Keima Construction Inc
-How to hire a contractor-
After printing - click here to return to home page!

Introduction

This guide to "Choosing a Contractor"  has been designed to help home owners and small business owners in choosing contractors for remodeling and building. Just as one would purchase a manual to assist them with automotive repairs or consulting an attorney for professional advice, this is your guide to assist you in choosing a contractor.

 The information in this book is powerful and if used correctly, it can save you "the owner" time and money. The statistics are unbelievable. Good people that trust in their contractors are getting ripped off all the time. Now, if you were to interview these people and find out how many of them took the time to responsibly review their contract and do a back ground check on their contractor, you will find that not to many people do.

 People are generally trusting in their nature and have little reason to believe that a professional would lie to them, but in business you have to go by the book.

 Home improvements can rate in the top five, as far as the largest investments that most people make. Wouldn't it be nice to invite contractors into your house and be able to speak intelligently with them and to be able to spot a con artist? Just as there is in any business, there is good and bad. and most licensed contractors work hard to make their business prosper, but the bottom line is "BUYER BEWARE."

 If you could afford an attorney to represent you in a legal mater but chose to represent yourself and lost, I'll bet that you'll do it differently next time. The literature contained hereafter doesn't claim to protect you against fraud or other crimes, it is to assist you in understanding a contract and to supply you with information that you might not have acquired on your own.

Ten Basic Rules

1. Always hire "licensed Contractors".

2. Don't sign a contract on the spot.

3. Ask for a State Contractors License Number.

4. Ask to see a Drivers license and log the number.

5. Never pay Cash for a down payment.

6. Don't allow commencement of work without a signed contract by both parties.

7. Always do a background check on your Contractor.

8. Review your contract thoroughly.

9. Execute Lien releases throughout the project.

10. If a deal sounds to good to be true, than it probably is.

 

Extra Items To Consider

11. Insurance 

12. Workers Comp. Ins.

13 Referrals 14. Bond

15 Names and License numbers of subcontractors.

16 Names of material suppliers.

17 Don't accept a P.O. Box # for an address on a contract.

18 The most important one of all. If you don't feel comfortable with the detail that is in your contract, then don't sign it. Hire a consultant to review the contract for you and make the changes that are necessary to assure you that your getting exactly what your paying for.

---

Contents of a Contract

This is the area that creates more conflicts between Home Owners and Contractors. A contractor should submit for proposal a detailed contract with a scope of work section and a complete break down of work that is to be done and the different types of materials that are to be used. Read the following information and refer back to this section when signing a contract or negotiating.

 

The most common phrase used in this industry that gets Home Owners into trouble is " as per plans ". If your having a $75,000.00 remodel done to your residence and a contractor submits a proposal that is two or three pages long, there is definitely something wrong!

EXAMPLE [ Foundation. ] Pour Aprx. 8 yards of concrete "as per plans".

[ Framing ] Frame addition "as per plans".

[ Electrical ] Install all plugs "as per plans".

A lot of times the architect will leave what's known as (Typical Items) out of a set of blue prints because they are just that, (Typical). Every contractor is expected to know and abide by the Uniform Building Code, (U.B.C.) When these items are left out of a set of plans and the contract that you just signed says "as per plans", Guess what? Prepare to be hit with what is called EXTRAS. If a contractor signs a contract with you and he knows that there is a lot of information missing or foresees several extras, He may low ball his price and charge you double for the extras.

Just to name a few of the items that are commonly not noted on plans are;

(Uffer rod, outside receptacles, dedicated circuits, finish lumber such as moldings and shelving, window schedules, door schedules, hardware schedules, roofing materials, lighting, phone jacks, TV jacks, cast iron plumbing in sub floors for noise suppression, cabinet elevations, paint and finish details, upgrades on the existing such as color coat), and much, much, more.

A contract should contain at least the following, if not more. The name and addresses of the Owner and the Contractor, Phone numbers of both parties (day and night numbers), Civil code provision 1689.7 Notice of cancellation, A start and completion date, A total price in writing and in numbers, A place for both parties to sign and date, A reference sheet containing names and phone numbers of Recent jobs, A detailed scope of work section, Allowances, Terms and conditions and possibly a little information about the contractor and his or her company.

Definitions of the Ten Basic Rules

You should always hire a contractor that is licensed by the state that you reside in. If a contractor is licensed, then he has created a trail for you to check on. Most professionals that have taken the time to create a legal business and acquire the proper documentation, have better intentions than others that run businesses illegally. Most licensed contractors will set up a decent progress payment schedule for the project and collect moneys only when they are due. The LAW states that you, (the home owner) does not have to pay any Unlicensed Contractor that performs for you. Further more, they (the unlicensed contractor) has no lien rights and cannot receive a judgment in a judicial court. This is why some of them will ask for a large down payment and to have it in cash. Cash won't leave a paper trail and the person with the most money has power. If you hire an unlicensed contractor, the (Franchise Tax Board) does not recognize him as a company. You take a chance of getting caught and having to compensate the government for his/her payroll taxes, social security and workers compensation insurance. If the authorities catch this Unlicensed Contractor during the remodeling of your home, the project will be stopped and you will have to find another contractor to finish your project. Can you imagine what that will cost you? let alone the extra time and effort.

