Home Improvement

Your home is your most expensive investment. Before you embark on a home improvement project, it is important to carefully select a reliable home improvement contractor. The small amount of time you spend initially will help prevent any unpleasant surprises and delays with your home improvement project. This report provides information on finding and selecting a reputable contractor, negotiating the contract, supervising the job, the laws concerning home improvement contracting in the Metropolitan New York area, and tips to help you identify and select a reputable contractor.

Finding a Home Improvement Contractor 
The first step in finding a home improvement contractor is to locate the names of a few home improvement contractors. The best ways to find the names of home improvement contractors are:

  1. Personal references - someone you know employed the contractor previously and was satisfied with the finished job, and
  2. Work sites where the quality of the completed job is visible.

Once you locate a few home improvement contractors, begin researching their background. First, contact your local Better Business Bureau. The Better Business Bureau can provide reports with the reliability ratings and three-year complaint history for the names of contractors that you provide. Next, call the licensing agency for home improvement contractors in your area to verify that each contractor has a current license in good standing. Some counties do not require home improvement contractors to be licensed, but licensing requirements are based on where the home improvement job is performed. If you live in a county that requires licensing, then the contractor must be licensed in that county, regardless of if the contractor’s home office is based in a county that does not require licensing. As an extra precaution, it is a good idea to call to verify the licensing of a contractor even if the contractor has a satisfactory report with the BBB; a contractor’s license status could change suddenly. Finally, ask each contractor for at least two references. Contact the references and visit the job sites, if possible. A contractor who has nothing to hide should not hesitate to give references. In addition, many people who are pleased with the results of their home improvement project will be glad to act as references for their contractor.

After narrowing the field of possible contractors, ask for estimates for your job. Get at least two estimates, but preferably three. Some contractors charge a fee for estimates - ask first to avoid misunderstandings. Be sure that your estimates are comparable. For example, make sure that both estimates include all work materials, and that materials are of comparable quality; it is not possible to compare an estimate that includes work materials with another estimate that does not. It is best to ask for estimates that include all labor, materials, and specific or estimated times of completion (depending on the type of job, the season, and a variety of other factors). You should also ask for detailed information about the work materials the contractor is planning to use, such as brand name, make and model, size, and quantity.

When making your final decision, do not consider cost alone. Consider ALL factors: total cost, including materials, estimated time of completion, and even the contractor’s personality. If you have any personal reservations about the contractor, follow your instincts. In many instances, you will see the contractor every day for the duration of the job, and it is therefore a good idea to make sure you feel comfortable talking with him or her about the job and having him or her around your house for the given period of time.

It may be helpful to take the time to make a chart listing each contractor and all of the factors that are going into your decision about which contractor to choose. This can help you ensure that you get the same information from each contractor so you can make a true comparison. Remember, the least expensive contractor is not necessarily the best for your home improvement job!

In New York City, home improvement contractors and salespersons must both be licensed by the New York City Department of Consumer Affairs. In Long Island and the Mid-Hudson regions, home improvement contractor licensing is determined by each county’s Department of Consumer Affairs; not all counties require home improvement contractors to be licensed. Be aware that the fact that a contractor can provide you with a Department of Consumer Affairs license number does NOT guarantee that the contractor’s license is in good standing. In New York City, a person performing a job for less than $200 does not require a license, nor does an individual employee who works for a contractor for wages. For all counties, plumbers, electricians, engineers, and architects require separate licensing, and do not need to be licensed as home improvement contractors -- be sure to verify their licensing with the appropriate agencies.

