Accomplishing regular home maintenance projects is a necessity every homeowner must face. In order to protect your investment against scams, it’s important to hire only reputable home improvement companies, and to be aware of the legalities involved.
Minnesota Building Contractors is actively involved in protecting local homeowners from fraudulent contractors. Below, we’ve listed some of the most common scam techniques used by “fly-by-night” contractors, and how to avoid their negative effects on your home and pocketbook. If you have any questions, please feel free to contact us.
SCAM 1 – A CONTRACTOR OFFERS TO GIVE YOU A DISCOUNT IF YOU PAY UPFRONT AND IN CASH.
A contractor who insists on cash is possibly working outside the law, not paying taxes and not obtaining licensing. If he or she insists on payment up front, they may be planning to disappear with your money.
A home improvement contractor working outside the law cannot obtain the necessary building permits for your home, which means you’ll eventually have to hire another contractor and pay even more to bring the work up to code. You may also encounter problems even trying to find a fly-by-night contractor after the work is complete.
Some of the warning signs to look for include:
- The contractor doesn’t have a permanent business address in the local area
- Payment is demanded in full, upfront
Scam 2– An unlicensed home improvement contractor does faulty work and you’re liable for injuries to a third party.
When hiring a local area home improvement contractor, make sure the one you choose is fully-licensed and registered according to the laws of Minnesota and Iowa. Otherwise, you could be liable for any injuries incurred due to the work that was done, like Charles Harper who hired an unlicensed electrician to install a new circuit breaker box on his mother’s home. A short time later, he was paying one and a half million dollars in damages to a third party.
Some time after the work was completed, a CableComm employee was injured when he fell from a power pole connected to the house. He alleged that faulty wiring of the breaker box was the proximate cause of his injuries. At trial, a jury awarded the cable employee almost one and a half million dollars in damages, finding that a person performing electrical work for pay must possess a valid license, and violation of any statute is prima facie evidence of negligence.
SCAM 3 – A HOME IMPROVEMENT CONTRACTOR OFFERS YOU A GREAT DEAL ON LEFTOVER HOME RENOVATION MATERIALS THEY HAVE FROM ANOTHER JOB.
You’d love to save money and feel good about helping the environment by using excess material instead of ordering new. However, the materials may be stolen or “off-grade.”
A competent, professional contractor like Minnesota Building Contractors carefully estimates the materials needed at a job site, and rarely has anything remaining but scraps. The “leftover” materials you’re being sold may be ungraded, below the minimum grade needed to pass building codes, or “fell off a truck” and are damaged.
SCAM 4 – YOUR HOME IMPROVEMENT CONTRACTOR SKIPS TOWN WITHOUT PAYING SUPPLIERS AND WORKERS, RESULTING IN YOU HAVING TO FOOT THE BILL…AGAIN.
You paid for the job upfront, but soon after it was completed you started receiving phone calls from disgruntled suppliers and laborers wanting their money. Unfortunately, the contractor had skipped town without paying everyone else involved in the job. It gets worse. Now you’re being sued.
That’s right. If your home improvement contractor does not pay suppliers and laborers for work done on your house, they may be able to sue you – even if you paid your contractor.
Consider Suki Kaur. Within months of closing on her two-story home, work in the new subdivision stopped and the builder’s parent company, Dunmore Homes, filed for bankruptcy protection.
Kaur, who is paying on a $430,000 mortgage, has become the target of two lawsuits and 28 liens from unpaid subcontractors and suppliers. More than a dozen other individuals in the same development are in a similar predicament.
The best way to avoid a similar situation is to go with an established contractor in your area like Minnesota Building Contractors – one with a permanent address and phone number, and a reputation in the community for doing good work.
SCAM 5 – THE CONTRACTOR SAYS THEY WILL GIVE YOU A SPECIAL PRICE IF YOU SIGN AT THE TIME OF THE ESTIMATE.
If you’re being forced to make a quick decision in order to get a discount, the chances are good you will regret your decision later on.
Fly-by-night contractors often offer a discount if you sign at the time of estimate. The reason? They’re working on commission and only care about getting paid, with little regard for your best interests or what happens after they get your signature.
A reputable contractor will always allow you time to ask for second – and third – opinions, evaluate the job and the estimate, and consider all of your options. A bad start to the job is a good indication of problems throughout the experience, so beware.