The BBB suggests that you solicit two or three bids for any remodeling work you are planning. Don't automatically accept the lowest offer. Make sure all bids are based on the same set of specifications and materials to be used. Ask for references and inspect finished products. Make sure the contractor is in compliance with all local licensing, bonding and insurance requirements and that any necessary building permits are obtained. The law requires a general contractor's license for any commercial job costing over $20,000 or for anyone building a home from the ground up. Homeowners should be aware that one or more permits may be required when having any home improvement, mechanical, plumbing or electrical work done to your home. The BBB cautions homeowners against applying for any permits yourself because if you do, you could be relieving the contractor from any liability or obligation and placing it on yourself.
Never sign a blank or partially blank contract. Before paying, get a sworn statement that all bills for material and labor have been paid for by the contractor. Typically a down payment of one third of the total contract price is made with additional payments made after completion of each phase of work; final payment should not be made until the work is completed and you have inspected the work.
If the work is to be financed, be sure to have complete details of the financing agreement, especially if a second mortgage of your home is used as security for the remodeling work.