After digesting all of the information that is in this book, how can anyone sign a contract on the spot? Most of the time when a person signs a contract on the spot, it's because he/she really thinks that they are getting the deal of the century. Think of all the times that you didn't buy something when you wanted to, and then found it for less the next week. You don't go to a car dealership and just because the sales man tells you that "your really getting an excellent deal", You buy the first car that you see. So why sign the first proposal that is offered to you? You should always get at least two bids. Tell the contractor when you have him on the phone, setting an appointment for an estimate, that you will not be making a decision that day. Tell him that you have to discuss this with others, your spouse, accountant or lender.

This number, by law, has to be on the contractors calling cards, contracts and any advertisement that they produce. Most contractors are proud of their license and display it prominently. If they hide this from you, you'll only have to wonder what else they'll hide. Don't be afraid to ask for this information. If the contractor is honest, and he wants to do business with you, he will offer the information to you on the spot with a smile. It's a good idea to get this number before he comes to visit you so that you can verify it with the license board. The number for Orange County is (714) 994-7430, use it.

There are Three main reasons for copping down their license number;

#1 You need to verify that the person that your speaking to is in fact the person that the contractors license is issued to.
#2 If the contractor does not want to produce his drivers license, then there may be a chance that he has things to hide from you.
#3 Some younger contractors have been known to use their fathers or uncles license number. The last name on the license will be the same, so you need to make sure that your entering into a legal contract. You will verify this with the License Board.

If you pay cash for a down payment, there may be a chance that you'll never see that money again. A big red flag should pop up in front of your eyes if your requested to pay in cash this early in the project. If you pay in cash, there is little proof in a court of law that you have entered into a contract. Okay, so he gave you a receipt, did you check the signature? What if he bails on you and you later take him to court. In court the judge ask you if you have a receipt and you answer "yes". Then the judge looks at the signature and it reads John Doe. Is Mr. John Doe who you signed a contract with?  If you pay with a check, the contractor will have to sign it to cash it. You now have two signatures, one on the contract and one on the check.

Don't ever allow this to happen to you. If you don't have a contract, then exactly what is the guy in the front yard building for you? Even though you think that the both of you have a complete understanding of what needs to be done, your human, you can forget or misunderstand each other. How convenient do you think that it would be for a contractor that is near the end of a job and running out of money to say "that wasn't included in the price". Excluding minor demolition, don't let a contractor start a job that requires permits, with out the permits. The City Building Department may have made some minor or major changes. If the contractor has gone to far and changes have been made, someone will have to absorb the additional cost to fix what's wrong. All contracts, agreements, addendum's, changes and receipts should be signed by both the contractor and the home owner. No signature, No check...

If after you collect the information and referrals that you need from a contractor and you don't verify this information, then your taking a big chance with your money and your house. You probably wouldn't trust your neighbor with $75,000.00 dollars of your money and the keys to your house, right?  So why would you trust a complete stranger. Well let me explain this to you. In order to do business, there has to be a certain amount of trust between all parties.

Before you put all this trust into someone that you just met, you should first establish that they are trust worthy, credible, and honest. To establish this you should start by calling the Contractors State License Board and see if the company that your considering to do business with is in Good Standing. Then you can call the Better Business Bureau to see if they have complaints on them and if so, what kind. Collect a sheet of references from the contractor and call the people to set up a time that you can go see the work. DON'T be fooled by pictures, any one can drive down the street and take pictures. Especially if it is stated to you that all of these pictures are of jobs in a different county. It takes only minutes to make phone calls, and if you are happy with only talking to people on the phone, then that's fine. At least do your home work so that your beyond a point of comfortable.

I have put together some questions for you to ask the people that you call on the referral sheet. Keep in mind that not every single job will run perfect and some of the people that you talk to may have had a small job done and others may be large jobs. The bigger the job, the more of a chance for problems. The same applies with how many jobs a particular contractor doe's in a year; for example, A general contractor may only do ten jobs per year verses a roofer may do eighty or more. The more jobs done per year increases the liability and the amount of people that the contractor will have to please.

How was the contractors pricing as compared to other bids that you received?

Did the contractor stick to his price?

Did he charge you an arm and a leg for extras?

Was the job started and completed in a reasonable amount of time?

Were you happy with his/her attitude when problems would arise?

How were his sub contractors?

Did you check any of his/her references and were you happy with them?

Did they keep the job clean and safe for you and your family?

Did he or his workers drink alcoholic beverages on or before the job?

How was his payment schedule, was it fair?

Did they foresee problems before it was to late?

Was the contractor himself on the job to govern it, or did you only see him when it was time to get paid?

Was he easy to get in touch with after hours or on weekends for questions?

Did they put in full days, or start at 10:00 AM and go home at 2:00 PM?

Would you ever use this contractor again?

Are you a repeat customer of this contractor?

Was this contractor referred to you or did you locate him on your own?

Did you have any liens attached to you house do to the contractors negligence?

Is there anything that you feel that I should Know about this contractor before I chose to do business with him or any of his agents?

