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You’ve heard these concepts many times before:

  • Know who you are doing business with.
  • Do your due diligence.
  • There is no such thing as a free lunch.
  • If it sounds too good to be true, it probably is.

Why do so many people fail to heed these warnings?
This article is dedicated to all the fully-licensed, properly-insured professionals and companies who are current in their education and training; respective of OSHA and common sense labor, civil and moral codes of conduct; and who work hard to earn your trust and confidence.

Ten recommendations that should help ensure you get what you deserve – and pay a fair price:

  1. Never give a contractor money until you have a complete meeting of the minds. You should receive a written contract (that you understand completely) that clearly spells out what you are to receive and expected to pay for, and what you are not getting (those items not included or excluded); as well as items that may carry additional charges, etc.

  2. Always ask for references and contact those references, not only for samples of completed work, but work currently under construction. Ask some pointed and specific questions of both the contractor and reference to see how the answers match.

    Sample questions: What was the entire scope of work involved and the contractor’s responsibility? How long did the project take, and how long was it expected to take? What would you not do again? What were the two biggest problems? How were the non-work areas of your home protected from the work area?

  3. Always request and receive current, updated copies of all licenses the contractor claims to hold, especially those licenses required to perform the task at your home. Also, demand notification from their insurance carrier that the contractor is fully and appropriately insured, and in good standing.

    Be sure they have general liability, workman’s compensation, and umbrella insurance protection coverage. You can easily verify license status at

    Many contractors are unable to carry – or choose not to carry – workman’s compensation insurance due to the cost. This is potentially a huge risk to you. Do not hesitate to discuss any insurance with your own insurance agent or attorney. Additionally, verify with your insurance agent that your homeowner’s insurance covers work being performed, because the contractors’ builders risk insurance normally does not cover remodeling work.

    Remember, when you make a draw payment, you now own that portion of the work.

  4. If you are accepting proposals or bids from several contractors, make sure the scope of work that each is bidding on is equal. Closely evaluate differences in value of work to be performed, quality of goods to be provided, or the use of dollar amount “allowances.” Failure to do so may result in a lower cost up front, but a finished product that falls short of your expectations and may ultimately cost you significantly more down the road.

  5. Payment terms, conditions and schedule are typical instruments that any reputable contractor will be familiar with when dealing with local lenders. A typical and accepted industry standard is for the contractor to receive a small deposit (10-20%) against the total contract price, with the balance of the payments being made in stages (draws) after the work has been performed.

    The draw schedule is set in advance and is based on the overall work being completed. The deposit is used for the contractor’s up-front expenses of bidding time, contract and administrative preparation, architectural and design, permitting, etc. The deposit gets consumed quickly.

    It is not fair or reasonable to expect a contractor to accept a “holdback” (monies withheld from each draw payment to “ensure all work is performed”). Holdbacks are common in commercial projects and sometimes in very large residential new-home construction, but rarely in smaller, remodeling projects.
    If you truly believe your selected contractor needs that motivation to perform to the agreed contract, maybe you have selected the wrong contractor.

  6. Your written contract should contain a warranty, clearly stating all conditions and limitations.

  7. Never accept the suggestion that the work can be done without obtaining a building permit. “Contractors” without proper credentials will be unable to obtain a building permit and might be more inclined to suggest they perform the work without one.

    You can verify whether or not a building permit would be required by contacting the building department in the municipality in which you reside. If a building permit is required, insist on it! Have the contractor “pull the permit,” and insist it be posted on the property as required by code.

  8. Expect to receive “Notice to Owner” delivered to you by the sub-contractors or material suppliers hired by your contractor to provide labor, material or both for your home. Due to Florida’s strong construction lien law, this is the means by which anyone providing labor and/or materials to your job site can protect themselves from not being paid by an unscrupulous contractor.

    You are ultimately responsible for this debt. In order to protect yourself, you should obtain a “Partial Release of Lien” or a “Final Release of Lien” from your contractor or from those who have served you a Notice to Owner before making your respective draw payment, which would include payment to that provider.

    You should also receive a “Final Release of Lien” from all sub-contractors and a “Contractors Final Affidavit” from your contractor. These documents verify you have paid the contractor and they, in turn, have made the required payments to the providers. These are very important steps, and any professional contractor will do these automatically without being asked by you.

  9. Do not make any advance payments other than the deposit. The only exception might be a special-order item you have selected that may require payment that you can pay directly to the supplier.

  10. You might feel more comfortable having your real estate contract attorney review the contract to make sure you fully understand the commitment and that you are fully protected before signing it.

What is your opinion?