor before signing a contract. Maryland law prohibits a contractor from asking for and accepting payment before a contract is signed.

* Never pay for the entire job before work has begun. Maryland law prohibits a contractor from demanding more than one-third of price at the time a contract is signed.

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