The Top 5 Contractor Scams and How to Avoid Them

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By: Oliver Marks
8Comments

Protect yourself against contractor scams that threaten to stick you with shoddy workmanship or take your money and run.

Effort: Med 3 wknds (interview contractors)
Investment: Low $0

Scam 3: I don’t need to pull a permit

You’re legally required to get a building permit for any significant construction project. That allows building officials to visit the site periodically to confirm that the work meets safety codes.

On small interior jobs, an unlicensed contractor may try to skirt the rule by telling you that authorities won’t notice. On large jobs that can’t be hidden, the contractor may try another strategy and ask you to apply for a homeowner’s permit, an option available to do-it-yourselfers.

But taking out your own permit for a contractor job means lying to authorities about who’s doing the work. And it makes you responsible for monitoring all the inspections—since the contractor doesn’t answer to the inspector, you do.

How to protect yourself: Always demand that the contractor get a building permit. Yes, it informs the local tax assessor about your upgrade, but it weeds out unlicensed contractors and gives you the added protection of an independent assessment of the work.

Next: Scam 4: We ran into unforeseen problems

Oliver Marks

A former carpenter and newspaper reporter, Oliver Marks has been writing about home improvements for 16 years. He’s currently restoring his second fixer-upper with a mix of big hired projects and small do-it-himself jobs.

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We can’t comment on the specifics of your contract; each state has its own construction contract statutes. A contract should clearly define all project plans and specifications. Overcharges shouldn’t be a surprise. Most often, they result from change orders -- changes you make in the field -- that you should have OK'd beforehand. Often, your authorization comes verbally, as in, "Sure, do it." However, it's always better to agree to changes in writing, so you know how much they’ll cost. Check your contract to see how it covers over-budget items. Often, unforeseen things happens during a renovation, especially concerning electrical and plumbing problems behind a wall. Generally, you should have an explanation and receipt for those extras. If you think the contractor is being unfair, have a conversation with him. Most times, you can work it out. Your contractor wants your recommendation, and should be willing to explain charges to your satisfaction or, perhaps, eat some overages you never agreed to. Rule-of-thumb: Hold back the last 10% of payment until you are perfectly satisfied with the job and bill. More info on contractor contracts: http://www.houselogic.com/home-advice/contracting/what-remodeling-contract-should-say/
Posted by HouseLogic on February 15, 2013

I am almost done with my kitchen remodel but I got an extra bill with some added costs - additional pluming/electrical (over the allowance) and additional painting charges for the walls and windows in back area of my kitchen that is about 3x5 feet (really the back walls of my kitchen that is on the other side of my kitchen nook. I shouldn't be surprised by extra fees, correct? My contract says all interior walls ceilings and moldings. And that any adjustments will be accompanied by receipts, amended proposal or invoice. I think the bill is my "amended invoice". Can I get your opinion on that? Is he padding the bill?
Posted by Homeowner on February 12, 2013

My point was, which is definitively true, is that if the argument is over what is included in a contract, a judge is bound by the four corners of that contract. Period. Actually, I should have wrote that second sentance a little different. "Anything AFTER the signature is void in a court" should read "Anything AFTER the signature may be void in court". It obviously depends on what the judge will/will not allow. Now, arguments may be made for what is/isn't included, but that is what the last empty page in my example tries to fix. What I was addressing was intent of both parties to include something in a contract. "If text appears after the signature in a contract, but it’s reasonably clear from the context that it’s intended to express and be a part of the agreement, a court may treat it as such." This is correct, a court may (or may not) treat it as such. Again, it is up to that particular judge what they will/will not allow and people can have different versions of what is considered resonably clear and if the case is about what is, or isn't in the contract, that is what I have attempted to clear up. I never stated that this was the end all, be all solution. I just stated what I do with my contracts now and then gave an example of how I do it. This method does tend to clear up any arguments of what is actually supposed to be included. I whole-heartedly agree (if there is any confusion with a contract) with this - "It’s best to contact an attorney to review contracts and make changes as every situation is different."
Posted by Raymond on December 20, 2012

This may not be definitively true. Context and presentation matter with contracts. If text appears after the signature in a contract, but it’s reasonably clear from the context that it’s intended to express and be a part of the agreement, a court may treat it as such. It’s best to contact an attorney to review contracts and make changes as every situation is different.
Posted by HouseLogic on December 14, 2012

I would like to add something about contracts that wasn't really clear in the article. Anything AFTER the signature is void in a court. I have known judges that will not allow any modification to the contract after the signature because they (the judge) are bound by what is in the contract for their ruling. If it is not included in the agreement, it can not be honored. How do you know if it is actually included? It can not be a "second sheet of paper stapled to the back", it can not be "handwritten scribbles below the signature". Now whenever I draw up a contract, I have IN the contract, a blank piece of paper for additions/modifications. Example, a two page contract would have the what is expected on the first page (page one of two) and a second page (page two of two) that, at the top of the page, is written, "This page intentionally left blank for additions/modifications", and then the signatures, dates, etc. are at the BOTTOM of the SECOND page. That way if anything has to be added, it is added ABOVE the signatures. Of course when something is added it must be stated that it is an addition to (or modification of) the original contract and must be signed or initialed and dated by all parties involved. I hope this helps to clarify the contract issue a little bit.
Posted by Raymond on December 13, 2012

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