Managing Construction

What Your Contractor Won't Tell You

Licenses, bonding, and insurance: Every contractor is required by law to have these essential documents in order, but not all do. And the harsh reality is that, if your contractor flouts the law, it could end up costing you.

Adamina Fies, president of Synergy Design & Construction in Reston, VA, says that, as absurd as it may seem, homeowners need to triple-check that their contractors and subcontractors are complying with state and local laws. If your contractor doesn't have the proper paperwork, then you, the client, could be pulled into lawsuits ranging from on-the-job injuries to unpaid subcontractors' bills.

Here's the checklist Fies uses when vetting contractors:

License to Drill. Is this license the right class for the job? Many states offer several classes of construction-related licenses, depending on the level of technical expertise claimed by the contractor and the typical cost of the projects they work on. Make sure your contractor not only has a license, but has the proper license for the scope of your project.

The Buck Stops Where? Understand who is responsible for subcontractors' work. Check out open complaints against both the general contractor and subcontractors, typically filed with your state's Department of Commerce.

Law and Order. Review court records to confirm that the contractor is not being sued for nonpayment. Cash-flow problems can prompt contractors to pay for last week's work with the check that you hand over today. Unpaid subcontractors can sue, bringing your project to a standstill if the contractor doesn't have enough cash or credibility to get the resources required to finish.

Take Inventory. As the job progresses, match invoices with the materials used and the work completed in order to be sure that you are being charged for what was bought for, and actually used for, your project.

Finally, be sure to check with your insurer to ascertain precisely what construction liabilities are covered by your homeowners' policy. If needed, take out a temporary rider to cover worst-case scenarios.

For more on contractors, consider:

Contractors, Contracts, and Costs
How To: Hire a General Contractor
What to Look For in a General Contractor