Why is it important for a home improvement contractor to be licensed? First of all, it is the law in most counties. Secondly, licensing protects the consumer. Agencies that license home improvement contractors can take complaints against licensed contractors, mediate disputes, and hold arbitration hearings to resolve complaints. Licensing agencies can accept complaints against unlicensed contractors, but are limited in their effectiveness against them; licensing agencies can try to locate unlicensed contractors, require that they obtain a license, and levy fines, but cannot force them to comply. Your local licensing agency has more leverage to reach a resolution with a licensed contractor than they do with an unlicensed contractor. In New York City, if the Department of Consumer Affairs is unable to mediate a dispute between a consumer and a contractor, the dispute will be addressed at an administrative hearing, where both the consumer and contractor will have the opportunity to explain their respective positions on the matter. If the hearing is decided in the consumer’s favor and the consumer is awarded a monetary judgment, the contractor is required to comply. If the contractor refuses to comply, the Department of Consumer Affairs will revoke the home improvement contractor’s license and seek restitution either from the contractor’s licensee bond or through the Home Improvement Contractor Trust Fund for up to $20,000. If a consumer has a problem with an unlicensed contractor, the Department of Consumer Affairs can issue a padlock order to close the business, require the contractor to obtain a license, issue a fine, and possibly seize the company’s equipment or automobiles. A contractor must pay restitution to consumers before he or she can apply for a license. When a consumer has a problem with an unlicensed contractor, the NYC Department of Consumer Affairs CANNOT give the consumer restitution funds from the Home Improvement Contractor Trust Fund.

The Contract
For every home improvement job, New York State law requires that the home improvement contractor provide the consumer with a complete, legible copy of the contract at the time it is signed by all parties, and before any work is started. New York State law governing home improvements applies to home improvement contracts that are $500 or greater. Local laws may vary, therefore, if your home improvement job is for an amount less than $500, check with your local licensing agency to see if the job qualifies as a “home improvement” job under local laws.

It is extremely important to obtain a written, signed, and dated contract for home improvement work BEFORE the work begins. Make sure that the following items are written into the contract:

  1. The home improvement contractors’ company name, address, phone number, and license number;
  2. List of materials to be used in the project, including brand names and model numbers, if applicable;
  3. Schedule of completion, including stages of completion - should have estimated dates for start and completion of project, including reasons why it might be delayed;
  4. Payment schedule that specifically states how payment will be made and under what circumstances, for example, if payments will correspond to completed work, or if payments will be due on specific dates, etc.;
  5. All verbal agreements should be written into the contract;
  6. Statement of any guarantee or warranty for services or parts;
  7. Clause stating that the contractor will obtain all permits required by law;
  8. Statement that contractor will be responsible for repairing mistakes and for cleaning the area after the job is finished;
  9. Clauses stating that the contractor must provide proof of payment to subcontractors and supply houses and giving the consumer permission to withhold final payment to the contractor until he or she provides such proof - otherwise, the subcontractors and suppliers can put a lien on the consumer’s property if the contractor does not pay them;
  10. Statement of the consumer’s right to cancel the home improvement contract within three business days of signing it, and a Notice of Cancellation which the consumer should use in that situation.

Before signing any contract, read the entire contract carefully and make sure you understand all provisions.

Changes made to the original home improvement contract once the project is already underway should be added to the contract and signed by both the consumer and the contractor. Remember that any changes to the original home improvement project may require additional costs and time.

New York State Law Concerning Payment
New York State law requires that home improvement contractors deposit all payments received prior to the completion of the job into an escrow account, to be withdrawn according to the schedule set forth in the contract. The amount of the payments should be approximately proportional to the amount of work done and materials needed to be purchased during each time period. Instead of depositing the funds in an escrow account, the home improvement contractor may elect to post a bond, contract of indemnity, or irrevocable letter of credit with a bank or savings and loan licensed to do business in the state. The money deposited in the escrow account remains the consumer’s property, or the bond, contract of indemnity, or letter of credit remains in effect, until the funds are used in accordance with the contract, or the home improvement job is finished, or the consumer defaults, relieving the contractor from having to finish the contract. This law serves to guarantee the person having the home improvement job done that the payments they make will be used for the purpose set out in the contract, or the funds will be returned.

