Archive for Sunday, December 7, 2003

Blueprint for disaster

Plunging into remodeling without sizing up contractor is an invitation to trouble

December 7, 2003


To Nancy de Booy, the little 60-year-old bungalow perched on a hillside in Tacoma, Wash., seemed ideal. With a bit of fixing up, she thought, the small home could be her own private getaway.

She found a contractor from a newspaper advertisement and hired him to renovate and expand the home by adding a second story and an outside deck.

That was a year ago.

Now, de Booy figures she's dumped at least $145,000 into the 1,900-square-foot home, and the job's not done. The contractor has walked off the job in a dispute.

A discouraged de Booy still is waiting for her kitchen and windows to be finished. She's considering walking away from her dream, writing off those nine months as a painful lesson learned.

"I'm thinking of buying a little place in a mobile home park," she said. 'I just can't keep pouring money into this place. Everywhere I look, it just hurts. I'm getting too old for this."

Broken promises

She blames the nightmare on a contractor who promised a complete renovation, including adding a second story, for $120,000. Halfway through the job, he said he would need $40,000 more than the agreed-upon price. De Booy refused to pay it, and he stopped work.

She filed complaints with the state, but she'll probably have to take the contractor to court, she said.

Before that first check exchanges hands, local experts say homeowners should follow these four key tips to avoid future headaches:¢ Get at least three bids for the job.¢ Ask for references.¢ Don't pay more than 10 percent up front.¢ Check with the state and the local Better Business Bureau to see if the contractor is registered, licensed and bonded.

Experts in contracting disputes and fraud cases say that de Booy's experience is similar to other complaints they hear regularly about home construction projects.

The first thing consumers should do is check to see whether a contractor is registered with the state and has posted the required bonds, said Sean Beary, a contract complaint expert with the Washington attorney general's office.

After that, Beary and other experts keep repeating one word: references.

Not only should consumers get references and call them, they should make sure the work done for the references is similar in scale to the proposed job on their own home.

Erin May of the Better Business Bureau of Oregon and Washington pointed to other key areas for consumers to consider when dealing with contractors.

Multiple bids

Homeowners often don't get more than one bid, she said. Multiple bids help put the job in perspective in terms of time and cost.

Both May and Beary emphasized that consumers should stop paying the contractor if they aren't satisfied. Too many keep handing out money.

"It gets to be a question of when do you cut your losses," Beary said. "I know that is a difficult decision to make, and I understand their dilemma."

Dennis Yonker, a specialist with Washington state's contractor registration program, said that the initial contract should be as detailed as possible. "That should alleviate a whole lot of headaches," he said.

He said consumers are not under any obligation to keep writing checks. "The consumer needs to understand that the more money they give the contractor, the less leverage they have," Yonker said.

In fact, before the job begins, the consumer may want to ask the contractor for a list of suppliers and subcontractors. "Ask to see if they've been paid on time by the general contractor," Yonker said. "Knowledge is power in dealing with the construction world."

No money up front

Peter Lawrence of the state's contract compliance office said that a homeowner shouldn't have to pay any money at all before the job is at least under way.

"Consumers think they have to pay money up front," he said. "But they don't. They just need to shop around and find a contractor who has a credit line with suppliers."

Lawrence advised holding 10 percent of the final payment until after the job is completed, until the contractor presents the homeowner with a "release of lien" statement from suppliers.

This essentially is an assurance by subcontractors and suppliers that they've been paid by the contractor, Lawrence said. Otherwise, the homeowner has to pay.

He also suggests that consumers, when considering a big project, ask the contractor to take out a performance bond equal to the amount of the job.

"If they are going to do a $60,000 kitchen remodel, the bond they are required to have is not going to be enough to even cover the costs if the job goes south," he said.

Before you hire a contractor¢ Plan your job from start to finish, and be specific in explaining to the contractor what you want.¢ Be clear about what city or county permits you (and your contractor) may need before the job begins.¢ Get at least three bids for the job. Don't simply choose the cheapest bid.¢ Ask for references. Then call the references. Make sure the job cited by the reference is similar to the work you want done on your home.¢ On large jobs especially, it's wise to ask the contractor for a list of his or her suppliers. Ask the suppliers if they have worked with the contractor and whether they have been paid on time.¢ Check with the state and the local Better Business Bureau to see if the contractor is registered, licensed and bonded. Both agencies will list complaints and/or liens against the contractor or their bond or filings in court.Before the job starts¢ Write up a contract that specifies when the work will be done and a payment schedule. Recommendations on payment schedules differ: Some experts say no payments should be made until the job is completed. Others say that a 10 to 15 percent payment at the beginning of the job is OK. Several recommend paying about a fourth of the total at a time, as work is completed satisfactorily. NO ONE advises paying for the entire job up front.¢ Make sure the agreement specifies clearly when the workers will arrive and leave, exactly how construction debris will be disposed of and how often it will be taken off the property (daily or weekly).During the job¢ Talk with the contractors regularly and go to them directly with questions you may have, or questions about the subcontractors. Don't just sign the contract and go out of town for a month.¢ If it's a large job, where the payments and deadlines are staggered, feel free to ask for receipts or some other documentation to show you were the money is going. When writing checks, some experts say the check should be made out to the contractor and the supplier or subcontractor.When the job is completed¢ Make sure the contractors remove any debris from your house.¢ Go back over the original checklist of what was to done at the beginning of the job and make sure all the work was completed for the agreed upon price.¢ On large jobs especially, hold back 10 percent of the total contract payment until you can get the contractor to provide you with a "release of lien" statement. This identifies all the suppliers on the job, and lists the amount they've been paid and any outstanding payments. At the end of the job, there should be no outstanding payments.--Sources: Better Business Bureau of Oregon and Washington, the Washington state Attorney General's Office and the Washington state Department of Labor and Industry.

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