 

When reviewing a contract, refer back to the {Contents of a Contract} page and read it carefully. The contract, by law, has to contain certain information and other information is mandatory for the protection of you the owner.

If you review your contract and realize that certain items are not included or other items are lacking detail, then review it with your consultant or contractor before signing it. If you hire a consultant, he would be more likely to amend the contract to benefit you, more so than the contractor would.

Along with reviewing the Scope of Work sheets, read the terms and conditions good. If you don't understand them, then get some one to interpret them to you. The terms and conditions are designed to set standards and penalties in the event of a default by one or both parties. Many contractors use a standard form type of contract and some contractors take those and alter them to better fit their needs.

When you have entered into a contract with a contractor, you cannot terminate the contract or fire the contractor just because he or one of his workers did something that may of upset you. You usually need to be able to prove that the contractor has violated the civil, penal or building code on purpose. There are other reasons that you can terminate a contract also, but you should probably consult an attorney before you act.

Very Important, If you terminate a contract without due cause, you can be made to pay the contractor all of the profits that he would have made if he would have finished the job. Other judgments may also be made against you.

So when you hire your contractor, make sure that you have chosen the right one for the job. Remember, a contract is a legal agreement that can either; save you from getting into trouble, or, Get you into a lot of trouble.

You should have your contractor and all of his ( laborers, employees, subcontractors, material suppliers and any other persons or company's that he will be paying ) on your project sign these releases when you pay out money to the contractor. There is a conditional and unconditional lien release. Sign the conditional lean release during the job to assure that the subs have been paid. Any subcontractors or material suppliers can attach a lien to your property if the prime contractor fails to pay the subcontractors or material suppliers. In order for a subcontractor or material supplier to obtain lien rights, they must first file a Twenty Day Preliminary Lien Notice. Not all companies file these, but if you receive one of these in the mail, file it with your contract.

Twenty day preliminary lien notice.

This is a notice that will inform you that someone other than the prime contractor is furnishing your project with materials and/or labor. In order for this notice to take affect, it must be mailed to you within twenty (20) days of witch a company has first furnished you with materials or labor. So note, if you can, when subcontractors or materials show up or are delivered to your job.

I firmly think that everyone has been taught this since they were children. Although, people fall for sales pitches and high pressure techniques every day. You see it on the news all of the time. A good salesman can sell almost anything, from a membership, to a used car. Don't let salesman pressure you into making a foolish decision on the spot because it sounds like a good deal. If you have already had several other estimates, and the last person that you see gives you the best price and you want to use him, that's fine. Don't sign a contract on the spot. You still have to do a back ground on the contractor or company and you still have to review the contract. If the contractor say's that "you have to sign the contract today to receive this special price that I'm offering to you", then you tell him that "I'm sorry that you can't offer this price to me tomorrow, because I would have signed this contract tomorrow." All of a sudden you'll find the contractor or salesman gracefully changing his story to still lock you in.

Don't ever fall for the oldest trick in the book of when the salesman ask to use your phone to call his boss. After returning back to you, the salesman say's to you, "I just got off the phone with my boss and I told him what nice people you were and that you had a fixed budget, so he authorized me to offer a "one time deal." The salesman is probably pulling a high pressure pitch.

These are items that your Consultant can help you with. Don't be afraid to ask or hire a consultant about this, or you could be paying twice for your job.      
It's a fact.        If a contractor doesn't pay his bills, you will.

 Good deals are out there, and you can find them if you do your home work. You have to remember a few things though.

             * Always compare apples to apples.

* You can't compare your apples until their in writing.

* Make sure that your getting exactly what your paying for.

* Ask your contractor, "If I add extras or make changes, How will I be billed?"

* Do the necessary back ground checks that you feel you need to do.

* Negotiate your progress payments and put them in writing.

* Get a start and completion date in writing.

* Think for at least twenty four hours before you sign a contract.

* If you don't understand your contract, and if you feel like you need someone on your side, Than hire a consultant. It is not money thrown down the drain.

---

A construction consultant is a person or company that can assist you in various areas of your project. A consultant can help you with understanding your contract, make sure that your not being overcharged, design a critical path for you and your contractor to follow and even help you with your interviews with your prospective contractors at the time of the estimates.

If you have a consultant attend your estimates, He can act as a mediator and make sure that you and the contractor understand each other equally. This will save the both of you valuable time and he may also be able to foresee any problems that may occur or find ways to save money. He will also stay alert and stop the contractor or salesman from pushing you into making a wrong decision. Not to mention that he may also see right through a CON ARTIST !

They are hard to find, but a good consultant can defiantly save you money and help your remodel run smooth.

You can locate a consultant the same way that you find contractors. The yellow pages are a start along with asking around.

Like contractors, they all vary in price. The price is not all that you should be concerned with. How much can he offer you and will he be there when you need him? The prices may range from $150.00 to $200.00 per hour, or a flat fee that might be a percentage of the job, or an initial fee and then an hourly fee afterwards.

The fee may also vary depending on the difficulty of the project. The fee can be related to hiring an interior designer. Remember though, You can negotiate the fee with the consultant the same as you would with a contractor.