The Consumer’s Right to Cancel
Under Federal Trade Commission law, consumers have the right to cancel home improvement contracts within three business days of signing them. “Business days” are every day except Sundays and major holidays. If the consumer cancels the contract within the allotted time period, the contractor must refund all payments made under the contract and notify the consumer of what he or she plans to do with any materials already delivered to the home improvement site within ten business days of receiving the consumer’s notice of cancellation. A home improvement contract may NOT be cancelled if the consumer initiated the contract and requested the work to begin immediately, for example, because of an emergency situation, as long as the consumer signed a document explaining the nature of the emergency work to be done and waiving the consumer’s right to cancel the contract.

Working With the Contractor/Monitoring the Job
You or someone you trust should supervise every home improvement job, to make sure that the correct materials are used, and that the work is completed correctly. The person supervising the job does NOT have to be an expert in home improvements. Feel free to ask questions and examine the work. Notify the contractor if the work is not being done properly, and ask him or her to correct it.

Never pay the entire, or even a major portion of, the cost of the home improvement job before any work has begun. The home improvement contractor may require the consumer to make a down payment and pay for materials; this is a common practice. However, try to arrange to link additional payments to stages of completion. It is best to arrange to withhold a large portion of the cost of the job until the job has been completed to the customer’s satisfaction and the customer has signed a certificate of completion. Withholding a significant amount of the price of the project will assist in protecting the customer by ensuring that the home improvement job is completed on time and in the manner agreed upon. Paying with a credit card also works to protect the consumer in the event there is a problem. ALL payment arrangements should be clearly written and explained in the contract.

Inspect the home improvement job BEFORE you sign the certificate of completion and pay the final installment. Take your time inspecting all of the work done to make sure you are satisfied. Also be sure to verify that the contractor has paid the subcontractors and suppliers -- ask to see proof of payment. If you discover any problems with the job, or if the subcontractors haven’t been paid, notify the contractor, and DO NOT pay the final payment or sign the completion certificate before the problem is corrected.

Emergency Home Improvement Contracting Jobs
In an emergency situation, there is less time to find out about a contractor’s reputation, and fewer ways to protect yourself. Try to use a contractor with whom you are already familiar, or one who comes recommended by someone you know. Be sure to get an estimate and a written contract. Ask about minimum charges. Make sure that you have the right to approve charges that will be greater than the estimated cost, before the work is performed. Pay with a credit card. Most importantly, try not to panic and flee to the first contractor you find in the yellow pages. There are thousands of contractors in the Metropolitan New York area, and you have many to choose from, even in an emergency. Taking a few minutes to research a contractor’s background has the potential to save you time, money, and aggravation in the long run.

Resource Information
To verify that a home improvement contractor is currently licensed to perform home improvement work, contact the Department of Consumers Affairs or another licensing agency in the county where the job will be performed:

Licensing Agencies: Dial #311 (NYC City Agency Hotline) for all inquiries

New York City
All 5 boroughs (212) 487-4076 or
Queens (718) 286-2990
Complaint Hotline (212) 487-4444

Long Island:
Nassau County (516) 571-3871 Complaints - (516) 571-2600
Suffolk County (631) 853-4600

Mid-Hudson Region:

Orange County (845) 291-2400 (complaint files on local businesses)
Putnam County (845) 808-1617
Rockland County (845) 708-7600
Sullivan County (845) 807-0411
Ulster County (845) 340-3260
Westchester County (914) 995-2155
White Plains (914) 995-2211-Licensing
Yonkers (914) 377-6807 (complaint files on local businesses)

To file complaints in any county, contact the New York State Attorney General's consumer helpline: 800-771-7755. The Attorney General's Office has a great deal of helpful information on its web site at www.oag.state.ny.us

For more information on licensing agencies, you may also visit the Department of Consumer Affairs web site at: www.nyc.gov/consumers.

You may also write to the following address:

New York City Licensing Center
42 Broadway, 5th Floor
New York, NY 10001